Guest Post: Foreclosure Counterattack – Propaganda, Pseudo-Legality, and Thuggery

By Russ, aka Attempter, a sustainability activist trying to help figure out solutions to America’s crisis, who blogs at Volatility

As Foreclosuregate, the legal crisis, looms ever larger and becomes a major political issue, the banks and government have scrambled to mount a counteroffensive against the consequences of their crimes. We can see how flat-footed they were caught. They seem to have become so comfortable with cutting every legal corner and evading every requirement which was even mildly inconvenient that they’re truly surprised this has escalated with such abruptness and violence. Their plan is to try to bluster and bully their way through by any means possible. They expect lies and lawlessness to prevail as always.

The first line of defense is the propaganda line that this is just a technical glitch, not a fundamental problem with the loan or the security, or any kind of systematic intentional fraud. So far this has been the preferred PR line for the administration and the mainstream media. But the banks are also working the line that no matter what the flaw, it can simply be legalized by legislative brute force.

Rather than deal with the considerable consequences of these abuses, the banks are prepared to bulldoze well settled state laws to give them an easy way out. And I’m not basing my view on this story alone; I had a conversation yesterday with a Congressional staffer who matter-of-factly said (but with little understanding of the underlying issues) that Congress would intervene on behalf of the industry, via its authority over national banks.

Congress took one step in this direction by frantically grabbing and unanimously passing a pre-existing bill which would require all states to accept the weakest state-authorized electronic notarizations. This would be only a minor fix of one of the technical issues, and isn’t very important in itself. But it probably foreshadows the far more expansive legislation we can expect to see after the election. Bolstering all of this, the banks are making extortionate threats against the real economy. They promise to wreck it even further if they aren’t given a clear path on this.

At the same time a concurrent propaganda line, seeming to somewhat contradict the other, is a hectic emphasis on speed.

Federal regulators sought Wednesday to prevent the growing furor over improper foreclosures from escalating, pressing mortgage lenders to replace flawed and fraudulent court documents while insisting that foreclosures continue apace.

It’s unclear why they’re simultaneously trying to downplay the significance of all this but also to drum up a sense of crisis which requires a stampede. You’d think they’d at least pretend to want to slow things down in order to make sure all those alleged “technical glitches” are properly fixed.

Demonstrating that the banks understand the significance of how the blogosphere has driven this story, the PR offensive has descended to the comment thread level, as we’re seeing the biggest surge yet of pro-bank commenters, many repeating the same talking points with suspicious discipline.

As Yves Smith at Naked Capitalism observed,

One regular reader has noticed that every time I put up a foreclosure post, the first comment, suspiciously close to the post time, is always a version of “deadbeat borrower”. He reads enough blogs that he is pretty convinced that NC is being targeted for this sort of message.

Perhaps the most insidious propaganda line, and certainly the most scabrous, is the bashing of alleged “deadbeats”. While the subprime borrower – powerless, often a minority – has long been an easy target, and the contempt has been spreading up the income scale as more people are engulfed in the catastrophe, the fact remains that few people intentionally bought more house than they could afford. Most were induced by the massive propaganda barrage from the banks, government, MSM, and even consumer groups, to see a house as a guaranteed investment which could only appreciate in price. More importantly, the main cause of inability to keep up the mortgage is losing one’s job or suffering a medical disaster. It’s the banks themselves who have presided over the destruction of America’s jobs, especially over the last two years. And it’s the government which refuses to counteract the banks’ campaign of socioeconomic scorched earth. (That’s the same government which also pointedly refused to reform the health care system, choosing instead to further entrench the existing larcenous dysfunction under a facade of lies and misdirection.)

So it’s the banks and government themselves who are overwhelmingly responsible for the wave of defaults. The defaults are the knock-on effects of the bank crimes, and now the banks want to seize the homes by further criminal means. Even after all this, few people fight foreclosures if they can’t afford to pay. The great majority of them say they can pay if they get a promised modification, or claim to be the victims of servicer error. So by any measure – moral, rational, or legal – the “deadbeat borrower” talking point is a sham.

But it’s no surprise, given the scurrilous character of the banks and their functionaries. A good indication of the kind of “legal” recourse they assume they can take are the kangaroo courts of Florida. These are not really courts of law but dedicated foreclosure machines manned by judges pulled out of retirement, apparently selected specifically for their bank-friendliness and/or ignorance of mortgage law and existing programs like the HAMP. These were given the mandate to process foreclosures as fast and lawlessly as possible. That puts the administration rhetoric about the need for speed in a new light. Evidently Florida’s rocket docket is the federal government’s dream solution as well.

But even this is failing to work for them. Political scrutiny and demands for legality are becoming more insistent, and the rocket docket has had to slow down and at least pretend to respect the law.

Underlying all of this, the foreclosures continue in spite of the vaunted moratoria. Perhaps they think they can still fool the judges this way: “We announced our moratorium, so obviously we’re only going ahead with fully legit foreclosures. Here’s the lost note affidavit on this one…” Now that this scam has been exposed, they’re spouting a reprise of the original lies – it’s a mistake, it’s miscommunication, we don’t know what’s happening with those bad apples….(Anyone who actually took anything they said seriously would have to wonder how it’s possible to be such a Master of the Universe, and warrant such a “bonus”, and yet make so many self-admitted mistakes and be so ignorant of everything all the time.)

This preference for lawlessness, this knee-jerk recourse to lies and crimes, is however no joke. At the lower levels, outside the regular media eye, the banks have repeatedly demonstrated their comfort with pure brutality. The examples proliferate of thugs threatening people, breaking and entering, bashing in doors, terrorizing occupants. So long as government at every level is the waterboy of the banks while people on the ground remain unorganized, atomized, and vulnerable, this will only get worse. We hear rhetoric, “joking” of course, about how they need to start burning houses down.

“The question to me is not do you foreclose or do you not foreclose. The question is when and with what philosophy you foreclose,” the man on the bank restructuring team said. “If you want to reduce the amount of leveraged homeowners you have, you need to ultimately kick them out of their homes.” A colleague walked up: His recommendation was to burn houses. It would lower the supply.

Even if that’s still a joke at the moment, how long can it remain so? It’s certainly in the mainstream of the logic.

Look, our hope is is that this moves rapidly and that this gets unwound very, very quickly and that if they can go back, reconstruct their paperwork and what we’ve stressed to them is that they need to expedite that process and work very, very quickly to get it done. we’re going to continue to push for that.

That’s Obama factotum Axelrod. And more from the firebugs:

“The first thing that needs to happen, I think, is to get these people out of their homes,” a man wearing a bespoke blue-striped shirt, a Hermés tie patterned with elephants and Ferragamo loafers said recently. “Correct! I’ll explain,” the veteran member of a bank restructuring and advisory team said.

