Chinese Scoop Up SoCal Foreclosures

http://www.nbclosangeles.com/around_town/real_estate/Chinese_Scoop_Up_SoCal_Foreclosures_Los_Angeles.html

President Obama’s Remarks on the Homeowner Affordability and Stability Plan

February 18, 2009

Text

Following is the text of President Obama’s remarks in Arizona, as prepared for delivery and provided by The White House.

I’m here today to talk about a crisis unlike any we’ve ever known – but one that you know very well here in Mesa, and throughout the Valley. In Phoenix and its surrounding suburbs, the American Dream is being tested by a home mortgage crisis that not only threatens the stability of our economy but also the stability of families and neighborhoods. It is a crisis that strikes at the heart of the middle class: the homes in which we invest our savings, build our lives, raise our families, and plant roots in our communities.

So many Americans have shared with me their personal experiences of this crisis. Many have written letters or emails or shared their stories with me at rallies and along rope lines. Their hardship and heartbreak are a reminder that while this crisis is vast, it begins just one house – and one family – at a time.

It begins with a young family – maybe in Mesa, or Glendale, or Tempe – or just as likely in suburban Las Vegas, Cleveland, or Miami. They save up. They search. They choose a home that feels like the perfect place to start a life. They secure a fixed-rate mortgage at a reasonable rate, make a down payment, and make their mortgage payments each month. They are as responsible as anyone could ask them to be.

But then they learn that acting responsibly often isn’t enough to escape this crisis. Perhaps someone loses a job in the latest round of layoffs, one of more than three and a half million jobs lost since this recession began – or maybe a child gets sick, or a spouse has his or her hours cut.

In the past, if you found yourself in a situation like this, you could have sold your home and bought a smaller one with more affordable payments. Or you could have refinanced your home at a lower rate. But today, home values have fallen so sharply that even if you made a large down payment, the current value of your mortgage may still be higher than the current value of your house. So no bank will return your calls, and no sale will return your investment.

You can’t afford to leave and you can’t afford to stay. So you cut back on luxuries. Then you cut back on necessities. You spend down your savings to keep up with your payments. Then you open the retirement fund. Then you use the credit cards. And when you’ve gone through everything you have, and done everything you can, you have no choice but to default on your loan. And so your home joins the nearly six million others in foreclosure or at risk of foreclosure across the country, including roughly 150,000 right here in Arizona.

But the foreclosures which are uprooting families and upending lives across America are only one part of this housing crisis. For while there are millions of families who face foreclosure, there are millions more who are in no danger of losing their homes, but who have still seen their dreams endangered. They are families who see “For Sale” signs lining the streets. Who see neighbors leave, and homes standing vacant, and lawns slowly turning brown. They see their own homes – their largest single assets – plummeting in value. One study in Chicago found that a foreclosed home reduces the price of nearby homes by as much as 9 percent. Home prices in cities across the country have fallen by more than 25 percent since 2006; in Phoenix, they’ve fallen by 43 percent.

Even if your neighborhood hasn’t been hit by foreclosures, you’re likely feeling the effects of the crisis in other ways. Companies in your community that depend on the housing market – construction companies and home furnishing stores, painters and landscapers – they’re cutting back and laying people off. The number of residential construction jobs has fallen by more than a quarter million since mid-2006. As businesses lose revenue and people lose income, the tax base shrinks, which means less money for schools and police and fire departments. And on top of this, the costs to a local government associated with a single foreclosure can be as high as $20,000.

The effects of this crisis have also reverberated across the financial markets. When the housing market collapsed, so did the availability of credit on which our economy depends. As that credit has dried up, it has been harder for families to find affordable loans to purchase a car or pay tuition and harder for businesses to secure the capital they need to expand and create jobs.

In the end, all of us are paying a price for this home mortgage crisis. And all of us will pay an even steeper price if we allow this crisis to deepen – a crisis which is unraveling homeownership, the middle class, and the American Dream itself. But if we act boldly and swiftly to arrest this downward spiral, every American will benefit. And that’s what I want to talk about today.

The plan I’m announcing focuses on rescuing families who have played by the rules and acted responsibly: by refinancing loans for millions of families in traditional mortgages who are underwater or close to it; by modifying loans for families stuck in sub-prime mortgages they can’t afford as a result of skyrocketing interest rates or personal misfortune; and by taking broader steps to keep mortgage rates low so that families can secure loans with affordable monthly payments.

At the same time, this plan must be viewed in a larger context. A lost home often begins with a lost job. Many businesses have laid off workers for a lack of revenue and available capital. Credit has become scarce as the markets have been overwhelmed by the collapse of securities backed by failing mortgages. In the end, the home mortgage crisis, the financial crisis, and this broader economic crisis are interconnected. We cannot successfully address any one of them without addressing them all.

Yesterday, in Denver, I signed into law the American Recovery and Reinvestment Act which will create or save three and a half million jobs over the next two years – including 70,000 in Arizona – doing the work America needs done. We will also work to stabilize, repair, and reform our financial system to get credit flowing again to families and businesses. And we will pursue the housing plan I am outlining today.

Through this plan, we will help between seven and nine million families restructure or refinance their mortgages so they can avoid foreclosure. And we are not just helping homeowners at risk of falling over the edge, we are preventing their neighbors from being pulled over that edge too – as defaults and foreclosures contribute to sinking home values, failing local businesses, and lost jobs.

But I also want to be very clear about what this plan will not do: It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans. It will not help speculators who took risky bets on a rising market and bought homes not to live in but to sell. It will not help dishonest lenders who acted irresponsibility, distorting the facts and dismissing the fine print at the expense of buyers who didn’t know better. And it will not reward folks who bought homes they knew from the beginning they would never be able to afford. In short, this plan will not save every home.

But it will give millions of families resigned to financial ruin a chance to rebuild. It will prevent the worst consequences of this crisis from wreaking even greater havoc on the economy. And by bringing down the foreclosure rate, it will help to shore up housing prices for everyone. According to estimates by the Treasury Department, this plan could stop the slide in home prices due to neighboring foreclosures by up to $6,000 per home.

Here is how my plan works:

First, we will make it possible for an estimated four to five million currently ineligible homeowners who receive their mortgages through Fannie Mae or Freddie Mac to refinance their mortgages at lower rates.

Today, as a result of declining home values, millions of families are “underwater,” which means they owe more on their mortgages than their homes are worth. These families are unable to sell their homes, and unable to refinance them. So in the event of a job loss or another emergency, their options are limited.

Right now, Fannie Mae and Freddie Mac – the institutions that guarantee home loans for millions of middle class families – are generally not permitted to guarantee refinancing for mortgages valued at more than 80 percent of the home’s worth. So families who are underwater – or close to being underwater – cannot turn to these lending institutions for help.

