Porkticia got me on the last thread:

There is an untapped source of architecture business for firms that want to make rain. It's helping local governments get projects shovel-ready for stimulus funding, earmarks, and grants. Congress won't fund ground-up bricks and mortar, but it will fund renovations.

Stevens deserves kudos for this: "Mr. Stevens suspended the FHA license for Taylor, Bean & Whitaker Mortgage Corp., one of the nation's top lenders, amid concerns that the company was originating too many bad loans. Taylor Bean closed its doors the next day. That same month, FHA cut off Lend America, another major lender, which also closed."

It's interesting to watch everybody label a collapse in social and moral order an "economic problem" and then try to solve it as such.

Funny things happen when economists run nations.

BTW, note the more fundamental problem of over-application of reductionism.

Mr. Stevens knows the industry well. He is the first FHA commissioner in nearly two decades to bring extensive private-sector experience to the job. During the 1980s, he was a top salesman of complex adjustable-rate mortgages for World Savings Bank, a California thrift. He went on to hold senior jobs at housing-finance giant Freddie Mac and at Wells Fargo & Co.

Fox. Henhouse. Taylor, Bean & Whitaker enforcement action belies his background.

Feckless Ness wrote:

Fox. Henhouse. Taylor, Bean & Whitaker enforcement action belies his background.

That looks less like a fox and more like a wolf. Perhaps he's after something bigger than chickens?

"A rising median price, as a indication of price declines moving up the food chain, is of interest to me, if pricing remains flat in the more affordable housing."

I was just gonna say - the only thing a rising median means to me is that higher end borrowers are starting to capitulate.

Also, not sure why, but I find higher end borrowers are less likely to go to foreclosure but more likely to do a short sale (though I have zero data to back that up, just an observation), if this is accurate, as short sales increase the median should increase, all else equal.

Only marginally on topic . . .

I've been reading Calvin Tomkins's New Yorker article on the South African artist William Kentridge. In it, there are a few lines regarding the post-Apartheid use of a Truth and Reconciliation Commission to deal with the atrocities committed under the retiring regime.

If we're not to have justice, or if we're to watch a token response to widespread fraud, I wonder if we might not be advised to consider a compromise - exchanging immunity for the details of failure. The relevant quote:

The transfer of power from the outgoing government to Mandela's party was fraught with tensions and uncertainties. "It seemed wonderful that we had a country transforming itself without the streets running in blood, and that we had a political compromise, but the price of the compromise was deeply felt," Kentridge said. "The main decision was to put the Truth and Reconciliation Commission in place with the understanding that terrible criminals would be let off scot-free as long as they told the truth about what they had done. There's a cost to pay for that kind of amnesty. The choice was made between truth and justice, and it meant not taking responsibility for your actions."

If, as it appears, we are not to see justice in the present situation, might we at least demand truth in exchange? Or will we settle for neither?

"but I believe HAMP et al had requirements like "mortgage was cleared by xxxxx date" that would disqualify "

sure, had to be originated before 1/1/09 I think, but the point is, if loans are being modified to a 31% DTI to be considered "affordable", what does that say about loans that are being originated today at 45DTI (or higher)? If 31 DTI is considered the height of affordability, shouldn't that be the de facto max for all new originations?

From the FHA article: Mr. Stevens, nevertheless, lashes out at critics who say the FHA is repeating the mistakes of subprime lenders. At a conference in November, Robert Toll, chief executive of luxury-home builder Toll Brothers Inc., referred to the FHA as "the new subprime" and "a definite train wreck" that will soon need a bailout, according to a transcript of his remarks.

sportsfan wrote:

every inch of rain puts 21,000 acre feet

LOL @ the units. Can you work furlongs into that?
Edit: An acre is one furlong by one chain, so every inch of rain puts 21,000 feet x furlongs x chains (a volume) into the aquifer.

"in the FHA article is an example of an FHA loan. The buyer is in his early 40s, and didn't have enough money saved to put 3.5% down (his dad helped and he paid him back with the FTHB tax credit)"

btw, I believe that is fraud, technically he is not allowed to borrow the money for the downpayment. If it was a gift, fine, but a loan is a no-no, it would not have passed underwriting.

Not that is would make much difference, at 3.5% down he is still a good 4% underwater right off the bat based on selling transaction fees.

"The ENEMY is Das Leihkapital. They’re working day and night, pickin’ your pockets. Every day and all day and all night pickin’ your pockets AND pickin’ the Russian workin’ man’s pockets. They call it international loan kapital. It is not international, it is not hypernational. It is subnational. A quicksand UNDER the nations, destroying all nations, destroying all law and government, destroying the nations, one at a time, Russian empire and Austria, 20 years past, France yesterday, England today."
Ezra Pound speaking, March 8, 1942.

Ezra Pound Speeking, 6-16

JP wrote:

LOL @ the units. Can you work furlongs into that?
Edit: An acre is one furlong by one chain.

Oh sure next you'll want cubits. Who do you think you are? Noah?