Right here at Naked Capitalism we may have seen the pro-bank handiwork, a shot across the bow. Yves was the target of a Denial of Service attack. Now that’s taking trolling to a whole new level. If it was organized on behalf of the banks, it’s part of the logic.

All of this, from the original predatory lending, to flippancy about conveying the titles and legally securing the trusts, to the Bailout dedicated to propping up those toxic MBS, which we now know are probably nothing but unsecured loans, to the government-led propaganda campaign and legislative hankering to cover up and eventually “legalize” this latest revelation, down to the brutish violence and dirty tricks of the gutter, is one coherent whole, one simple train of logic. It’s simply the logic of might makes right, feudal greed, and total nihilism vis the law and democracy. The mortgage debacle reveals so many abdications of the system, and this abdication of the rule of law is one of the most thorough.

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87 comments

  1. Democraatus

    How much more must happen befora Americans take their country back? In the Netherlands, we start seeing explanations of the fiat money scheme pop up in regular MSM. Things are heating up fast.

    With Denninger here: stop looting and start prosecuting.
    In addition: force the consequences of the fraud on the bad guy by law.

    Let’s hire jobless people for that job en masse. The only Obama decision which would actually do the country any good.

  2. skippy

    Firstly thanks for all your input here and at your blog, that said I offer exhibit A.

    • takeresponsibility says:
    October 16, 2010 at 11:44 pm
    Funny people think the banks are responsible for foreclosures by not having paperwork!

    No one would be dealing with the banks if they paid the $$ they KNOW darn well they owe for the priviledge (not a right) to own a home.

    And record #s of people would not be unable to pay their mortgages if we didn’t have 10% unemployment.

    We wouldn’t be in this mess if not for the current economic policies of this administration.

    Hats off to this administration for getting the people to focus on – and blame- bank paperwork, instead of the govt policies, for the foreclosure rate.

    This elitist administration just proved they can fool many people, many times! Lots of high fives and laughter at the White House.

    Reply
    • Skippy says:
    October 17, 2010 at 12:19 am
    HA…back link to AOL…the HOLE Political class as a subsidiary of the Bankster class which is again owned by the Bondholders that matter most class…OWNS THIS DEFECTIVE BABY…polemic assertions aside.

    Skippy…Its getting worse than a bar brawl…everyone fighting not knowing whom or how it all started, yet its on! Lots of scores being settled under the guise of free_for_all_…eh. Mean while the *individuals* that started this hole fracas are heading for the exit…having called the cops them selves….shezzzz

    —–

    Skippy…What is the first thing to come out of a psychopaths mouth…its not my fault, I[WE] were just supplying demand, its the deadbeats fault…you know the suckers…whoops…did I just say that, I[WE] meant the deadbeat bad apples reneging on the crap we sold them, even thou we shipped all their job off shore…bet they didn’t see that one comin…eh.

    Well who’s fault is it…that they didn’t read or understand the reams of double speak trap laden contracts, hell we even supplied the paralegles…cough…sales staff to inform them the facts, this baby is never coming down its up up up, Flip it, heloc it, everyone is doing it[!] shit we have a special on a bakers dozen…yes you too can be come a real estate magnate just like me (just look at all the successful people in our brochure or as seen on our psychologically tested TV ads). Just sign on the doted line and be like the rest of us, time is running out, act fast, don’t be a loser or the herd will leave you behind forever!

    That not good enough for you…well because of this tidal wave of deadbeats our *shell* companies (no employees) have been swamped, overburdened/unqualified subsidiary staff, have resorted to robosigning (carpal tunnel claim incoming, not to worry investors doors will be closed before that) as only true American Patriots would…to clear the deadwood/deadbeats from the forest of our Republic Homeland (come on Faux News / MSM Patriot Hero segment methinks).

    And why all these shenanigans you ask, why give people hundreds of thousands of dollars, all in the job market security of the last decades, on the pretence that RE/CRE prices never go down, with increasing reduction in any means to validate such risk taking by the virtuous Banksters. Well to facilitate more demand it seems, it seems every one wanted securitisation, they wanted 5% YOY ad infinity, hell foreign banks and sovereign governments wanted the stuff as it papered over all their problems ie: got historical accounting blues eh…not to worry our SCAMWOW securitisation obfuscation products can help you, operators on stand by…to send our fine upstanding sales staff (well connected family backgrounds or Ivy league to your door (stripclubs/booze/kilo of coke…on the house) to service your needs.

    Skippy…It all went well, till no more suckers could be found, till default rates (deadbeats hands morte reached up from the Global Neoliberal Spartan Pit) reached activation levels…counter-party Mass Assured Destruction was at DEF CON 4…that the cavalry was called…cough the printing presses of some nations (future tax burdens on the yet born)…the said cavalry is now massacring anyone that stands it its way.

    En Fin

    PS. Beat the crap out of your selves commoners…their counting on it[!] yet again they do their masters biding…sigh.

    1. Anonymous Comment

      “It all went well, till no more suckers could be found.”

      Oh, how I now understand Shakespeare. If ever there was a tragic comedy for the ages – this is it.

      lolz, boo

  3. Miles_Phoonman

    My foreclosure has actually been suspended by JP morgan and withdrawn from the court. The other day the bank’s lawyer sent me a modification application. for months Jp morgan would not give me the time of day, then all of a sudden a mod application. they know the gig’s up. My loan is one of those nutty old WAMU neg am loans. that should explain it all. dumb all around.

    1. Noash

      Hey Miles – I sent my bank a Where’s The Note? letter on October 12th. On October 14th, I found a UPS envelope in my door. The package had been overnighted. It was the traditional one-page letter about how the bank would really, really like to work with me if I need a Home Loan Modification. Why would they spend the money to overnight something I’ve been receiving in my mortgage statement every month? They still have 17 business days to respond in writing acknowledging they have received my request. I’ll be waiting to see if they respond.

  4. skippy

    Cut and paste amends see:

    THE “DELAYED/LATE PAYMENT” SCAM TO RAILROAD BORROWERS INTO FORECLOSURE

    October 15, 2010

    October 15, 2010

    We previously wrote on this website about various scams being engaged in by “lenders”, servicers, “trustee” banks, and the like with regard to “temporary forebearance agreements” which are, in our view and experience, nothing more than a method for the foreclosing parties to pull money from the borrower to fund their operations and attorneys for an ultimate foreclosure when the “permanent” loan mod request is denied. However, based on the literal slew of e-mails we have been receiving lately, there is apparently a new scam which seems to be intentionally designed to railroad borrowers attempting to work with the foreclosing party into a fraudulently manufactured foreclosure.