My plan changes that by removing this restriction on Fannie and Freddie so that they can refinance mortgages they already own or guarantee. This will allow millions of families stuck with loans at a higher rate to refinance. And the estimated cost to taxpayers would be roughly zero; while Fannie and Freddie would receive less money in payments, this would be balanced out by a reduction in defaults and foreclosures.

I also want to point out that millions of other households could benefit from historically low interest rates if they refinance, though many don’t know that this opportunity is available to them – an opportunity that could save families hundreds of dollars each month. And the efforts we are taking to stabilize mortgage markets will help these borrowers to secure more affordable terms, too.

Second, we will create new incentives so that lenders work with borrowers to modify the terms of sub-prime loans at risk of default and foreclosure.

Sub-prime loans – loans with high rates and complex terms that often conceal their costs – make up only 12 percent of all mortgages, but account for roughly half of all foreclosures.

Right now, when families with these mortgages seek to modify a loan to avoid this fate, they often find themselves navigating a maze of rules and regulations but rarely finding answers. Some sub-prime lenders are willing to renegotiate; many aren’t. Your ability to restructure your loan depends on where you live, the company that owns or manages your loan, or even the agent who happens to answer the phone on the day you call.

My plan establishes clear guidelines for the entire mortgage industry that will encourage lenders to modify mortgages on primary residences. Any institution that wishes to receive financial assistance from the government, and to modify home mortgages, will have to do so according to these guidelines – which will be in place two weeks from today.

If lenders and homebuyers work together, and the lender agrees to offer rates that the borrower can afford, we’ll make up part of the gap between what the old payments were and what the new payments will be. And under this plan, lenders who participate will be required to reduce those payments to no more than 31 percent of a borrower’s income. This will enable as many as three to four million homeowners to modify the terms of their mortgages to avoid foreclosure.

So this part of the plan will require both buyers and lenders to step up and do their part. Lenders will need to lower interest rates and share in the costs of reduced monthly payments in order to prevent another wave of foreclosures. Borrowers will be required to make payments on time in return for this opportunity to reduce those payments.

I also want to be clear that there will be a cost associated with this plan. But by making these investments in foreclosure-prevention today, we will save ourselves the costs of foreclosure tomorrow – costs borne not just by families with troubled loans, but by their neighbors and communities and by our economy as a whole. Given the magnitude of these costs, it is a price well worth paying.

Third, we will take major steps to keep mortgage rates low for millions of middle class families looking to secure new mortgages.

Today, most new home loans are backed by Fannie Mae and Freddie Mac, which guarantee loans and set standards to keep mortgage rates low and to keep mortgage financing available and predictable for middle class families. This function is profoundly important, especially now as we grapple with a crisis that would only worsen if we were to allow further disruptions in our mortgage markets.

Therefore, using the funds already approved by Congress for this purpose, the Treasury Department and the Federal Reserve will continue to purchase Fannie Mae and Freddie Mac mortgage-backed securities so that there is stability and liquidity in the marketplace. Through its existing authority Treasury will provide up to $200 billion in capital to ensure that Fannie Mae and Freddie Mac can continue to stabilize markets and hold mortgage rates down.

We’re also going to work with Fannie and Freddie on other strategies to bolster the mortgage markets, like working with state housing finance agencies to increase their liquidity. And as we seek to ensure that these institutions continue to perform what is a vital function on behalf of middle class families, we also need to maintain transparency and strong oversight so that they do so in responsible and effective ways.

Fourth, we will pursue a wide range of reforms designed to help families stay in their homes and avoid foreclosure.

My administration will continue to support reforming our bankruptcy rules so that we allow judges to reduce home mortgages on primary residences to their fair market value – as long as borrowers pay their debts under a court-ordered plan. That’s the rule for investors who own two, three, and four homes. It should be the rule for ordinary homeowners too, as an alternative to foreclosure.

In addition, as part of the recovery plan I signed into law yesterday, we are going to award $2 billion in competitive grants to communities that are bringing together stakeholders and testing new and innovative ways to prevent foreclosures. Communities have shown a lot of initiative, taking responsibility for this crisis when many others have not. Supporting these neighborhood efforts is exactly what we should be doing.

Taken together, the provisions of this plan will help us end this crisis and preserve for millions of families their stake in the American Dream. But we must also acknowledge the limits of this plan.

Our housing crisis was born of eroding home values, but also of the erosion of our common values. It was brought about by big banks that traded in risky mortgages in return for profits that were literally too good to be true; by lenders who knowingly took advantage of homebuyers; by homebuyers who knowingly borrowed too much from lenders; by speculators who gambled on rising prices; and by leaders in our nation’s capital who failed to act amidst a deepening crisis.

So solving this crisis will require more than resources – it will require all of us to take responsibility. Government must take responsibility for setting rules of the road that are fair and fairly enforced. Banks and lenders must be held accountable for ending the practices that got us into this crisis in the first place. Individuals must take responsibility for their own actions. And all of us must learn to live within our means again.

These are the values that have defined this nation. These are values that have given substance to our faith in the American Dream. And these are the values that we must restore now at this defining moment.

It will not be easy. But if we move forward with purpose and resolve – with a deepened appreciation for how fundamental the American Dream is and how fragile it can be when we fail in our collective responsibilities – then I am confident we will overcome this crisis and once again secure that dream for ourselves and for generations to come.

Thank you, God Bless you, and God bless America.

White House closes in on housing plan

White House closes in on housing plan

Obama will unveil details of plan to help homeowners on Wednesday

Video: Economy in turmoil

from msnbc.com

Awaiting Obama’s plan, banks halt foreclosures

Feb. 13: President Barack Obama is expected to announce a plan next Wednesday to help homeowners avoid foreclosure, one financed by $50 billion in bank bailout money that would help lower interest rates or loan amounts for struggling borrowers. NBC’s Brian Williams reports.

J

The White House said Friday a much-anticipated plan to help struggling homeowners will be announced by President Obama in a speech Wednesday in Arizona. In the interim, banking giants Citibank and J.P Morgan said they would halt new foreclosures on owner-occupied home loans through March 6.

The administration is working on a comprehensive plan to try to halt the ongoing wave of home foreclosures as part of its efforts to stabilize the financial system. The $50 billion package may include a program to buy up distressed mortgages at discount prices, subsidies to help struggling homeowners make their monthly payments and national standards for modifying home loans to more affordable terms.

The foreclosure prevention plan is part of a broader package of measures the administration is putting in place to help the staggering economy. Congress is moving toward final passage of the economic stimulus legislation. The Treasury Department has outlined in broad terms a plan to help stabilize the nation’s financial sector.

Story continues below ↓advertisement | your ad here

Government-controlled mortgage finance companies Fannie Mae and Freddie Mac suspended foreclosure sales during the winter holidays and have halted evictions from foreclosed properties until next month. Earlier this week, the Office of Thrift Supervision urged the more than 800 thrift institutions nationwide — which hold roughly a half-trillion dollars in mortgages — to do the same.