JP wrote:

Edit: An acre is one furlong by one chain.

Never heard that before, but it's true:

From wiki:

Originally, an acre was understood as a selion of land sized at one furlong (660 ft) long and one chain (66 ft) wide; this may have also been understood as an approximation of the amount of land an ox could plow in one day.

Kudos to Olick and hopefully the regulators are reading.

yeah, I bet the regulators are reading. Unfortunately, they are reading the society column to see if the ceo of the bank in question has any daughters/nieces they can marry when they 'investigate'.

arggh metric or bust, cut it out before I slug you

Overall, 8.3% of its U.S. residential portfolio is 90 days or more past due, an increase of 114 basis points from the third quarter.

In other words CR is going to have to update squatters 'bonus' contribution to PCE.

ac wrote:

BTW I want everbody to notice that when it comes to the weather I'm a bright eyed optimist and not at all doom and gloom.

That's only because you don't know about the giant computer in the basement of 85 Broad St. which controls the world's weather.

BTW: Your original statement works out to about 26M cubic meters per inch of rain, which sounds like a heckuva lot of water.

back in a 1st year physics class there was a 1 question pop quiz and the prof demanded the answer be in slugs just for fun. so I answered in whatever normal units because I didn't know, but I became cheesed when 2 other people in the room knew a slug was 32.2 lbs. It ended up being a non-factor in my mark, but I have never forgotten

sportsfan
measuring water in acre-feet is common, especially because land is measured in acres as a human-friendly measurement. I would just rather it be measured in mega litres and people over time can adjust their terms of reference.
there's a great piece of software called "frink", excellent for quick unit conversions, eg:
1 acre foot -> litres
150543360000/122047 (approx. 1233486.771489672)
1.233 ML (mega litres) is just so much smoother

ghostfaceinvestah wrote:

even though the dollar volume of its portfolio of housing receivables is declining.

that is not necessarily incongruous. It is possible that with the lower level of interest rates the prepayment risk of the portfolio has declined - thus its duration (and mark to market value) has increased offsetting the decline in the dollar volume outstanding. Also just using a lower discount rate could also give you the same outcome.

wow, calling for 20% of mortgages to enter some kind of default before this was all over used to be enough to get laughed at

corrected

ghostfaceinvestah wrote:

btw, I believe that is fraud, technically he is not allowed to borrow the money for the downpayment. If it was a gift, fine, but a loan is a no-no, it would not have passed underwriting.

it is my understanding that the FTHB credit explicitly allowed it to be used for making the down payment - further I beleive that it is a refundable tax credit so you get either way.

GDD9000 wrote:

If anyone came back to you and said it was a loan, how could they prove it was not a gift? Most often, the kid might say it is a loan, and perhaps intends to pay the money back, and even might say so, but if anything, the fact that they didnt have the money in the first place is a good indication that they arent likely to have the ability to pay it back in the future. So it ends up being a gift anyway.

Kind of makes me want to take a close look at Timmy's financing...

Yah, it's certainly trivia question material that slug is the unit of mass in our hairbrained system.

FYI: Google performs unit conversions as well, no need to add software. Just plug in 21000 acre feet in liters ... I've pretty much ditched my calculator

JP wrote:

BTW: Your original statement works out to about 26M cubic meters per inch of rain, which sounds like a heckuva lot of water.

That seemed way off somehow, so I went to the trusty conversion table and found it's a little over 1,233 cubic meters.

EvilHenry got the same result (though I've never used the term megaliters before).

["A $500,000 loan in Massachusetts is like a $300,000 loan in Nebraska," says Massachusetts Democratic Rep. Barney Frank, who favors raising limits to $800,000 in the most expensive markets. "All we're trying to do is control for geography."]

That Barney is a PoS purple dinosaur. Time for him to leave. He likes the taxpayers in Nebraska to pay for overpriced homes in MA. Let The market correct for geography, not taxpayers.

bearly wrote:

That Barney is a PoS purple dinosaur. Time for him to leave. He likes the taxpayers in Nebraska to pay for overpriced homes in MA. Let The market correct for geography, not taxpayers.

SO! They want us to pay for their health care!

(it's a joke...)

True - but the vote the bums out mentality comes into play, and Kennedy was a Dem and the Dems are in power. This does not bode well for one in tonight's result.

Mr Slippery wrote:

OK, no funnel cloud, but I snapped this full rainbow right after the storm clouds broke.

oooh, new icon request - :rainbow:

sportsfan wrote:

I've never used the term megaliters before . . .

I suppose to be truly sophisticated I would have to use "mega litres"

Republicans and Democrats are like Fords and Mercurys. Nothing different than the name plate.

EvilHenryPaulson wrote:

calling for 20% of mortgages to...default...used to be enough to get laughed at

Yes, I remember those long ago days of 2008.

It's amazing how nobody can deal with the social construct of the 40-hour workweek.

Just can't see past it.

"it is my understanding that the FTHB credit explicitly allowed it to be used for making the down payment -"

yeah but he didn't use the FTHB credit directly, he used a "gift"/loan from his father. If he marked that as a gift on the application, but it was really a loan, that is fraud.