    The fact pattern is always the same: the “lender”, servicer, etc. reaches out, at least on paper, to the borrower facing or in a foreclosure as to a possible workout with a payment schedule. There is an agreement made, and the borrower makes the first payment on time, receipt and delivery confirmed (e.g. certified mail RRR, Fedex, etc.), but the “lender”, servicer, or whoever made the offer then intentionally sits on the borrower’s payment, does not post it until after the “due date”, and then claims that the borrower defaulted on the agreement and proceeds to foreclosure. To add insult to this injury, many of the so-called “workout” agreements contain waiver of defenses clauses where the borrower gives up the right, by contract, to later contest or challenge the foreclosure.

    This is plain, outright, blatent fraud. There is absolutely no excuse whatsoever, under any circumstances, for a foreclosing party who sets forth a payment schedule which the borrower complies with to not code the payment as received on the confirmed day of receipt. It thus appears, under the totality of the circumstances and in view of the frequency of the fact pattern, that what the “lenders”, servicers, and others are doing is to falsely lure the unsuspecting borrower into a set of false representations for the express purpose of fraudulently manufacturing a foreclosure while depleting the borrower’s liquid reserves which could have been used to defend the foreclosure.

    In view of the recent revelations in the depositions of employees of the law offices of David J. Stern where a multitude of instances of illegal and unlawful conduct were revealed (which actions were engaged in to force foreclosures through the system due to the pressure by the lenders, etc.), we are not surprised at what we are hearing. What needs to be done, however, is to vehemently challenge these fraudulently manufactured foreclosures and, if appropriate under the proper circumstances, assert claims for money damages as well.

    Jeff Barnes, Esq.,

    http://foreclosuredefensenationwide.com/

  5. Psychoanalystus

    Great article. Thank you.

    To begin with, don’t expect judges to bring justice to this. Don’t expect this massively corrupt government to do that either. But if enough people stop paying their mortgages, withdraw their savings from the banks, and stop using those damned credit cards, the banks will collapse in due time. That is the solution that will stop this government-bankster thuggery in its tracks and free this nation from under this monstrous oppression.

    Psychoanalystus

  6. Eric

    The claim that few people bought too much house to afford – or more properly expressed borrowed, too much money to pay back – doesn’t bear scrutiny. While I agree that a lot of this was believing the myth that houses were sure-fire appreciation vehicles, people still understood that they were overextending themselves to capture this appreciation. And it undeniably worked for probably hundreds of thousands of folks, so it wasn’t craziness. But it stopped working and that was always a risk. How many times do we have to hear someone say that they had planned to re-finance to an affordable fixed mortgage based on the equity that they assumed to get while they were on the introductory payment schedule to figure out that they understood they would sink if the appreciation didn’t show up? What I dislike about many of these posts and comments is the presumption that people are fundamentally idiots when they aren’t. Nothing above means that they should suffer foreclosure based on frauds, but if the mess gets cured so that notes and mortgages line up the way everyone wanted them to that’s fundamentally a good thing for the country. If that means accepting valid e-versions of documents starting tomorrow, please tell me how the consumer is harmed if the end state is what everyone intended.

    1. attempter

      The “consumer” is harmed by being a consumer rather than a citizen in the first place.

      And I still can’t figure it out – even if I agreed anyone “owes” money on land, to whom could he possibly legitimately owe it?

      Not to the banks, who are idle, criminal, insolvent, and owned by the people anyway.

      Not to the illegitimate government which has completely abdicated sovereignty by siding with anti-sovereign corporations against the sovereign people.

      To whom?

    2. DownSouth

      Eric,

      The reason that e-versions of documents cannot be accepted is that it is much easier to tamper with them, modify them or create them out of thin air than it is with wet signature paper documents. E-documents can be modified with the stroke of a keyboard. With wet signature paper documents, there is the physical document itself which can be examined. It is much more difficult to discern tampering with the original paper document than with a photographic image of the original, and to do so with a digitized version of the original would be impossible.

      As an extra line of defence against forgeries there is the practice of recording documents in the courthouse quickly after their execution. This all but precludes someone from going back at a later date and tampering with the original document, because a copy of the original is on file in the courthouse, and if a new document showed up that didn’t correspond with the one on file, it is obviously a forgery.

      This is just common sense. But of course the banksters would prefer to see the people’s common sense go on holiday.

      1. Doug Terpstra

        The banksters’ druthers for e-foreclosures (high-frequency foreclosures or HFF) is reminiscent of Diebold paperless voting machines. It was far too technically difficult, they argued, to have a hard paper trail, even though ATMs, gas pumps, and store registers spit out receipts with unfailing reliability. The propaganda, scratch that, damned lies, were truly breathtaking … then and now. Intolerable sociopathy for which they will have hell to pay—hopefully in this life.

    3. jest

      You still don’t get it.

      No one claims that the borrowers should be rescued on account of being idiots.

      However, everyone can agree that people were overextended, both the borrowers AND the banks. However, he borrowers had legitimate reasons for this (the oeuvre of Elizabeth Warren is testimony to this, and too complex to get into detail here), while the banks did it simply out of greed.

      The other fact is that this is not a matter of paperwork, but the potential unraveling of one of the biggest asset classes on earth. The same people who believe this is simply a paperwork problem also throw around gargage arguments such as “contained,” “liquidity not solvency,” the CRA, etc.

    4. svsm

      The pooling and servicing agreements for the MBS trusts called for the original paper dutifully recorded as per existing law. How do you propose retroactively changing the contracts?

      It’s not just a matter of the original paper either. The recording of the transfers of assignment simply weren’t done. They avoided all recording fees by using MERS. If I were on a county board, I’d be looking at suing the banks for back fees. Everyone who pays property taxes knows they’ve gone through the roof. How much of that could have been defrayed if these banks had paid the fees as prescribed by law. Are you proposing we eliminate recording at the county level from now on? retroactively forgive them all the transfer fees? Do we just skip from whoever it it assigned to in the records now to whoever they say it is with no established chain?

      The federal government would have to rewrite New York trust law and nullify the need to record records at the county level…retroactively. Then make everyone accept electronic records instead of original documents. I have no doubt they’ll try. But this will be fought all the way to the Supreme Court.

      1. jest

        The scary thing is that post Bush v. Gore, Citizens United, and other nonsense, anything is possible with those robe-clad clowns.

    5. monday1929

      “Eric” (Jamie?): To add to the holes punched in to every sentence you wrote, the fraudulently bonused bankers were the professional risk evaluators.

    6. Stan Getz

      Eric,

      Because the law is the only defense of a person from the whims of the powerful. If properly regulated , the mortgage industry would never have become so irresponsible and such an incredible financial hazard to the rest of the economy. So gov and the rule of law are the only things that have the capability of preventing overwhelming private greed from destroying society. The fed gov abdicated its responsibility and the last bastion of sense are the state courts.