Treasury Secretary Timothy Geithner, Housing and Urban Development Secretary Shaun Donovan and other Obama administration officials held a series of meetings this week Wednesday with top bankers, community groups and financial industry representatives to discuss the plan.

So far, government efforts to prevent foreclosures have focused on pressing the lending industry to work with at-risk homeowners voluntarily and provide them with more affordable payment terms. But the new proposal signals a shift to a more direct government approach.

The foreclosure prevention package is expected to contain a number of measures designed to work in concert. One proposal would draw on $50 billion in funds already approved for the financial bailout to buy up millions of mortgages at a discount.

Video

The foreclosure fight

Feb. 13: A CNBC panel discusses the proposals to help stem rising foreclosures and what their consequences may be.

CNBC

A $300,000 mortgage on a house now worth $200,000, for example, might be bought at a 30 percent discount. The homeowner then would be able to refinance the smaller mortgage with lower monthly payments. The government could then sell the loan back to investors, freeing money to buy more loans.

Of the roughly 10 million to 12 million households facing foreclosure over the next four years, the buyback plan could help between 4 million to 5 million to keep their homes, according to John Taylor, president of the National Community Reinvestment Coalition, who met this week with White House officials to discuss the plan.

White House officials have stressed the urgency of acting to shore up the nation’s banking system to avert a potential “catastrophe.” But slowing the pace of foreclosures is essential to reducing the glut of homes on the market and resolving the crisis, according to Columbia University economics professor Christopher Mayer.

Click for related content

Why it’s so hard to modify a mortgage

‘Pay option’ loans could swell defaults

Foreclosure solutions won’t be easy

“We’ve got to deal with housing,” he said, ”because, look, if housing drops another 20 to 25 percent, I can promise you a lot more of these mortgages are going bad, and we’re going to have a much bigger problem.”

Some 275,000 foreclosure filings were reported in January — or about one in 466 households — an 18 percent increase over January 2008, according to data released by RealtyTrac Thursday.

Page break by AutoPager. Page( 2 ).

To date, industry efforts to halt the pace of foreclosures have proved inadequate. According to the Office of the Comptroller of the Currency, more than half of the 287,755 mortgage workouts in the third quarter of 2008 involved repayment plans that, in many cases, increased the monthly cost of the loan to make up for missed payments. That’s one reason more than half of borrowers who had worked out new mortgage terms redefault within six months, according to the OCC, which regulates nationally charted banks.

For the past two years, Congress has considered a number of proposals to try to keep struggling homeowners in their homes. Much of the debate has centered on how much taxpayer money — if any — should be applied to the problem. That debate continues to slow progress on adopting these proposals.

Some longstanding proposals have advancing slowly through Congress. One of those would overhaul the Hope for Homeowners program Congress set up last year with the goal of helping more than 400,000 homeowners swap unaffordable adjustable mortgages for 30-year loans with fixed rates. Tight restrictions and high fees left that program out of reach for all but 25 homeowners who have been approved to date.

Story continues below ↓advertisement | your ad here

The White House foreclosure package is also expected to try to break the logjam at the heart of the problem homeowners face trying to modify their mortgage to more affordable terms: the enormous legal complexity created when trillions of dollars worth of mortgages were bundled into pools and sold off to investors. Loan servicing companies — originally hired to collect payments from homeowners and distribute them to investors — have been slow to respond to modification requests, in part because they fear being sued by investors.

Share your stories

Baby boomers losing their jobs in this recession face multiple challenges – including the difficulty of finding another job that pays as well as the one they lost. With retirement funds in tatters, they also have less time than younger workers to rebuild their nest eggs. Are you facing these challenges? If so, we want to hear from you. Selected responses will be published in an upcoming story.

Y

Under a program overseen by Federal Deposit Insurance Corp. Chairwoman Sheila Bair, standard guidelines were developed to speed the modification of mortgages held by the failed IndyMac Bank, which the government seized last year. The program also provides financial incentives to servicers to modify loans and gives them legal protection if they follow certain standard guidelines.

Both the Treasury and the Federal Reserve also have been exploring ways to make mortgages more affordable to help stimulate demand for housing.

By far the most controversial proposal to break the loan modification logjam would change bankruptcy law to allow judges to modify loans from the bench — as they’re able to do for all other forms of consumer debt. This so-called “cramdown” idea has been floated several times since the crisis began but has been vigorously opposed by the financial services industry.

Lenders argue they would have to charge higher rates to offset the increased risk that a judge would forgive part of a loan in bankruptcy court. Proponents counter that the risk is no higher than for any other form of secured credit subject to modification, and that any increased borrowing cost would be relatively small.

But the proposal is getting another look. On Tuesday, Geithner told Congress changes in the bankruptcy law “will be an important part of the president’s plan.”

“At that same time, we want to do it very, very carefully,” Geithner testified, “because this is a delicate situation, complicated balance. And we want to make sure we’re not making the process worse as we go forward.”

To date, industry efforts to halt the pace of foreclosures have proved inadequate. According to the Office of the Comptroller of the Currency, more than half of the 287,755 mortgage workouts in the third quarter of 2008 involved repayment plans that, in many cases, increased the monthly cost of the loan to make up for missed payments. That’s one reason more than half of borrowers who had worked out new mortgage terms redefault within six months, according to the OCC, which regulates nationally charted banks.

For the past two years, Congress has considered a number of proposals to try to keep struggling homeowners in their homes. Much of the debate has centered on how much taxpayer money — if any — should be applied to the problem. That debate continues to slow progress on adopting these proposals.

Some longstanding proposals have advancing slowly through Congress. One of those would overhaul the Hope for Homeowners program Congress set up last year with the goal of helping more than 400,000 homeowners swap unaffordable adjustable mortgages for 30-year loans with fixed rates. Tight restrictions and high fees left that program out of reach for all but 25 homeowners who have been approved to date.

Story continues below ↓advertisement | your ad here

The White House foreclosure package is also expected to try to break the logjam at the heart of the problem homeowners face trying to modify their mortgage to more affordable terms: the enormous legal complexity created when trillions of dollars worth of mortgages were bundled into pools and sold off to investors. Loan servicing companies — originally hired to collect payments from homeowners and distribute them to investors — have been slow to respond to modification requests, in part because they fear being sued by investors.

Share your stories

Baby boomers losing their jobs in this recession face multiple challenges – including the difficulty of finding another job that pays as well as the one they lost. With retirement funds in tatters, they also have less time than younger workers to rebuild their nest eggs. Are you facing these challenges? If so, we want to hear from you. Selected responses will be published in an upcoming story.

Y.

Under a program overseen by Federal Deposit Insurance Corp. Chairwoman Sheila Bair, standard guidelines were developed to speed the modification of mortgages held by the failed IndyMac Bank, which the government seized last year. The program also provides financial incentives to servicers to modify loans and gives them legal protection if they follow certain standard guidelines.