Not that it matters much, just saying...

Nuke wrote:

Nothing different than the name plate.

And both representing Wall St. over Main St.

Nuke wrote:

Republicans and Democrats are like Fords and Mercurys. Nothing different than the name plate.

I just wish we could trade 'em in on a regular basis like Fords and Mercurys.

JP wrote:

That's for 1 acre foot. I used 21,000 (per your post.)

Sorry. Yes, that would be about 26,000,000 cubic meters of water.

I'm going to guess that would be 26,000,000,000 litres of water, but, EvilHenry, it doesn't come naturally.

Yes, it's a metric driveway.

"The mechanics of the new program, according to NAHB economist Robert Dietz, allow lenders to purchase tax credits from the buyers and then collect the rebate from the IRS. Homebuyers must still come up with FHA's mandatory downpayment of 3.5% on their own, but they can use the tax credit to lower their principal balance and save on monthly payments."

HUD $8,000 first-time home buyer tax credit available now - May. 29, 2009

I don't think he did anything illegal.

sportsfan wrote:

I realize those South of the mountains let it all run into the ocean

There's a water replenishment district that recharges the aquifers south of the mountains, sportsfan. Hence, the Sepulveda Basin, etc. Some communities could be net exporters of water, except we can't let the water table go so high or the Century Freeway will float away. Cities given names like Lakewood and Artesia bespoke the water resources of the time.

GDD9000 wrote:

entire establishment is rather reluctant to find fraud in anything,

I think the real scandal is that much of went on was actually quite legal. I think that is what they are scared of because then the accountability really does fall on those in government and political process for not making it illegal. Welcome to 30 years of de regulation mania.

EvilHenryPaulson wrote:

all the people who grew up in Canada before our switchover still use the old units,

I distinctly remember my metric kit in third grade, preparing us for the US switchover. That was 1972. Hahahahaha.

Feckless Ness wrote:

Shouldn't that be 1 inch x 1 furlong x 1 chain? Else we'd be 21,000 feet under water.

You know, I thought about that for a second when writing above. I have to assume: when sf wrote above "into the aquifer", that the aquifer is aggregating water from greater than 1 acre (= 1 furlong x 1 chain).

I think the real scandal is that much of went on was actually quite legal.

What about "breach of fiduciary duty arising from willful negligence."

It seems that charge describes what happened. Would it stick?

Feckless Ness wrote:

Else we'd be 21,000 feet under water.

LOL. Okay, my final comment. The valley is about 400 square miles. You can do the math. You can even convert to square kilometers first if you like (1:2.59), but I wouldn't recommend it.

GDD9000 wrote:

rather reluctant to find fraud in anything, despite how pervasive it was in almost all parts of the housing debacle

The system can only work with massive amounts of fraud.

There is no real work.

Work is finite and shrinks in an environment of rising productivity.

"I don't think he did anything illegal. "

You're not going to let this go, are you?

The tax credit can only be monetized when it is done so through a state agency.

In this case, the borrower likely claimed the funds from his father were a gift, when the funds were really a loan to be paid back through the FTHB tax credit. That is fraud.

I can keep posting proof if you want me to.

6 keys to first-time homebuyer tax credit

"For the most part, homebuyers can't use the tax credit as an automatic down payment, although "tax credit funds can be used for the basic down-payment requirement (3.5 percent) on an FHA-insured loan only when it's handled through a state housing finance agency (HFA)," says Lemar Wooley, a spokesman for the U.S. Department of Housing and Urban Development.

If the home loan is handled through an FHA lender (and not an HFA), the tax credit can be "used to add to the down payment above the 3.5 percent required amount. It can also be used for closing costs," says Wooley.

Many state HFAs are running or sponsoring programs that will use a tax credit for a down payment. These programs often place a second lien on the home as collateral to secure the eventual repayment of the tax credit funds. Some HFAs lend directly to homebuyers while others work through networks of state-approved lenders. For a list of what state HFAs are doing, go to www.ncsha.org."

I think it all comes down to plausible deniability. When Jamie Dimon said we never thought house prices could fall, the other day in front of congress, that was not by accident. That was his entire defense of the fraud. But the thing is, we pay these types of people to be smart, to know whether such a thing could occur. And to anyone who has ever looked at home price history, it is quite clear that prices could come down across the country, even if they havent before, because theyve come down in many places before, and the reasons were quite clear. His saying that this couldnt happen is equivalent to saying we cant really ever have a bad recession again. Or the business cycle has basically been repealed, or the great depression was a fluke. None of these things can reasonably be expected as conclusions from the "best and brightest" ya know, the people who make the big bucks, because if we didnt pay them the big bucks they wouldnt be on wall street and we'd lose such valuable talent that does such good things for us, like tell us that home prices cant ever fall and design AN ENTIRE SYSTEM OF SECURITIZATION around the idea.