      It begs the question of why the fed is in such a hurry to divest itself of the majority ownership of Citi. If people knew we owned Citi and will defacto own many banks once their insolvency is widely recognized then the people might wake up and demand we exercise our ownership rights is forcing a reasonable resolution to the housing market.

  7. Talton Embry

    It’s football season. I thought of Michael Vick when I read your article today. He went to prison for having dog fights. People are arrested, fined and imprisoned for cock fighting. No one, not one person, is in jail for mortgage fraud, unless it was against the banks. Tens of thousands of people’s lives, millions of lives, have been adversely affected by the activities of the financial industry. All of these citizens would have been better treated had they been animals. Someone in authority would have cared. “They Shoot Horses Don’t They?”

    1. attempter

      Animals are treated better than people in many ways. That’s because enslaving animals requires taking better care of them than the system had to take of workers.

      Factory farms are an exception, though.

  8. rcthweatt

    In a criminal case, prosecutorial and police misconduct is not excused by the guilt of the defendant; it is an offense in and of itself.

    Assuming sincerity and a lack of personal interest(for the sake of argument) on the part of those who blame ‘deadbeat’ borrowers, what drives this impulse to blame the weak, and support the strong? A psychological need for authority, to identify with power, and fear of a world in which authority crumbles?

    It seems clear that the majority of these ‘deadbeats’ stretched themselves to buy because everything they heard and saw told them it was now or never-soon, prices would be entirely out of their reach,and for good. Were they responsible for that? Who in the MSM told them, ‘its’ a bubble, not sustainable, it’ll crash, stay out and wait’? Any voice that warned of this was drowned out- by the same voices now talking about ‘deadbeats’.

    1. attempter

      Those who were taken in by the propaganda and conned into buying more than they could afford are common, but still the minority among distressed housedebtors.

      Most are direct victims of the banks’ having destroyed their jobs (through globalization and their intentional triggering of the crisis), and/or the system’s perpetuation of a health “insurance” system where most of us are one medical emergency away from bankruptcy.

      1. Doug Terpstra

        And even bankruptcy provides dubious relief, following “reform” in 2005. The timing of that hideous bill hardly seems coincidental to this crisis but rather a synergistic plan component.

    2. ohmyheck

      This:

      “A psychological need for authority, to identify with power, and fear of a world in which authority crumbles?”

      This is exactly what it is. Link-“The Authorirarians”

      http://members.shaw.ca/jeanaltemeyer/drbob/TheAuthoritarians.pdf
      Quote:

      “So a right-wing authoritarian follower doesn’t necessarily have conservative political views.

      Instead he’s someone who readily submits to the established authorities in society, attacks others in their name, and is highly conventional. It’s an aspect of his personality, not a description of his politics.

      Rightwing authoritarianism is a personality trait, like being characteristically bashful or happy or grumpy or dopey. “

  9. Rodger Mitchell

    The guest author said, “Even the oft unfairly pilloried Modern Monetary Theory types are quick to point out that the constraint on central bank money-creation is inflation.”

    What he fails to mention is that supply-caused inflation has not existed since the end of the gold standard (1971), and is so distant now that the money supply could increase far more than it has during the past two years, without causing inflation. (See point #12 at http://rodgermmitchell.wordpress.com/2009/09/07/introduction/ )

    Inflation has not been caused by money supply but rather by energy costs. (See: http://rodgermmitchell.wordpress.com/2010/04/06/more-thoughts-on-inflation/ )

    While the inflation bugaboo has prevented our recovery, the recession has cost us trillions. We are like those people who die from the flu, because they were afraid of vaccination.

    Rodger Malcolm Mitchell

    1. Susa

      You say inflation is caused by energy costs. But are you sure that oil prices are set purely by supply and demand? You blame OPEC in your blog entry but why not indirectly loose money? The commodity price spike in 2008 can’t be explained by fundamentals, the rise was too dizzying and the fall too great to see it in any other light than momentum-driven speculation. Now, if speculation can cause inflation by driving up commodity prices, then that’s an argument for tighter restrictions on who can participate on those exchanges. That would limit the impact of loose money throughout the world. After all, the commodity exchanges set the prices for all of us across our fair Earth.

  10. DownSouth

    Thanks attempter, for putting all the data points into a coherent narrative so the American people can see and understand just how badly they’ve been had.

    Your conclusion is worth repeating:

    All of this, from the original predatory lending, to flippancy about conveying the titles and legally securing the trusts, to the Bailout dedicated to propping up those toxic MBS, which we now know are probably nothing but unsecured loans, to the government-led propaganda campaign and legislative hankering to cover up and eventually “legalize” this latest revelation, down to the brutish violence and dirty tricks of the gutter, is one coherent whole, one simple train of logic.

    I might add that there is one other rhetorical strategy I’ve noticed the bankster apologists deploying. They extract one of the elements you have enumerated above and defend it in isolation, as if it were a stand-alone phenomenon. In this way people never get the big picture, or evaluate events in their proper context, for to do so would expose the extent to which there is a well established pattern of abuse at work here. It is by putting occurrences into a larger framework that people can fully understand that each isolated event plays a role in a much larger whole: It’s just one gear in a large interlocking machine. And the whole is infinitely much uglier than each individual part that makes it up.

    1. attempter

      Yes, they try to represent one detail as being the whole. That’s why, if they have to do anything at all, they prefer to make a big deal out of the affidavits.

      There’s something Platonic or Kantian about it – they want us to focus not on the underlying failure to maintain the chain of title (the “real thing”, the real issue) but on the sloppy (not, of course, fraudulent, oh no) paperwork regarding it – an image or accoutrement of the real thing.

  11. Dan Duncan

    After I read Attempter state the following:

    “While the subprime borrower – powerless, often a minority – has long been an easy target…the fact remains that few people intentionally bought more house than they could afford. Most were induced by the massive propaganda barrage from the banks, government, MSM, and even consumer groups, to see a house as a guaranteed investment which could only appreciate in price.”

    I just knew I had come to the right place!

    Oh Attempter and Yves,

    Save me, please!

    For I was a subprime borrower (and a minority too!). I am powerless. [Attempter even says so!]

    Yes! I was victim of the Big-Bank/MSM propaganda. They told me my house would go up forever. I bought this line, hook line and sinker. I did so, because I am powerless. I even went so far as to refi my house and extracted equity to payoff credit cards, only to do it all over again….because I have no say in the matter. I have no will.

    Now come the banks with more propaganda. They tell me the foreclosure-gate is totally exaggerated. Since I cannot think for myself, once again, I find myself susceptible to their charms.