Both the Treasury and the Federal Reserve also have been exploring ways to make mortgages more affordable to help stimulate demand for housing.

By far the most controversial proposal to break the loan modification logjam would change bankruptcy law to allow judges to modify loans from the bench — as they’re able to do for all other forms of consumer debt. This so-called “cramdown” idea has been floated several times since the crisis began but has been vigorously opposed by the financial services industry.

Click for related content

Why it’s so hard to modify a mortgage

‘Pay option’ loans could swell defaults

Foreclosure solutions won’t be easy

Lenders argue they would have to charge higher rates to offset the increased risk that a judge would forgive part of a loan in bankruptcy court. Proponents counter that the risk is no higher than for any other form of secured credit subject to modification, and that any increased borrowing cost would be relatively small.

But the proposal is getting another look. On Tuesday, Geithner told Congress changes in the bankruptcy law “will be an important part of the president’s plan.”

“At that same time, we want to do it very, very carefully,” Geithner testified, “because this is a delicate situation, complicated balance. And we want to make sure we’re not making the process worse as we go forward.”

Grab Your Torch ‘n Pitchforks! At-risk homeowners storm mansions of mortgage CEOs

Grab Your Torch ‘n Pitchforks! At-risk homeowners storm mansions of mortgage CEOs

By JENNIFER MILLMAN

Updated 6:13 AM EST, Mon, Feb 9, 2009

Related Topics: United States

Hundreds of people trying to save their homes from foreclosure flocked to Connecticut’s wealthy Gold Coast this weekend to give financial kingpins a piece of their mind.

Watch Video

At-risk homeowners and volunteers rally outside the homes of CEOs in the mortgage industry to protest predatory lending.

“We Are Victims”

close

Here are some of the financial CEOs who NACA says prey on homeowners. Victims who want their voices heard can find their contact info on the organization’s…

Stamford sits in the midst of one of the nation’s wealthiest areas, and among the regions particularly hard-hit by the housing market collapse. Nearby Greenwich and other suburbs are home to many of Wall Street’s wealthiest executives and financial managers.

Homeowners are fed up – and many are frustrated that those who lead the companies that gave them their subprime mortgages live in luxury while they struggle so hard to meet their loan payments and not fall behind.

On Sunday, hundreds of angry homeowners and volunteers traveled in vans and minibuses and protested outside Morgan Stanley CEO John Mack’s multi-million-dollar mansion to tell the wealthy finance czar how they really feel.

The group, led by Neighborhood Assistance Corporation of America (NACA), also went to Greenwich Finance CEO William Frey, among others, as part of what NACA calls the “Predator’s Tour.”

Sporting bright yellow shirts that read, “Stop Loan Sharks,” protestors demanded more accountability from the CEOs of the financial institutions responsible for the millions of unaffordable mortgages in the state and across America.

“We can’t let them live quietly in a lap of luxury while they throw hard working Americans out on the street,” NACA explains on its Web site. “This action is within our legal rights as Americans to peacefully protest and meet with those who control our family’s livelihood.”

NACA coordinated the protest as part of its “Save the Dream” forum – a weekend of workshops to counsel stressed-out homeowners on ways to refinance their mortgages amid the nation’s housing market meltdown.

Related Stories

Event organizers expected thousands to show up throughout the weekend for financial advice and mortgage assistance. NACA has helped restructure thousands of mortgages to arrangements homeowners can afford.

None of the protestors were arrested.

Copyright Associated Press / NBC New York

http://www.youtube.com/watch?v=_NMu1mFao3w&eurl=http://www.godlikeproductions.com/forum1/message723757/pg1&feature=player_embedded

<object width=”425″ height=”344″><param name=”movie” value=”http://www.youtube.com/v/_NMu1mFao3w&color1=0xb1b1b1&color2=0xcfcfcf&feature=player_embedded&fs=1″></param><param name=”allowFullScreen” value=”true”></param><embed src=”http://www.youtube.com/v/_NMu1mFao3w&color1=0xb1b1b1&color2=0xcfcfcf&feature=player_embedded&fs=1” type=”application/x-shockwave-flash” allowfullscreen=”true” width=”425″ height=”344″></embed></object>

U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes

U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes

By Mark Pittman and Bob Ivry

Feb. 9 (Bloomberg) — The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.

The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged to provide up to $5.7 trillion more if needed. The total already tapped has decreased about 1 percent since November, mostly because foreign central banks are using fewer dollars in currency-exchange agreements called swaps. The Senate is to vote early this week on a stimulus package totaling at least $780 billion that President Barack Obama says is needed to avert a deeper recession. That measure would need to be reconciled with an $819 billion plan the House approved last month.

Only the stimulus package to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates approved in 2008 have been voted on by lawmakers. The remaining $8 trillion in commitments are lending programs and guarantees, almost all under the authority of the Fed and the FDIC. The recipients’ names have not been disclosed.

“We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?”

Financial Rescue

The pledges, amounting to almost two-thirds of the value of everything produced in the U.S. last year, are intended to rescue the financial system after the credit markets seized up about 18 months ago. The promises are composed of about $1 trillion in stimulus packages, around $3 trillion in lending and spending and $5.7 trillion in agreements to provide aid.

Federal Reserve lending to banks peaked at a record $2.3 trillion in December, dropping to $1.83 trillion by last week. The Fed balance sheet is still more than double the $880 billion it was in the week before Sept. 17 when it agreed to accept lower-quality collateral.

The worst financial crisis in two generations has erased $14.5 trillion, or 33 percent, of the value of the world’s companies since Sept. 15; brought down Bear Stearns Cos. and Lehman Brothers Holdings Inc.; and led to the takeover of Merrill Lynch & Co. by Bank of America Corp.

The $9.7 trillion in pledges would be enough to send a $1,430 check to every man, woman and child alive in the world. It’s 13 times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office data, and is almost enough to pay off every home mortgage loan in the U.S., calculated at $10.5 trillion by the Federal Reserve.

‘All the Stops’

“The Fed, Treasury and FDIC are pulling out all the stops to stop any widespread systemic damage to the economy,” said Dana Johnson, chief economist for Comerica Inc. in Dallas and a former senior economist at the central bank. “The federal government is on the hook for an awful lot of money but I think it’s needed to help the financial system recover.”

Bloomberg News tabulated data from the Fed, Treasury and FDIC and interviewed regulators, economists and academic researchers to gauge the full extent of the government’s rescue effort.

Commitments may expand again soon. Treasury Secretary Timothy Geithner postponed an announcement scheduled for today that was to focus on new guarantees for illiquid assets to insure against losses without taking them off banks’ balance sheets. The Treasury said it would delay the announcement until after the Senate votes on the stimulus package.

Program Delay

The government is already backing $301 billion of Citigroup Inc. securities and another $118 billion from Bank of America. The government hasn’t yet paid out on any of the guarantees.