The thing about the fraud is that if you think they KNEW house prices could decline, and they said, eh, who cares, lets wind this puppy up anyway, sell as much of this as you can. In that case it's easy to spot. That we let Jamie Dimon make that statement so casually in front of the congress is precisely why we are so screwed, and what is so very wrong with the system, and how blatantly obvious it is that the whole thing could never have worked unless they unreasonably denied a pretty obvious reality about how the world works. They rigged the thing, and the most important part of the rigging just got tossed out the other day as if it were nothing. All they had to do was collude with the ratings agency (via conflicts of interest due to giant profits being earned from this biz) about this one little assumption, and the edifice was built brick by brick. Yet the cornerstone was unsound.

I know that it's dreadful of me, but I just can't get all upset over
the 2nds getting a few thou. If I were I buyer, I'd slip them a bit to go away.

I had one, just one, closing with Taylor, Bean, and it was weird.

JP wrote:

In general: I'm wondering if there will ever be outrage at the fact that the mortgage interest deduction
There's already a cap, @ $1MM note. My magic-eight-ball says the cap will be lowered. I asked when and it told me it only answers 1 question about any subject.

Welcome to Kali-Florida!

fiduciary duty in my limited experience has a lot more to do with going through the motions, or delegating responsibility
it doesn't do a good job of covering stupidity

not disclosed on the loan application

It was part of my future inheritance. I was under no obligation to pay it back. But I did. And happy 'bout that, too.

January 19, 2010

"China lowered its holdings of U.S. Treasury bonds in November 2009 to $789.6 billion from $798.9 billion in October 2009, AFP reported Jan. 19, citing data from the Treasury Department."

For a real thrill, put on a hockey mask when you get there

picosec +1

can't harvest resources outside our atmosphere - yet.

THE SITTING ROOM

Welcome, guest, where have you been so long?
Missed has been your golden face, your song,
The chattering of gossips on your shoulder,
Rises up as you rise up, sky holder;
The house has one great room, an azure stair,
Come in and tell us how you’ve been, and where

Down among the deepest southern seas
Swimming I have been, on liberty,
Sipping on the great and misty clouds
I laughed, by thunder, powerfully and loud;
Between the crab and prancing Capricorn
My vigor plays a full twelve hours long

My visits will be short till winter’s end,
But I will stay a day or two, my friend;
Be assured that soon I will return,
Longer will I stay and stronger burn;
For now I will some little river sip
To blow a cloud of vapor from my lip

Pavel
January 19, 2010

black dog wrote:

I read the fine print. As an added bonus those who haven't defaulted will be allowed to look thru the window at the defaulted person big screen tv they were able to afford by defaulting. Popcorn not provided.

LOL-
+1

CalculatedRisk wrote:

That just screams underwater from day 1 to me.

Really hard to scream underwater CR - even harder for others to hear you.

lawyerliz wrote:

I know that it's dreadful of me, but I just can't get all upset over
the 2nds getting a few thou. If I were I buyer, I'd slip them a bit to go away.

This would only make sense if the seller was in a recourse loan, right? If it was non-recourse, why would a seller want a short sale as opposed to walking away? I suspect the credit ding is similar either way.

On the strength of IBM's stellar report today, it's stock fell in AH trading by more than it had advanced during the trading day.

Blackhalo wrote:

Who picked it up?

UK (hedge funds) and Japan were the largest foreign purchasers. I suspect U.S. banks also bought a big chunk (carry trade.)

picosec wrote:

On the strength of IBM's stellar report today, it's stock fell in AH trading by more than it had advanced during the trading day.

someone leaked, gutsy considering Raj is getting a slap on his reputation for and that IBM VP was embarrassed

OT, but hope for unemployed (middle management) chair warmers:

Hotel chain offers human bed warmers - Telegraph

Jonathan wrote:

OT, but hope for unemployed (middle management) chair warmers:
Hotel chain offers human bed warmers - Telegraph

Probably start seeing that on Craig's list soon enough-

omg, Life is stranger than The Onion.

JP wrote:

Lowering the cap is a whole lot more politically feasible than doing away with the deduction, so I might guess that it starts in the next few years.

Won't that reduce the pool of available buyers for Jumbo properties, presumably depressing property values in that category? Too many movers and shakers living there for me to believe there will be political will to do it. It would take an incumbent beat-down of both (D) and (R) in 2010 for it to happen IMHO.

dryfly wrote:

Really hard to scream underwater CR - even harder for others to hear you.

LOL. But rephrase to use the Aliens reference: "Underwater, no one can hear you scream".

Making something that is natural fraudulent is stupid, good
for Barley.

Applause!! Applause!!

thx for my guffaw of the day

JP wrote:

Do I pay the fine directly to you, Officer?

In Texas, the Highway Patrol used to carry credit card imprinters. I imagine that they have higher tech methods now.

How about the other type of SS - no not short sales but social security. I received a statement of my estimated benefits and beneath them is a bolded footnote:

*Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2037, the payroll taxes collected will be enough to pay only about 76% of scheduled benefits

I wonder what 10% unemployment does to their estimates?

lawyerliz wrote:

The ding is about the same and I can't figure out why people want
short sales.