    I can’t resist them. Oh, I just know it is because I am nothing but a powerless, simpleton subprime minority. Oh help me! I know it’s wrong, but I cannot help it:

    THE-BANKS-ARE-GOOD. THEY-WOULD-NEVER-HURT-ME. THEY-REALLY-WANT-TO-HELP-ME. THEREFORE, I JUST KNOW FORECLOSURE-GATE IS AN EXAGGERATION. THEY EVEN TOLD ME IT WAS. AND THEY WOULD NEVER EVER LIE TO ME…

    Oh no…but this can’t be right! Yves and Attempter have told me that I can’t resist their propaganda. In fact, they think I am brainwashed. Save me Attempter. Save me Yves. I’m so confused. I cannot think for myself. [Remember, I am a minority after all.]

    Please…US Government and Academics everywhere. I am overwhelmed. Just take it. Take it all. Save me from me. Make my financial and health decisions for me. I know you know best.

    I AM POWERLESS. I AM SIMPLE. I AM A MINORITY. I GIVE YOU EVERYTHING.

    Whew! I feel so much better now. Such a relief. Thank you Attempter! Thank you Yves!

    1. DownSouth

      I often wonder why Yves continues to allow you to comment here, with your sneering, condescending, holier-than-thou attacks; with statements light on factual reality but long on attitude, half-truths and distortions. I’ve about come to the conclusion she allows it because you’re so bad at what you do that you do your cause more harm than good.

      Take the current comment for instance. What it shows is that you and the other corporate shills can’t have it both ways. There’s just too much information out there that rebuts your non-stop distortions and half-truths, like this report from Science Daily:

      Big Pharma Spends More On Advertising Than Research And Development, Study Finds

      A new study by two York University researchers estimates the U.S. pharmaceutical industry spends almost twice as much on promotion as it does on research and development, contrary to the industry’s claim.
      The researchers’ estimate is based on the systematic collection of data directly from the industry and doctors during 2004, which shows the U.S. pharmaceutical industry spent 24.4% of the sales dollar on promotion, versus 13.4% for research and development, as a percentage of US domestic sales of US$235.4 billion.

      [….]

      Thus, the study’s findings supports the position that the U.S. pharmaceutical industry is marketing-driven and challenges the perception of a research-driven, life-saving, pharmaceutical industry…

      $57.5 billion a year in advertising, just for Big Pharm alone.

      So while the corporate shills are screaming to their gills that propaganda doesn’t work, the money trail tells an entirely different story.

      1. Dan Duncan

        You know DownSouth, you act as if I am capable of making a rational decision to post what I post. How dare you?!

        I am no more capable of making a rational decision on what I post than a borrower is in deciding that a 125% adj. rate, negative Am loan might not be judicious.

        Look, I can’t help it. I am subject to right-wing propaganda, and I lack the wherewithal to reject their teachings. Obviously I am feeble-minded; please show me a little compassion and tolerance.

        Speaking of the Left’s much vaunted notion of tolerance, which mysteriously disappears when the Left is actually called upon to be tolerant….Consider:

        If the defaulting borrowers are victims of propaganda, then so is that Bad Ass who just has to drive around in the Hummer.

        Middle-class America, who voted in GW…twice? You can’t blame them for this. They were unable to resist Fox News propaganda.

        How about all those out there who support Big Oil and who, of course, chant in unison: “I HEART Sarah Palin”? Hell, these poor saps can’t even spell propaganda.

        But that’s the rub isn’t it? When people like Attempter spew the garbage that the defaulting borrowers were incapable of making a decision and that they were victims of propaganda, a lot of other bullshit follows….

        You can’t have it both ways. If a person is powerless with respect to buying a house, he is also powerless with respect to driving a gas-guzzling SUV or mindlessly voting for Sarah Palin.

        In due course, you are powerless to do anything but to idle away every day of your life, endlessly arguing in this chatroom from morning ’till night, day in and day out…

        And I am powerless to the notion that you are an utter moron for doing so.

        But don’t get mad at me for the last statement. I can’t help it.

        Tolerance, my friend. Tolerance.

        1. DownSouth

          Well sure ‘nuf, Dan, first rattle out of the box and you’re up to your old tricks again. You snarl:

          I am no more capable of making a rational decision on what I post than a borrower is in deciding that a 125% adj. rate, negative Am loan might not be judicious.

          Absent from this little cartoon, however, is any mention of the lender. The lender, who one would think to be far more sophisticated about things financial and economic than the average homeowner, must have also “decided” that the borrower could repay “a 125% adj. rate, negative Am loan,” no? Or—-Could it be?—-that the lender knew all alone there was no way the borrower could repay such a loan? But then that raises a very unpleasant question, doesn’t it? If he knew the borrower couldn’t repay the loan, then why did he make it?

          But never mind all these perplexing questions. In the make-believe world of the corporate shill the lender’s role just magically disappears. Everything is about the borrower.

          Like I said, all we ever get from you and the other corporate shills is distortions and half-truths, and this comment is surely true to form.

          1. Siggy

            I don’t think Dan is funny, I don’t think he’s relevant. I tend not to read his stuff. I read your stuff and enjoy your fixation with Hannah Arendt. I marvel at your ability to provide citations and long quotes. As to chiding Dan, not worth the effort, he doesn’t get it.

            This barrage of proganda about bad borrowers is not amusing and unfortunately expected. Once the loan defaults and becomes eligible for foreclosure, the chain of title establishes standing. Can’t prove standing, can’t foreclose.

            Should the defaulter stay in the house? Maybe if he’ll keep it up and mow the lawn. Should the servicer or the mortgage loan owner commit forgery, fraud and any other falsification that can be conceived? Of course not. And if they do, prosecute them, throw away the key. Will such action destroy the financial system, not in a million years, there’s lost of people just slavering at the bit for the opportunity to be a bankster.

            It was a fraud to orginate the loan in the first place. It was a fraud to not record the several assignments that led to securitization. It was a fraud to tell the rating agencies that the pools of loans were constructed so as to mitigate defaults. It was a fraud to represent to buyers of MBS that all of the assignments and recordations had been accomplished.

            Now it confounds me that anyone would buy a CDO. That little beauty consists of claims against the income streams of equity/first loss tranches whose expected value is zero. Wow, that’s salesmanship.

            What’s the cure here, establish a clear chain of title, can’t do that? Enter the State Attorney General and the proceeding for escheat.

            And in all that, remember that the lender did not have to make the loan! Any loss arising from a defaulted loan is his and his alone to bear. The borrower, well, he gets to sleep in the street.