The Fed said Friday that it is delaying the start a $200 billion program called the Term Asset-Backed Securities Loan Facility, or TALF, to revive the market for securities based on consumer loans such as credit-card, auto and student borrowings.

Most of the spending programs are run out of the Federal Reserve Bank of New York, where Geithner served as president. He was sworn in as Treasury secretary on Jan. 26.

When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and then Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. The Federal Reserve so far is refusing to disclose loan recipients or reveal the collateral they are taking in return. Collateral is an asset pledged by a borrower in the event a loan payment isn’t made.

Fed Sued

Bloomberg requested details of Fed lending under the Freedom of Information Act and filed a federal lawsuit against the central bank Nov. 7 seeking to force disclosure of borrower banks and their collateral. Arguments in the suit may be heard as soon as this month, according to the court docket. Bloomberg asked the Treasury in an FOIA request Jan. 28 for a detailed list of the securities it planned to guarantee for Citigroup and Bank of America. Bloomberg hasn’t received a response to the request.

The Bloomberg lawsuit is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan).

For Related News and Information:

To contact the reporters on this story: Mark Pittman in New York at mpittman@bloomberg.net ; Bob Ivry in New York at bivry@bloomberg.net .

Last Updated: February 9, 2009 00:01 EST

FORECLOSURES: TILA RIGHT OF RESCISSION and CONSEQUENCES

FORECLOSURES: TILA RIGHT OF RESCISSION and CONSEQUENCES May 7, 2008 · 30 Comments Seminars for Layman (Pro Se Litigants) and For Lawyers TILA RIGHT OF RESCISSION and CONSEQUENCES TRUTH IN LENDING FEDERAL CIVIL COURT, FEDERAL BANKRUPTCY, STATE COURT INFORMATION THIS POST RELATES ONLY TO RESCISSION UNDER TILA.

IT SHOULD BE REMEMBERED THAT THERE ARE MULTIPLE GROUNDS FOR RESCISSION AND CANCELLATION OF THESE NOTES AND POSSIBLY TREBLE DAMAGES FOR USURY. SEE HOLDER IN DUE COURSE IN GLOSSARY. I have been inundated with TILA questions. So I went out hunting to see if anyone had already written about it in terms that a lay person might be able to understand. What I found is shown below. I believe it to be generally correct and the citations are good citations of law. See this site for the entire write-up. It should give most lay people an idea on how to handle this and it will be valuable to your lawyer if he/she is not totally familiar with the TILA context.

http://www.rcxloan.com/Civil_Action__BK__Motion_14.htm. As always, we are available to answer questions and direct you to the proper people to get expert help and advice.

MY ANSWER TO OUR READER’S QUESTIONS: 1. TILA Rescission is self enforcing. It automatically extinguishes the lien and the liability. The time for rescission does not run until you actually knew the full scope of the violation.

That is tantamount to it never running out.

2. YOU CAN ASSERT AND SHOULD ASSERT TILA VIOLATIONS IF YOU CAN BEFORE YOU ARE IN FORECLOSURE OR EVEN IF YOU ARE CURRENT IN YOUR PAYMENTS.

3. Judge is required to look for authority himself if you are representing yourself without a lawyer (pro se). This provision in effect makes the Judge your lawyer and your Judge.

Pretty good combination for you. 4. Judge has no discretion to deny damages, refunds etc to Borrower once a violation of TILA, no matter how small, is discovered.

5. TILA Rescission is NOT barred before during or after other proceedings unless those other proceedings specifically mention rescission as an issue to be tried.

6. Federal Action for injunction against the players to require them to file documents canceling the documents of record and providing judgment for damages and refunds is probably the best action since that is what is contemplated.

7. If in bankruptcy, it should be pled in an adversary proceeding. But if the bankruptcy is primarily related to the foreclosure the better practice would be to file in the same Federal Court, Civil Division, a complaint for violation of TILA rescission.

8. A Quiet TItle Action in State Court would probably also be a good idea before, during or after the Federal action. It clears up any doubt whatsoever about the status of title or the lender’s lien or encumbrances.

9. THIS IS INFORMATION YOU NEED BECAUSE THE LATEST LENDER STRATEGY SEEMS TO BE FOR THE LENDER TO IGNORE THE RESCISSION NOTICE. THE LENDER IS BETTING YOU WON’T KNOW WHAT TO DO.

10. Suggestion: If you are in Court and you have opted or are ordered to settlement, try to get a paragraph in the mediation order that requires all decision-makers to be present, whether they are parties or not.

This would include the holders of securities who are the ultimate owners of the mortgage. (You may get a pleasant surprise. We have reports that the lenders sometimes can’t trace them down, in which case, the foreclosure action or sale is dismissed and you have no mortgage).

TILA & Res Judicata (Analogous to Mr. Pierre R. Augustin, Pro Se’s situation since he had never litigated fully or raised any TILA claims affirmatively or defensively) – A rescission action may not be barred by prior or subsequent TIL litigation which did not involve rescission (Smith v. Wells Fargo Credit Corp., 713 F. Supp. 354 (D. Ariz. 1989) (state court action involving, inter alia TIL disclosure violations did not bar a subsequent action based on rescission notice violations in conjunction with same transaction which were not alleged or litigated in prior action) (See also In re Laubach, 77 B.R. 483 (Bankr. E.D. Pa. 1987) (doctrine of merger bars raising state and federal law claims arising from a transaction on which a previous successful federal TILA action was based; merger does not bar, however, rescission-based on the same transaction)). IX. Timely Notified Lenders/Attorneys of TILA Right of Rescission Mr. Pierre R. Augustin, Pro Se filed a copy of the notice of rescission letter (See Exhibit 5) in the bankruptcy court notifying the attorneys representing DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance as well as having certified receipt return of proof of delivery to the Lawyers including are proof of notification according to the Official Staff Commentary, 226.2(a)(22)-2 as authorizing service on attorney.

The Truth-in-Lending law empower Mr. Pierre R. Augustin, Pro Se to exercise his right in writing by notifying creditors of his cancellation by mail to rescind the mortgage loan transactions per (Reg. Z §§ 226.15(a)(2), 226.23(a)(2), Official Staff Commentary § 226.23(a)(2)-1) and 15 U.S.C. § 1635(b).

Equitable Tolling The filing of Bankruptcy tolls or extends the rescission time as Mr. Pierre R. Augustin, Pro Se had filed for bankruptcy on September 26, 2005 and obtained a discharge on September 26, 2006. Also, the principle of equitable tolling does apply to TILA 3 years period of rescission since despite due diligence, Mr. Pierre R. Augustin, Pro Se could not have reasonably discovered the concealed fact of TILA violations in-depth and explicitly until September 17, 2006 at about 5 a.m. in reading the Truth-in-Lending book by the National Consumer Law Center.