Or it could be the kickback they might be getting from the 1st and 2nd to share in the premium of the difference between a short sale, and a foreclosure. A nice "tip."

Well, Mike, you were warned.

lawyerliz wrote:

Well, Mike, you were warned
I don't expect to see any of that money - so should I receive anything when I retire in 25 yrs or so it will be a pleasant surprise.

I did get my 10, 50 and 100 trillion dollar zimbabwe bank notes today. They may have more value than the future value of my SS contributions...

dryfly wrote:

Really hard to scream underwater CR - even harder for others to hear you.

The movie remake: A LIEN. "When you're underwater, no one can hear you scream."

volker the viking wrote:

I contend a leap beyond the concept of money is essential to a successful outcome

On an individual micro level - abso-[effing]-lutely. Macro econ is a world of kabuki all its own - who knows there.

Sorry that I cut in line ahead of you guys, but SS has been very good to me the last 5 years. Not that I'd want to live on it alone, and as a true homeowner I have minimal housing expenses, but it provides for a fair fraction of my extravagant life style.

NOTE: Local lightning stroke just caused a momentary power glitch, but desktop computer played thru it. Better post before the next one.

lawyerliz wrote:

The ding is about the same and I can't figure out why people want
short sales.

Easy, they can tell their friends they sold the house, leaving the "short" out of it. The neighbors see the real estate sign and it saves some ego.

Blackhalo wrote:

It is a shame it was spent. Now the boomers can still get the benefits but deny them to the following generations by incrementally bumping up the retirement age. The following generations will end up having to keep (working) paying in, without ever reaching retirement age.

Yes - the little tidbit about "your full retirement age = 67" followed by the data point showing by waiting until 70 resulting in a 20% increase in monthly payments gives you an inkling of what's to come.

They will just keep moving the goal line another 5 yds at a time. Kick the can.

josap wrote:

Easy, they can tell their friends they sold the house, leaving the "short" out of it. The neighbors see the real estate sign and it saves some ego.

I knew somebody who was selling her home in Key West last year and moved heaven and earth to make a short sale happen, because she thought it would save her credit. She was a divorcee, and was selling the house with grudging go-ahead from her ex, who just wanted to walk away. (They were both living here in California.) She made it happen, but -- wasn't worth it?

dryfly wrote:

Hint for you - most cleaning doesn't - it just LOOKS cleaner.

Here's an old housekeeper's trick - leave a bit of pine-scented cleaner in the toilet water. The smell of cleaning products makes people think a place has been cleaned.

That's excellent.

Just curious what exactly was the fraud that Wall Street committed ?

The biggest elements of fraud were (a) borrowers over stating their income (b) mortgage brokers encouraging borrowers to over state their income (looking the other way is not fraud) (c) appraisers over valuing the properties (d) sham transactions amongst related parties. I don't know if steering clients into higher priced loans is fraud in a strictly legal sense anymore than a salesman getting me to buy a more expensive TV is. For a mortgage broker to get somebody a loan that they knew the person could not pay back again not fraudulent if the information provided was accurate.

I don't think that any evidence has been produced where Wall Street actually bribed somebody at S &P to put a AAA rating on to stuff. (Certainly S&P was swayed by the money they were making from all the rating work but again that is not fraud). Again there was been limited instances of people outright fudging their mark to market (we can question the model but using a model that proves wrong in hindsight is not fraud).

Blackhalo wrote:

Looks an awful lot like conspiracy to commit fraud, prosecutable under RICO

and with different evidentiary standards at no extra cost

josap wrote:

thought the lender had to sign off on a deficiency when the short sale went through. Although that may not be until the new rules take effect on April 4th or 5th

I don't know. If the 2nd/HELOC gets nothing why would they agree not to pursue deficiency ?

I'm reading The Great Depression, A Diary, by Benjamin Roth

It's a good read, and he's a critical thinker, a lawyer by profession.

April 14, 1932

Signs of the times: The demand for gold metal by foreign countries on account of money scarcity has made it worthwhile to melt old gold ornaments, etc. The jewelers on E. Federal St. are running large ads saying they will pay high prices for old gold in any form.

GDD9000 wrote:

I agree with all that crazyv, however, I think you missed my point that the fraud is denying you know something (that national house prices can go down) and therefore building an unsound financial innovation around it.

All It'd take is one cc'd E-Mail, bringing up the possibility. Or looking in to the very act of GS shorting their OWN MBS and securities.

right, the ratings were a sham, because the people who are supposedly paid to know the most somehow didnt know what many people could have pointed out to them. And Id think that many did, just like I pointed out to my masters at the time when i worked in CRE. I mean, the best and brightest think there is zero chance of this happening? Dont sound to bright to me, unless of course, they are just intentionally misrepresenting things. And when you team them up with their best and brightest lawyers, who can tell them how they will one day go in front of congress and deny knowing what they must have known, well, you do the math.

bearly wrote:

If the 2nd/HELOC gets nothing why would they agree not to pursue deficiency ?