          2. Dan_in_KC

            Thank you DownSouth – if you had not already responded to Dan Duncan’s statement regarding the negative amortization loans I would have. The banker’s either convinced themselves that the people to whom they made such loans could (or would be able to) afford the loan OR they knew that the loan would fail in which case they too were betting the value of the home would not fall and they would make a killing reselling the same home(s) over and over again to other naive fools while raking in their loan origination fees and collecting mortgage payments between the time the mark (‘er ‘homeowner’) moved in and was then ultimately kicked out. If the former – then of the two parties involved I would hold the banker’ to a higher level of obligation to lend responsibly. If the latter then they were clearly failing their fiduciary responsibility to their depositors and acting in a reprehensible manner (at best) to those whom they aggressively marketed such loans.

            When people go to a loan shark for a loan – they can half way expect that the terms are going to be stacked against them. When they go to a ‘respectable’ bank for a loan they have a higher degree of trust and the bankers took advantage of that expectation. I expect my credit card company to try to f@!k me over but not my bank. That trust has now been eroded through the corrosive behavior of the bankers over the last few years and while I logically can appreciate some arguments concerning the homeowner’s obligations to meet their contractual obligations my emotional response to the crap banks pulled in the pursuit of their profits is not in their favor. Furthermore, contractual obligations do not apply if the contracts themselves were illegitimate.

            By the way – lest someone think I am a ‘deadbeat sympathizer’ because I’m one myself I will state for the record that I paid my home off early (and am happy to be in a position to tell the bank to go suck on a rock if they want to collect more fees from me).

        2. Anonymous Jones

          “I am subject to right-wing propaganda, and I lack the wherewithal to reject their teachings. Obviously I am feeble-minded.” Reminds me of the old comedy saw: It’s funny because it’s true!

  12. anon48

    “Perhaps the most insidious propaganda line, and certainly the most scabrous, is the bashing of alleged “deadbeats”. While the subprime borrower – powerless, often a minority – has long been an easy target, and the contempt has been spreading up the income scale as more people are engulfed in the catastrophe, the fact remains that few people intentionally bought more house than they could afford. Most were induced by the massive propaganda barrage from the banks, government, MSM, and even consumer groups, to see a house as a guaranteed investment which could only appreciate in price.”

    This continuing promotion of the “borrower as a victim” mentality is unhealthy. It encourages people to avoid accepting responsibility for their actions. Now can you can say “…Most were induced by the massive propaganda barrage …” all you want. But, anecdotally, I know a number people who bought multiple homes in Arizona, Las Vegas and Florida during the bubble years, for no better reason other than they saw friends making big sums flipping house and felt they were being left out. From a financial perspective, they had no business doing this. They bet a significant portion of their wealth on real estate- and lost. Their stories are part of this crisis whether you like it or not. Further, I doubt whether there’s any empirical evidence that supports the assertions you have made above.

    I have no connections to the banking industry. I have followed this blog for almost three years. There was more real-time meaningful observation and insights to be found here, than could be found anywhere else. My eyes were opened to what a waste of time it has been to try to follow current events via the WSJ (had done that for more than twenty years). But now it seems this blog has become much more than that. It’s become a political force to be reckoned with. The intense blocking and tackling that the author has done on the financial crisis has pushed the bad guy investment bankers back 90 yards, their backs now to their own end zone. And that’s terrific.

    To me, this blog has achieved the results it has through relentless coverage of the various aspects of the crisis as it has unfolded, clear presentation of facts, able story-telling, outstanding analogies all woven together in a tight logical masterpiece(also well told in ECONned). Yves helped establish negotiating leverage, on behalf of the rest of us, against these brutes. This provides at least some small hope for a more favorable long term resolution to the crisis, where the people who caused it will be punished and additional controls are put in place that reduce the likelihood of a follow-on crisis. So the last thing I want to see Yves do is moderate her position. Because the very moment she does that and pulls the knife away from their necks, the rest of us lose leverage (and hope).

    However, from my perspective, everything gained has all been built upon the foundation of truth and credibility. I agree with some of what you wrote but the ”all borrowers are victims” meme has no basis in reality. I would suggest you refrain from promoting that argument. So who cares if the other side continues to hammer home the deadbeat theme. I have just as little interest in seeing these people get a free house at the expense of the rest of us as I do seeing financial industry miscreants walking away scot-free.

    1. Darby Shaw

      “They bet a significant portion of their wealth on real estate- and lost. Their stories are part of this crisis whether you like it or not. Further, I doubt whether there’s any empirical evidence that supports the assertions you have made above.”

      Simply untrue.

      “I agree with some of what you wrote but the ”all borrowers are victims” meme has no basis in reality. I would suggest you refrain from promoting that argument. So who cares if the other side continues to hammer home the deadbeat theme.”

      Dangerously untrue

      Empirical evidence (this case was a year and a half in the making):

      http://www.scribd.com/doc/38654717/Class-Action-vs-Mortgage-Electronic-Registration-Systems-Gmac-Deutsche-Bank-Nation-Star-Aurora-Bac-Citi-Us-Bank-Lps-Et-Al

      Before commenting on the complaint, I would implore one to actually read it first.

      http://www.youtube.com/watch?v=yXrkubSA2SA&feature=related

      Some more knowledge being dropped…boo yah!

      1. Eclaire

        And, a bit more anecdotal evidence from one who worked for a multinational corporation that had purchased a sub-prime mortgage company in the ’90’s (when few people knew what “sub-prime” meant). We were “financial and tax advisors” to lower income people, many of whom were immigrants. Company policy was to target clients with mortgages AND credit card debt and to “advise” these clients to bundle all their debt (secured and unsecured) into one big, low-interest sub-prime refinance mortgage (secured by their home) – lower your monthly payments and all the interest becomes tax-deductible.

        And we can take away your home if you can’t make the payments. Heh heh heh (twirling mustache).

        Classifying these clients as “victims” may be a bit strong, but I think we can safely say that they were intentionally misled by financial advisors who supposedly had their (the clients’) best interests at heart.

        Note: I quit.

      2. anon48

        Thanks, I learned something new.

        A single data point provides enough valid empirical evidence so that the result can be projected over an entire population.

        1. Darby Shaw

          Up until recently, Yves and a few others have been the only real “data points”. When the indictments rain down, you will see all the empirical evidence you can handle.

          Willful ignorance is still ignorance.

    2. Kevin de Bruxelles

      Really this Fauxclosure problem comes down to one thing and one thing only:

      The Rule of Law.

      So to me all this debate about “deadbeats” or “hopeless minority victims” is just a total waste of time. The rule of law applies equally and the rights of both supposed deadbeats as well as helpless minorities must be respected. So I am happy to insert either caricature into any argument I make because the legal process is what is in question here; not the moral character or skin colour of the participants in this process.