The equitable tolling principles are to be read into every federal statute of limitations unless Congress expressly provides to the contrary in clear and ambiguous language, (See Rotella v. Wood, 528 U.S. 549, 560-61, 120 S. Ct. 1075, 145 L. Ed. 2d 1047 (2000)). Since TILA does not evidence a contrary Congressional intent, its statute of limitations must be read to be subject to equitable tolling, particularly since the act is to be construed liberally in favor of consumers.

Security Interest is Void The statute and regulation specify that the security interest, promissory note or lien arising by operation of law on the property becomes automatically void. (15 U.S.C. § 1635(b); Reg. Z §§ 226.15(d)(1), 226.23(d)(1). As noted by the Official Staff Commentary, the creditor’s interest in the property is “automatically negated regardless of its status and whether or not it was recorded or perfected.”

(Official Staff Commentary §§ 226.15(d)(1)-1, 226.23(d)(1)-1.). Also, the security interest is void and of no legal effect irrespective of whether the creditor makes any affirmative response to the notice. Also, strict construction of Regulation Z would dictate that the voiding be considered absolute and not subject to judicial modification.

This requires DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance to submit canceling documents creating the security interest and filing release or termination statements in the public record. (Official Staff Commentary §§ 226.15(d)(2)-3, 226.23(d)(2)-3.) Extended Right of Rescission The statute and Regulation Z make it clear that, if Mr. Pierre R. Augustin, Pro Se has the extended right and chooses to exercise it, the security interest and obligation to pay charges are automatically voided. (Cf. Semar v. Platte Valley Fed. Sav. & Loan Ass’n, 791 F.2d 699, 704-05 (9th Cir. 1986) (courts do not have equitable discretion to alter substantive provisions of TILA, so cases on equitable modification are irrelevant). The statute, section 1635(b) states: “When an obligor exercises his right to cancel…, any security interest given by the obligor… becomes void upon such rescission”. Also, it is clear from the statutory language that the court’s modification authority extends only to the procedures specified by section 1625(b). The voiding of the security interest is not a procedure, in the sense of a step to be followed or an action to be taken. The statute makes no distinction between the right to rescind in three day or extended in three years for federal and four years under Mass. TILA, as neither cases nor statute give courts equitable discretion to alter TILA’s substantive provisions. Since the rescission process was intended to be self-enforcing, failure to comply with the rescission obligations subjects DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance to potential liability. XIII. Non-Compliance Non-compliance is a violation of the act which gives rise to a claim for actual and statutory damages under 15 USC 1640. TIL rescission does not only cancel a security interest in the property but it also cancels any liability for the Mr. Pierre R. Augustin, Pro Se to pay finance and other charges, including accrued interest, points, broker fees, closing costs and that the lender must refund to Mr. Pierre R. Augustin, Pro Se all finance charges and fees paid. In case DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance do not respond to this default letter, Mr. Pierre R. Augustin, Pro Se has the option of enforcing the rescission right in the federal, bankruptcy or state court (See S. Rep. No. 368, 96th Cong. 2 Sess. 28 at 32 reprinted in 1980 U.S.C.A.N. 236, 268 (“The bill also makes explicit that a consumer may institute suit under section 130 [15 U.S.C., 1640] to enforce the right of rescission and recover costs and attorney fees”). TIL rescission does not only cancel a security interest in the property but it also cancels any liability for Mr. Pierre R. Augustin, Pro Se to pay finance and other charges, including accrued interest, points, broker fees, closing costs and the lender must refund to Mr. Pierre R. Augustin, Pro Se all finance charges and fees paid. Thus, DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance are obligated to return those charges to Mr. Pierre R. Augustin, Pro Se (Pulphus v. Sullivan, 2003 WL 1964333, at *17 (N.D. Apr. 28, 2003) (citing lender’s duty to return consumer’s money as reason for allowing rescission of refinanced loan); McIntosh v. Irwing Union Bank & Trust Co., 215 F.R.D. 26 (D. Mass. 2003) (citing borrower’s right to be reimbursed for prepayment penalty as reason for allowing rescission of paid-off loan). XIV. Sources of Law in Truth in Lending Cases “These include TILA itself, the Federal Reserve Board’s Regulation Z which implements the Act, the Official Staff Commentary on Regulation Z, and case law. Except where Congress has explicitly relieved lenders of liability for noncompliance, it is a strict liability statute. (Truth-In-Lending, 5th Edition, National Consumer Law Center, 1.4.2.3.2, page 11) XV. Synopsis of How Rescission Works The process starts with the consumer’s notice to the creditor that he or she is rescinding the transaction. As the bare bones nature of the FRB model notice demonstrates, it is not necessary to explain why the consumer is canceling. The FRB Model Notice simply says: “I WISH TO CANCEL,” followed by a signature and date line (Arnold v. W.D.L. Invs., Inc., 703 F.2d 848, 850 (5th cir. 1983) (clear intention of TILA and Reg. Z is to make sure that the creditor gets notice of the consumer’s intention to rescind)). The statute and Regulation Z states that if creditor disputes the consumer’s right to rescind, it should file a declaratory judgment action within the twenty days after receiving the rescission notice, before its deadline to return the consumer’s money or property and record the termination of its security interest (15 USC 1625(b)). Once the lender receives the notice, the statute and Regulation Z mandate 3 steps to be followed. XVI. Step One of Rescission First, by operation of law, the security interest and promissory note automatically becomes void and the consumer is relieved of any obligation to pay any finance or other charges (15 USC 1635(b); Reg. Z-226.15(d)(1),226.23(d)(1). . See Official Staff Commentary § 226.23(d)(2)-1. (See Willis v. Friedman, Clearinghouse No. 54,564 (Md. Ct. Spec. App. May 2, 2002) (Once the right to rescind is exercised, the security interest in the Mr. Pierre R. Augustin’s property becomes void ab initio). Thus, the security interest is void and of no legal effect irrespective of whether the creditor makes any affirmative response to the notice. (See Family Financial Services v. Spencer, 677 A.2d 479 (Conn. App. 1996) (all that is required is notification of the intent to rescind, and the agreement is automatically rescinded). It is clear from the statutory language that the court’s modification authority extends only to the procedures specified by section 1635(b). The voiding of the security interest is not a procedure, in the sense of a step to be followed or an action to be taken. The statute makes no distinction between the right to rescind in 3-day or extended as neither cases nor statute give courts equitable discretion to alter TILA’s substantive provisions. Also, after the security interest is voided, secured creditor becomes unsecured. (See Exhibit #6) XVII. Step Two of Rescission Second, since Mr. Pierre R. Augustin has legally rescinded the loans transaction, the mortgage holders (DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance) must return any money, including that which may have been passed on to a third party, such as a broker or an appraiser and to take any action necessary to reflect the termination of the security interest within 20 calendar days of receiving the rescission notice which has expired. The creditor’s other task is to take any necessary or appropriate action to reflect the fact that the security interest was automatically terminated by the rescission within 20 days of the creditor’s receipt of the rescission notice (15 USC 1635(b); Reg. Z-226.15(d)(2),226.23(d)(2). XIII. Step Three of Rescission Mr. Pierre R. Augustin is prepared to discuss a tender obligation, should it arise, and satisfactory ways in which to meet this obligation. The termination of the security interest is required before tendering and step 1 and 2 have to be respected by DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance XIV. Conclusion I am requesting an itemized statement of my payment record to DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance. When Mr. Pierre R. Augustin rescinds within the context of a bankruptcy, courts have held that the rescission effectively voids the security interest, rendering the debt, if any, unsecured (See Exhibit #6). (See in re Perkins, 106 B.R. 863, 874 (Bankr. E.D.Pa. 1989); In re Brown, 134 B.R. 134 (Bankr. E.D.Pa. 1991); In re Moore, 117 B.R. 135 (Bankr.E.D. Pa. 1990)). Once the court finds a violation such as not responding to the TILA rescission letter, no matter how technical, it has no discretion with respect to liability (in re Wright, supra. At 708; In re Porter v. Mid-Penn Consumer Discount Co., 961 F,2d 1066, 1078 (3d. Cir. 1992); Smith v. Fidelity Consumer Discount Co., Supra. At 898. Any misgivings creditors may have about the technical nature of the requirements should be addressed to Congress or the Federal Reserve Board, not the courts. Since DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance have not cancelled the security interest and return all monies paid by Mr. Pierre R. Augustin within the 20 days of receipt of the letter of rescission of September 21, 2006, the lenders named above are responsible for actual and statutory damages pursuant to 15 U.S.C. § 1640(a). Once again, please send me a copy of my payment history and other document showing the loan disbursements, loan charges and payment made. Also, DanversBank, Ameriquest Mortgage, Commonwealth Land Title Insurance Company, New Century Mortgage and Chase Home Finance are to take any necessary or appropriate action to reflect the fact that the security interest was automatically terminated by the rescission (15 USC 1635(b); Reg. Z-226.15(d)(2),226.23(d)(2). This requires canceling documents creating the security interest and filing release or termination statements in the public record of FREE and CLEAR TITLE to Mr. Pierre R. Augustin. Thank you (TTTLMG). May GOD Bless America, Pierre Richard Augustin, Pro Se, MPA, MBA 28 Cedar Street, Lowell, MA 01852 Tel: 617-202-8069 TILA Pleading Under the Federal Rules of Civil Procedures, it may be sufficient to plead that the TILA has been violated. (Fed.R. Civ. P. 8(a)). Specific violations do not necessarily have to be alleged with particularity (Brown v. Mortgagestar, 194 F. Supp. 2d 473 (S.D. W. Va. 2002) (notice pleading is all that is required in TILA case); Herrara v. North & Kimball Group, Inc., 2002 WL 253019 (N.D. Ill. Feb.. 20, 2002) (notice pleading sufficient; response to motion to dismiss can supplement complaint by alleging facts re specific documents assigned); Staley v. Americorp. Credit Corp., 164 F. Supp. 2d 578 (D. Md. 2001) (Mr. Pierre R. Augustin, Pro Se need not specify specific statute or regulations that entitle him to relief; court will examine complaint for relief on any possible legal theory); Hill v. GFC Loan Co., 2000 U.S. Dist. Lexis 4345 (N.D. Ill. Feb. 15, 2000). The consumer’s complaint need not plead an error exceeded the applicable tolerance, since this is an affirmative defense (Inge v. Rock Fin. Corp., 281 F.3d 613 (6th cir. 2002)). In page 2 (See Exhibit 1) of Mr. Pierre R. Augustin, Pro Se’s civil complaint, he stated that TILA was in of the Jurisdiction of all the claims against the creditors or defendants in that civil action. At #6 of page 14 (See Exhibit 2) of civil complaint, Mr. Pierre R. Augustin, Pro Se explicitly stated that the New Century Mortgage Note which is now assigned to Chase is in violation of TILA and Regulation Z claims. In page 17 of the civil complaint, Mr. Pierre R. Augustin, Pro Se did mention rescission and statutory damages (See Exhibit 3).Neil Garfield