Not sure about the 2nd. The split of funds from a short sale is between teh 1st & 2 nd lien holders. The 2nd may or may not get anything. As far as I know there is no way to find out who gets how much, if anything.

Rajesh wrote:

When the MBS were sold; the prospectus stated that their was due diligence on the underwriting standards of the mortgages. In fact the firms checking the mortgages reported that the mortgage didn't meet the (incredibly low) underwriting standards. Securities were sold anyway. That is securities fraud.

No, that's an error.

It's not enough to point to loans that didn't meet the standards. To get to fraud you would need to show that the sellers were aware that the due diligence outlined in the prospectus had not in fact been performed.

picosec wrote:

As I see things, the only thing that has changed is more "transparency,"

There is only transparency on the loan you actually get. There is still no requirement to present borrowers with the best loan for them. If you qualify for a prime loan but the mortgage broker signs you up for a sub-prime loan; you get all the gory details of the cost of the sub-prime loan but zero information on other loan options you can qualify. There are studies that suggest that minorities were steered to sub-prime loans even when they qualified for prime loans.

Yalt wrote:

To get to fraud you would need to show that the sellers were aware that the due diligence outlined in the prospectus had not in fact been performed.

Considering the fact that the ratings agencies were actively refusing to look a the loans that made up the MBS, someone knew.

MICHAEL GREENBERGER: I walk into Brooksley's office one day, the blood has drained from her face. She's hanging up the telephone. She says to me, "That was Larry Summers."

RON SUSKIND: Larry basically reads her the riot act. He more or less tells her, my understanding, is that, "You don't get it."

MICHAEL GREENBERGER: He says, "You're going to cause the worst financial crisis since the end of World War II," that he has, my memory is, 13 bankers in his office who informed him of this. Stop right away. No more.

NARRATOR: In Washington, they say, the financial sector has five lobbyists for every congressman.

TIMOTHY O'BRIEN: Brooksley Born is stepping into the maw of the most well oiled and highly financed lobby in the history of Washington, D.C. It's the financial lobby.

ROGER LOWENSTEIN: Bankers just fall over themselves calling Summers and Rubin and Greenspan and everybody, saying, "Get this lady off our backs."

NARRATOR: But the harder they pushed, the more interested Born became.

BROOKSLEY BORN: They were totally opposed to it. That puzzled me. You know, what was it that was in this market that had to be hidden? Why did it have to be a completely dark market? So it made me very suspicious and troubled.

Blackhalo wrote:

All It'd take is one cc'd E-Mail, bringing up the possibility.

I don't see how you could get a fraud case out of a single e-mail from a single employee who brought up the theoretical possibility that the firm's assumptions weren't correct.

If the threshold for fraud were as low as some of you seem to think, just about every transaction everywhere would be fraudulent.

Liz<

so you found your missing feline?

June 13, 1932

The situation in the county has almost reached a breakdown. The whole county government has already been reduced to a skeleton and even this will collapse when present fund is used up next November...

Hunh? What did I miss?

Yalt wrote:

the due diligence outlined

Due diligence was out-source by Wall Street firms to companies who specialize in checking mortgage underwriting. The companies reported back that the loans didn't meet the standards. Do a test and ignore the results. I don't think any judge would think that meet the standard in the prospectus.

Blackhalo wrote:

As I understand it, there is a neat trick, in that you can start collecting at 67, and then pay it back at 70 to get the 20% for a nice interest free loan.

Can you point me in the right direction to track this down? My dad is 64 and began collecting early. It may make sense to "pay back" the last few years of benefits when he hits 65 if the monthly bump in benefits is 20%.

Blackhalo wrote:

Considering the fact that the ratings agencies were actively refusing to look a the loans that made up the MBS, someone knew.

Who?

You don't build a successful fraud case out of supposition. You need to identify a perpetrator and you need to build a case that convinces beyond any reasonable doubt.

Yalt wrote:

It's not enough to point to loans that didn't meet the standards. To get to fraud you would need to show that the sellers were aware that the due diligence outlined in the prospectus had not in fact been performed.

Does it also have to show intent? Or is it sufficient to have it occur 'accidentally' yet still be aware & do nothing?

bearly wrote:

Title person I work with said JPM & WFC are serious about pursuing deficiency. Better not to short sale in that case and let it go to FC.

A short sale would be okay for the seller (borrower) so long as part of the short sale agreement (with the lender), the lender agreed to forgive the balance owing.

Oh, yes, the hub heard her yowling to get in at 5 in the morning, didn't bother.

My mom went out to find her, and she sneaked in, unbeknowst, and was found mysteriously
sitting in the kitchen.

I used to let them out once in a while, until they came back with ticks. I can deal
with fleas, but not ticks.

dum luk wrote:

In other words, there is no such thing as securities fraud.

Not at all. You might be able to show that the sellers knew the statements in the prospectus were false.

I'm just saying that the fact that there were loans that didn't meet the prescribed standards isn't enough. They might have to buy the loans back, but at that point it's not criminal conduct.