      This also means that if the banks do respect the legal process then they should be able to foreclose.

      I’ve also read elsewhere before this scandal broke out that since the “foreclosies” are all helpless victims of the evil banks, the foreclosure process should be stopped regardless of what the law says. To me this is just a flipping of the current argument that since “foreclosies” are all deadbeats they should be evicted regardless of what the law says. To me anyone following the logic of the rule of law must reject both of these victim / deadbeat arguments.

      1. anon48

        “Really this Fauxclosure problem comes down to one thing and one thing only:
        The Rule of Law…So to me all this debate about “deadbeats” or “hopeless minority victims” is just a total waste of time.”

        I disagree. The rule of law will carry no weight if the general population loses respect for it.
        I deal with the tax code every day. Its law right? Many tax laws have been passed over the years that include sleazy exceptions for certain particular parties (think oil and gas industry). And to make matters worse, they’re usually hidden in areas where most folks will not know to look. My own experience is that I have a number of potential clients to which I respond “No thanks” because they are involved in hair-brain schemes that will most certainly blow up if detected by IRS. Subjectively, my sense is that many people are losing faith.

        The problem is that IRS is presently at its wits end trying to enforce the law while at the same time keeping up with all the recent tax law changes, court cases and directives with which I must deal. When given the chance to speak off the record most knowledgeable IRS employees at all levels, will admit that the only reason the system continues to work is that most taxpayers (while not happy) continue to comply voluntarily. Who knows how long that will continue?

        The argument that you so easily dismiss, whether it is or isn’t ethical to walk away from a loan under these circumstances, is a philosophical discussion our Congress may most likely have to address in the very near future. Hopefully, they’ll show it more respect than you. What they decide will have a direct impact on the level of respect the rest of us have for “the rule of law”. Then you’ll be able to use the results of that discussion as a means to create new caricatures for any future arguments that you have the opportunity to make.

        1. Kevin de Bruxelles

          Just like democracy, the only thing worst than the rule of law is no rule of law. The rule of lay is an ideal, sadly power and human fallibility always intrudes on this idea to make it less than perfect. But abandoning the rule of law altogether because of these perceived impurities only ensures that in its place rises the rule of power, the rule of the big man, the rule of the Few.

          Walk-aways, strategic defaults, jingle mail, whatever you want to call it, are explicitly allowed in any non-recourse loan system. Those are the rules of the game, the rule of law. In most parts of Europe these types of loans are typically not allowed and you have less trouble with walk-aways or foreclosures or housing bubbles because people usually understand this and act conservatively because of it. But not always. In Japan for example the fact that they had a bubble and recourse loans (someone correct me if I am wrong here) meant that because these people could not walkaway, thee economy suffered the effects of decades of underwater home-owners. I would refer you to Richard Kline’s comment on that daily links thread of today. In the end walking away is the best thing that people can do in order to bring prices back down to affordable levels. But this debate about walking away has nothing to do with L’affaire Fauxclosure.

          The real danger here is that in order to solve this “problem” the US government is going to suspend the rule of law in favour of Wall Street by creating a type of Banksta-Sharia law, In many Islamic Sharia law systems the word of a Muslim woman is weighed at half the value of a man’s. The words of non-Muslims is weighed even less. In the coming Banksta-Sharia law the word of a banker will be taken at full value while the word of a regular American citizen will be taken at no value. This is where we are heading. And when that day comes, we have to be clear that this is battle is NOT a useless war of attrition between deadbeats vs. the helpless minority victims. This framing only plays into Wall Street’s hands. The real battlefield is the rule of law and whether the people of the US have the same rights before the law as Wall Street does.

          Any true capitalist would not be appealing to the morality of weaklings and would instead let the chips fall where they may. They would stand back and insist that the government not intervene while the rule of law crushes Wall Street into a million tiny pieces.

          1. anon48

            “Any true capitalist would not be appealing to the morality of weaklings and would instead let the chips fall where they may. They would stand back and insist that the government not intervene while the rule of law crushes Wall Street into a million tiny pieces.”

            How naïve. Anyone worth their salt knows that Wall Street is the ultimate capitalist club and has already purchased a good chunk of “the rule of law” via K Street. Further, your argument presumes that laws are made of static universal norms –unless you try to argue the stellar record of courts in their omniscient interpretations while establishing new precedents. The oft repeated chant about “the rule of law” is no more meaningful the chant of the Ed Sullivan-like character in Mad Max when he continually recited the rules of Thunderdome- “Two men enter- one man leaves”.

            Life is dynamic, society becomes more complex, laws must be changed to remain relevant. This discussion about what is or isn’t ethical for a society should be discussed openly on honestly before new laws are made. We should take the opportunity and have that discussion. Before K-Street takes control of this conversation.

          2. SidFinster

            Capitalists are not about capitalism. Capitalists are about getting the fattest bonus possible as quickly as possible. To the extent it is relevant at all, ideology is simply a means to get that bonus and associated perks.

            If “government red tape is interfering with markets!” will result in a hefty bonus, capitalists will insist that “markets be liberated.”

            If bailouts and corporate welfare will result in the biggest stack this Christmas, capitalists will demand bailouts. Notice how quickly many an infestment banker changed his tune (and with such touching sincerity) from 2006-2008.

            If Kim Jong-Il were to be named President and Juche Teacher For Life in 2011, the same folks who scream for “QE Forever!” would be fighting to put the biggest Dear Leader badges on their uniforms.

            None of this is surprising; most of us would do the same if we had the power to do so. What is amazing is that we as a society let it happen.

    3. DownSouth

      anon48,

      I’ve got to give you one thing, and that is that you are good. Really good. Your arguments are deceptively subtle and beguiling. They sound factual and well reasoned, but as Darby Shaw points out, there is precious little factual reality to back them up.

      Darby’s already shot holes in your departures from factual reality, so let me shoot some holes in your departures from sound reasoning. Here’s a good example:

      I agree with some of what you wrote but the ”all borrowers are victims” meme has no basis in reality. I would suggest you refrain from promoting that argument.

      To begin with, attempter never said “all borrowers are victims.” What he said was:

      Perhaps the most insidious propaganda line, and certainly the most scabrous, is the bashing of alleged “deadbeats”. While the subprime borrower – powerless, often a minority – has long been an easy target, and the contempt has been spreading up the income scale as more people are engulfed in the catastrophe, the fact remains that few people intentionally bought more house than they could afford. Most were induced by the massive propaganda barrage from the banks, government, MSM, and even consumer groups, to see a house as a guaranteed investment which could only appreciate in price.

      So you exaggerate what attempter said, distort it, and set up a straw man that can easily be knocked over.