An Open Letter to my Two Mortgage Companies

from:

http://blog.stealthmode.com/2009/02/06/an-open-letter-to-my-two-mortgage-companies/

February 6, 2009…12:00 pm

Jump to Comments

Dear Aurora Loan Services (a unit of Lehmann Brothers) and Citibank Mortgage (who took the TARP money):

Between the two of you, you hold my fate in your hands. In July 2005, approaching 65 years of age and having been an enrepreneur for forty years, I bought a home in Half Moon Bay, about three miles from one of my daughters. I put 10% down and got a 5-year interest-only mortgage for about $576,000 and a HELOC at prime +2 for the remainder, about $154,000.

I was really happy to live close to my daughter, and the two of us encouraged my other daughter to move home from the Netherlands to join us. For three years, everything seemed fine. I made friends, I continued to run my business in Arizona, invest in my startup companies, and assume I’d be in Half Moon Bay full time one day. Prescient about Arizona real estate, I sold my house there and rented.

And then two people on my block in Half Moon Bay had to use short sales to get themselves out of their obligations, and the value of my home suddenly dropped. All of a sudden, the home I paid $769,000 for, and then spent $45,000 modernizing, thinking I’d live in it for at least ten years, became worth $699,000.

I’m no dope; I’ve been in business all my life. I saw everybody starting to turn in their keys. I knew it was a bad financial decision to keep paying on the mortgage, but I was loving the house, spending quite a bit of time in Half Moon Bay as my daughter was now pregnant, and determined to make it through this momentary drop.

And then November came, and the value of my house dropped to about $659,000. More important, my business began to go away. And I mean go away. Suddenly, four deals I was in, all of them capable of making me financially secure, either fell out of escrow or went on “hold.”

However, Obama got elected, and I kept on paying. I did make a call to you at Aurora in December, asking if I could get some help, and you advised me that you couldn’t help me because I wasn’t behind. Of course I wasn’t: I was struggling to preserve my excellent credit.

Well now it’s February. I am scrambling for small projects. My deals recede in the background under the weight of our crumbling economy. Congress argues over the stimulus bill. And I have taken a deep breath and realized I am going to fall behind on this mortgage.

Like Rome, I am burning while Congress fiddles. And I’m not getting any younger. I’m an optimistic person, a healthy person, and a person willing and anxious to work. No, I don’t want to move in with my daughters. I want to ask you to re-finance my mortgage at the current value of my house at a 4.2% rate, like everyone in Congress is suggesting.

Otherwise, I have to let you foreclose. And this will not benefit you or me. Me, it will ruin my credit. You, it will give you yet another foreclosed property to sell at even less than if I could keep it for a few years and then sell it for you. And it will further erode the property values in my little subdivision, full of other families.