I bought a pack of underwear a while back that turned out not to be the size they said they were on the package. I exchanged them. I might have been inconvenienced but I wasn't defrauded.

To be clear, I'm not saying there wasn't any securities fraud involved in these transactions. But fraud's hard to prove and I'm very skeptical it can be done by a bunch of guys hanging out on a blog.

bearly wrote:

Title person I work with said JPM & WFC are serious about pursuing deficiency.

In that case FC is thr better choice. Or finl BK at some point.

FHA to tighten standards! Really.

I left that spelling error in there to see what would be made of it!!

lawyerliz wrote:

well, would you rather live a shorter life?

No I'd rather they stop taking money from me that I'll likely never see. At 40 yrs of age I'd gladly walk away from any future benefits in return for not having to pay into SS for the next 20 to 25 years.

My bottom ad is for a penny stock site named OxofWallStreet.com. By naming their site for a gelded bull, are they acknowledging that they are a scam? Who would invest with a company named Ox of Wall Street?

Maybe they're assuming that most people don't understand the difference between an ox and a bull, since Ox is a bit archaic? But then why use Ox at all?

Thanks much.

dryfly wrote:

Or is it sufficient to have it occur 'accidentally' yet still be aware & do nothing?

You've issued a prospectus, so you've already done something. If you're aware that statements you made in your prospectus are false, there's a case for fraud.

Yalt wrote:

there's a case for fraud

there's always a case for fraud

a fourth grader could tell you what they were doing was wrong

Unless something new has happened, and please tell me if it has,
lenders don't go after short sellers, unless they sign notes, and even
then I've never heard if the notes were enforced. In the early days, the agreements
said they were still open to deficiencies, and nobody would sign those.

In FC in Florida ALL loans are "recourse" BY RIGHT, and I haven't seen one
lender ask for one.

picosec wrote:

but I can see civil laywers licking their chops

The burden of proof in a civil case is much less. And discovery may uncover actionable information for a criminal case. My guess is that there will be a ton out of court settlements.

Most fourth graders are probably also aware of the difference between "wrong" and "criminal".

Do you really want to live in a society where they can put you away without reference to the law because they claim what you did violated some unspecified moral code?

Yalt wrote:

But fraud's hard to prove and I'm very skeptical it can be done by a bunch of guys hanging out on a blog.

I agree with that. But if a bunch of people speculating on a blog can see all the smoke, a real law enforcement prosecutor should be able to find the fire.

Mike in Long Island wrote:

No I'd rather they stop taking money from me that I'll likely never see. At 40 yrs of age I'd gladly walk away from any future benefits in return for not having to pay into SS for the next 20 to 25 years.

Especially if there's any chance of SS becoming means-tested. Which comes up occasionally.

July 25, 1932

A considerable traffic has grown up in Youngstown in purchase and sale at a discount of Pass-Books on the Dollar Bank, City Trust and Home Savings Banks. Prices vary from 60% to 70% cash. All of these banks are now open, but are not paying out funds.

so no deficiency, right?

picosec wrote:

Ain't gonna be much in the way of criminal fraud cases, but I can see civil laywers licking their chops

Oh, I'm sure we'll see a ton of civil cases out of this, but I suspect they'll typically revolve around breach of fiduciary duty and not outright fraud.

Yalt wrote:

But fraud's hard to prove and I'm very skeptical it can be done by a bunch of guys hanging out on a blog.

What do you mean - we can prove anything we want - those who question us are only stooopid s and don't matter much anyway.

Just because they CAN get a deficiency, doesn't mean they WILL.

Are they asking for Heloc deficiencies in AZ or anywhere else???

This sez they are release from liability. No deficiency.

Blackhalo wrote:

I agree with that. But if a bunch of people speculating on a blog can see all the smoke, a real law enforcement prosecutor should be able to find the fire.

Maybe, maybe not. These guys are experts at walking legal tightropes while they go about their wrongdoing.

August 8, 1932

Since bank books can now be bought at large discounts some people are buying them up and then trading them in for foreclosed properties held by the bank.

lawyerliz wrote:

Are they asking for Heloc deficiencies in AZ or anywhere else???

Not that I have heard of.
But people need to understand that a HELOC is not a mortgage and make sure they have a signed doc that they will not be hounded down later for repayment. Most people in Az think a HELOC is a mortgage.

Fraud requires scienter. But you can have a successful civil case without fraud.

GDD<
I just wish I had some canned tomatoes from last summer for the sauce...

Not this year. My parents still have some from the previous year, but the tomato blight this year meant they only canned a handful in mason jars. Most went bad. Sad to hear about, and glad I didnt see it. Normally, when I visit, I take a couple home with me - sucks i have to check them now, but with sturdy cardboard tubes, you can get em back without breakage. Scares me every time tho.

Well if CR mentions Eneagram Type, maybe it's not completely unexpected to reply to:

"sportsfan
measuring water in acre-feet is common, especially because land is measured in acres as a human-friendly measurement. I would just rather it be measured in mega litres and people over time can adjust their terms of reference."

With:
but as PD Ouspensky points out in Tertium Organum (couldn't find the exact quote), as I remember it, some of the old units of measure are based on a methods that means more knowledge of the object being measured is contained in the measurement. So you would have some conception of what you are measuring if you say "bushel," or "gallon," or "pound," or "hands." That's part of what he is saying, as I recall, as well as that it is easier to keep a number of different quantities and calculations in mind at the same time than in a more purely mathematical-type calculation of other systems.

If you decide to go short sale instead of fc or walking away, don't you get to live in the house longer? For free? It seems by the time you overprice it (altho you probably don't have control over the pricing, but realtors tend to overprice anyway) and then wait for all the reductions to occur, then the buyers probably can't qualify anyway and you have to wait for the next set of buyers...

That was always my thought process anyway.

I'm always on the lookout for ways to live cheap.

(No, my house is not underwater. Purely hypothetical.)

And then, if you short sale it, you disclose all those faults that if you were selling you may not remember to disclose. That should delay a deal a while.

:thinking thinking:

Jackrabbit wrote:

How do you get the people at the top.

bottoms up

we need a story

Give me control of a nation's money and I care not who makes its laws" - Meyer Amschel Bauer Rothschild

It's ALWAYS legal, even if just barely. And even if it's not legal, TPTB will say that it was legal.

The Fed and the FIRE eCONomy are looting the wealth from the American public. That should be abundantly clear to all. Legal or not, it's profoundly immoral. Banks don't lend money, they create credit. The Fed exists to preserve the value of the issued credit - productive or fraudulent. Of course, fraudulent credit issuance is an easy payday for Wall St., so why would we expect them to issue credit for productive endeavors.

Legalism - the process of making immoral acts legal. We certainly don't want to stifle "innovations" in legalism.

Brilliant! That's great And I agree with the point.

Jackrabbit wrote:

I suggest that only a charge like breach of fiduciary duty arising from willful negligence MIGHT stick to the top guys.
The possibility of a class action makes it really compelling for some enterprising lawyers.

The problem is their losses will be paid for by their employers, or more precisely their employers' insurers. It's not so easy to actually hurt the guys at the top. And that's not an accident.

Blackhalo wrote:

as a way to get a lower rate...

Lots of those types of sugestions were made. Why do you think so many people got a loan for a vacation home a couple of blocks away from where they live?

Yalt wrote:

And before we even can talk about RICO, don't we need crimes?

I'm sympathetic to your argument, but if I sneak up on you and wap you on the head with a pipe, has a crime been committed? Especially if I get some of these guys to vouch that I've been right here all the time?

When we bought our first house, my FIL gave us the 5% downpayment as a gift.

In the not-so-dark ages (2003) my daughter and her husband bought their first home with the help of a DP gift from her aunt. Even then, it was documented in writing as a gift.

Yalt,

Slavery was fine in it's day, so was aparteid. Both perfectly legal.

Big tobacco never committed a crime either. And going to war under false pretenses is fine too. We have a free market in fraud and legalisms. Maybe I'd be more comfortable with all the non-frauds if we didn't keep bailing them all out.

Why do we have ten times as many lawyers per capita as Japan? Who can say, but perhaps we're ten times as immoral.

Yalt wrote:

The problem is their losses will be paid for by their employers, or more precisely their employers' insurers. It's not so easy to actually hurt the guys at the top. And that's not an accident.

Insurers have some outs - reasons why they don't have to pay. And in any case, any financial guy that is convicted of such a charge is OUT OF THE INDUSTRY. Their bonuses become severance (if they manage to keep them).

I think much of top management might go. And it would be a clear warning for everyone in the industry to act properly in the future.

It just struck me. Has anyone heard from Homedad lately?

I haven't seen Homedad.

So you are saying they are idiots and incompetents then, not fraudsters. That sort of clashes with the theory of the best and brightest, doesnt it?

sdtfs wrote:

I'm sympathetic to your argument, but if I sneak up on you and wap you on the head with a pipe, has a crime been committed? Especially if I get some of these guys to vouch that I've been right here all the time?

Yeah, that would seem to be a crime.

I'm not sure I'm being understood here. There's legal, and there's moral. They aren't the same, and they aren't ever going to be exactly the same. One is quite precise (hence "legalistic") and has an enormous, violent enforcement power behind it. The other is vague and depends on social power for its enforcement.

I feel like we're confusing the two and I don't like it. I wouldn't want to live in a society where the power of law enforcement stood behind some vague unspecified moral code so that the authorities could do whatever they wanted to you whenever they thought you had done something "wrong". And I wouldn't want to live in a society where great masses of people thought the law completely specified right and wrong, so that anything that doesn't clearly violate a specific written code is ok.

Blackhalo wrote:

It might just start by going after someone who failed to disclose a loan from their family, to make the down payment, and for them to roll over on the mortgage broker who suggested it

uh huh, well........somebody? anybody? anywhere?