Do I want to bare my soul to you, or to the online world? Of course not. But my highest and best use right now is to offer myself as an example, a data point. I’m articulate. I’m not a person who should never have been given a mortgage. Not an uneducated victim of a greedy mortgage broker. And not a speculator. Just a person caught in something much bigger than all of us.

I’d like to take a moment to thank my parents and all my teachers, who gave me the gift of writing, so I can at least convey my feelings to the world. Namaste.

Are Banks Liable for Madoff Losses?

Are Banks Liable for Madoff Losses?

Plaintiffs Say Yes, Argue Multiple Theories

Posted 43 minutes ago

By Martha Neil

It’s a bad time to be a bank with any connection to the alleged $50 billion Ponzi scheme that Bernard Madoff is accused of running, or any other such claimed investment swindle. Seeking to recover from banks assets that may not be recoverable from those alleged to be directly responsible for investment losses, lawyers representing cleaned-out investors are making a number of legal arguments in an effort to hold the financial institutions liable. Among them, a federal lawsuit in the Southern District of Florida is raising questions about “the flow of fees and information” between Banco Santander S.A. and its subsidiary, Optimal Investment Services S.A., which invested with Madoff, reports the National Law Journal. The litigation, which is being pursued on a class action basis, asserts claims including federal securities laws violations, breach of fiduciary duty, negligent misrepresentation, gross negligence and unjust enrichment. And, even though it recently scored a trial court victory in federal court in Massachusetts, another Santander subsidiary, Sovereign Bank, is still being pursued by a receiver for allegedly ignoring obvious red flags concerning funds held there by convicted Ponzi schemer Bradford Bleidt, the article continues. Boston solo practitioner David Fine is seeking a new trial on breach of fiduciary duty and negligence claims. The bank should have known that the deposits of investor funds being made by Bleidt didn’t conform with requirements of the U.S. Securities and Exchange Commission, he contends. “This clearly was the wrong kind of account.” A Santander attorney didn’t respond to a request for comment from the NLJ. Meanwhile, Westport National Bank is on the hot seat after investing some $60 million of customer funds with Madoff in a single account in the bank’s own name, reports the New York Times. The problem is, this scenario may result in the Securities Investors Protection Corp.applying its six-figure insurance limit concerning misappropriated cash and securities to the one account in the bank’s name, rather than applying the same limit to each individual’s holdings. The latter approach obviously would be likely to result in exponentially increased protection for investors. (Questions have been raised in earlier news accounts, however, about whether the SIPC will be able to pay out the full amount insured to all investors, given the massive claimed losses from the Madoff fund and the SIPC’s relatively limited assets.) Westport National Bank has said in earlier statements that customers knew what they were doing and emphasized that it did not provide any investment advice. It also told customers in a recent letter that it plans to urge the SIPC to treat customers’ funds as though they had been in separate accounts, according to the Times.

Your Bank Didn’t Loan You Any Money, and They Can’t Foreclose On Your House

www.foreclosurefish.com

March 25, 2008, 3:33 pm
Posted by Nick in Legal Information
Rating: 0/5   Votes : 0

digg_skin = ‘compact’;

The following article should probably be considered for educational or entertainment purposes only. It is rare to find such a knowledgeable judge working for government that puts the interest of the individual over the financial interests of the banks and their system of credit and money creation. Homeowners facing foreclosure should absolutely be aware of this case and the arguments, but taking any of this as actual legal advice should be warned against.I first stumbled across the very curious case of Jerome Daly through an article by Ellen Brown, author of the book Web of Debt. It concerns a foreclosure case in Minnesota in 1968 that has yet to be overturned, and the issues go straight to the heart of the sleight of hand that the banking system is built upon. The case also presents an optimistic view of how individuals can take back the power to create money from the private banks.

Jerome Daly was a homeowner living in Minnesota who stopped paying his mortgage. The lender, First National Bank of Montgomery, of course, sued the man for foreclosure. Daly presented his argument before a jury as to why he did not owe the bank anything.

Essentially, he argued that the bank had not provided any consideration for Daly’s promise to pay back the loan. Consideration is one of the requirements for a valid contract, and without it, a contract is void. Daly was arguing that the mortgage contract was void and did not need to be repaid because the bank had not actually given him any money. The lender had created the money out of thin air in response to the promise to repay the loan.

This credit, argued Daly, was not real money that counted as consideration and therefore did not need to be paid back. Without valid consideration, the mortgage contract was null and void and nothing was owed to the bank. Astoundingly enough, the jury agreed with him and declared that the mortgage was not a valid contract.

The judge and a representative testifying on behalf of the bank also agreed with Daly’s argument, in effect. The bank’s president, Mr. Morgan, admitted that the money did not exist until Daly was given the mortgage, and the money was created out of thin air.

The judge wrote a supporting decision in the case agreeing with Daly, writing “The money and credit first came into existence when they created it. Mr. Morgan [the bank's president] admitted that no United States Law or Statute existed which gave him the right to do this.” Thus, the lending of the money to Daly in the form of a mortgage did not constitute valid consideration. The bank did not even have the authority to create money out of thin air according to any known law or statute.

This case has been suppressed far more than argued against, and it has not been overturned. What this means to homeowners facing foreclosure is that they may not even owe their bank any money, and the lender is trying to take the home to pay an illegal contract. This case is, quite possibly, a get out of debt-jail free card.

But that does not mean that the local judges will allow these kinds of rational arguments in their courtrooms. Just because mortgage contracts can be proven invalid and the lending system a scam does not mean that corrupt judicial systems will allow the truth to be told about the equally-corrupt banking system. Political power and money work hand-in-hand.

Thus, it should not be surprising that people who have used the Daly arguments to protect against foreclosure have not always been successful in finding a court to listen to them. Rubber stamping foreclosure lawsuits generates good money for lawyers in the form of legal fees and for local county courts in the form of filing fees. (Of course, neither of these parties seem to be aware that the money they are helping to steal was created out of thin air itself, and they are selling out fellow human beings to an illusion.)

Homeowners, as I mentioned above, should be aware of this argument, because it shows the banking system to be the scam that it is. Now that so many more homeowners were given bad loans and are losing their houses because of them, will more of them rely on the argument of a void mortgage contract and the unconstitutionality of the monetary system itself? That remains to be seen, but it is a convincing, rational, and very interesting argument that Daly put forth. Even more interesting is that the judge and jury agreed with him.

But, on the less interesting side will always be the corrupt judges, lawyers, and others who benefit from the banking scam. As one of them stated in regards to this issue, “If I let you do that — you and everyone else — it would bring the whole system down… I cannot let you go behind the bar of the bank… We are not going behind that curtain!” The “whole system” supports the banks and the government — why should we expect them to help people defend against unlawful acts and contracts?