      Where you reach your most disingenuous, however, is when you state:

      So the last thing I want to see Yves do is moderate her position. Because the very moment she does that and pulls the knife away from their necks, the rest of us lose leverage (and hope).

      Now while you’re a far superior polemicist than Rick Halsen, whom I was debating yesterday on this thread, you both seem to be opening the same line of attack, which is to knock off those protecting Yves’ left flank. What you hope to do is shift the whole argument to the right, so that the discourse does not encompass the full left-to-right spectrum, but only the center-to-right spectrum. Halsen argues his position this way: “we should start from the middle again to see where we are and where we need to go.”

      Where have we seen this strategy used before? It comes right out of Obama’s negotiating book. He murdered his left flank, embraced his right flank, and we can see how well that worked out with bank “reform” and health care “reform.”

      The truth is that you don’t want the pendulum, as Halsen put it, to return to the “middle.” What you want is to establish a new middle, a good distance to the right of the current one.

      Further evidence of your deceptiveness is when you advise: “So who cares if the other side continues to hammer home the deadbeat theme.” Well I care, and I’m sure a lot of other people care, that is if what the other side is saying is not true. And funny you should care so much about the veracity of what the left is saying, but not a dither about what the right is saying. Is there just a little bit of a double moral standard at work here.

      Even more evidence of your deceptiveness is when you conclude: “I have just as little interest in seeing these people get a free house at the expense of the rest of us as I do seeing financial industry miscreants walking away scot-free.” Now that’s not really comparing apples to apples, is it? If you were really interested in fairness as you claim, you would have said: “I have just as little interest in seeing these people get a free house at the expense of the rest of us as I do seeing financial industry miscreants getting a free house at the expense of the rest of us.”

      Of course the financial industry miscreants already have their free house, and much, much more. So any talk of taking the financial industry miscreants’ free house away from them is heresy, completely beyond the realm of possibilities.

      And surely the fiancial industry miscreants know that taking their house away from them is a far easier chore than taking their freedom away from them. The first can be a civil proceeding, the other is always a criminal proceeding. And the burden of proof for a criminal conviction is much higher thanfor a civil judgment.

      1. anon48

        Downsouth,

        Wow, you give me way too much credit. The truth is that I’m not as good a writer as I should be- and probably rush things too much when posting. Those clever literary maneuvers you cite are really nothing more than obvious examples of my less than stellar writing abilities. Trust me, I’d be way more successful in life than I am if I had only half the Machiavellian talents that you’ve attributed to me.

        The only thing you said where I can see some truth is

        “..you both seem to be opening the same line of attack, which is to knock off those protecting Yves’ left flank. What you hope to do is shift the whole argument to the right, so that the discourse does not encompass the full left-to-right spectrum, but only the center-to-right spectrum. Halsen argues his position this way: “we should start from the middle again to see where we are and where we need to go.”

        Aside from the part where I’m knocking off those protecting Yves left flank- I freely admit that I seek to move the argument to the center. That is the nature of the way I do business. I see nothing wrong with that. BUT I also realize that taking this approach may be naïve in certain situations. Maybe this is one of those situations. Regardless, I do not wish to see Yves more her argument to the center. It’s obvious to me that would be counter-productive.

        BTW- I had to look up the definition of polemicist. Guess I can’t argue with you on that one since my wife has accused me of taking a superior point of view my times over the years. I’ll acknowledge that’s not something to be proud of.

        1. DownSouth

          Oh, I don’t think I give you too much credit at all. And when I was lauding your abilities I wasn’t thinking so much in terms of your writing skills, but your ability to think out and craft arguments that are verisimilar and plausible.

          Take your comment at 1:37 pm above. This leaves little doubt that you understand the stakes involved in winning in the courtroom of public opinion, and that in that courtroom just about the only arguments that resonate are moral arguments. Perhaps no one said it better than Oliver Wendell Holmes, Jr. Writing in The Common Law in praise of Chief Justice Lemuel Shaw, he said: “the strength of that great judge lay in an accurate appreciation of the requirements of the community whose officer he was….[F]ew have lived who were his equals in their understanding of the grounds of public policy to which all laws must ultimately be referred.”

          The comment, however, just like your opening comment, is subtlety and intelligently, but inexorably, focused on the question of “whether it is or isn’t ethical to walk away from a loan.” Everything you write is with that one intention in mind—-to question the ethics of the borrowers, impugn their motives and intentions, or marginalize and discredit their defenders. It’s just that with you, unlike with some of the more hamfisted commenters hereabouts, it’s much more difficult to discern. Many people are won over more by form than by content.

          1. anon48

            “Everything you write is with that one intention in mind—-to question the ethics of the borrowers, impugn their motives and intentions, or marginalize and discredit their defenders. It’s just that with you, unlike with some of the more hamfisted commenters hereabouts, it’s much more difficult to discern. Many people are won over more by form than by content.”

            NO- my intention has not been to question the ethics of anyone. But rather communicate that not all of the borrowers were innocent victims entitled to a free house.

            The reason, mostly based upon evidence presented at this blog more than anywhere else, is that legally (but not morally) those folks hold a winning hand. My concern is that the potential for anarchy if this comes to pass is beyond comprehension. My hope is that instead, with the leverage established by Yves Smith and people like her, the IB’s will now be forced to provide for significant loan mods on a large scale. Something they have refused to do up until now. This as I recall, has been something she has been promoting since day one. This is the only reasonable way out of the mess, while at the same time, getting the real estate market and economy moving forward again.

      2. anon48

        “Darby’s already shot holes in your departures from factual reality…”

        Oh yeah right. Riddled it with bullets.

        Shoot, couldn’t help myself.

    4. readerOfTeaLeaves

      Great points.

      To me, this blog has achieved the results it has through relentless coverage of the various aspects of the crisis as it has unfolded, clear presentation of facts, able story-telling, outstanding analogies all woven together in a tight logical masterpiece(also well told in ECONned). Yves helped establish negotiating leverage, on behalf of the rest of us, against these brutes.

      Agree. It’s a wonder.

  13. Darby Shaw

    The root of this fraud is unadultered greed, which can be tangibly traced back to the creation period of the MBS’s. While attempting to create and sell (Actually, to fill orders; to sell something would actual require a sales process, which in this case was non-existent)as many of these economic sh*t-bombs as humanly possible, the gentlemen involved in this process soon ran out of enough parts needed to build the bonds(thus jeopardizing their modest salary and reasonable bonuses). So rather than wait for more quality pieces of financially healthy borrowers(which would have led to healthier and well valued bonds), they instead “relaxed” (ie threw out the window) underwriting guidelines to the point that virtually anyone, no matter how unsound fiscally, to purchase a home (at 100% LTV no less)in order to create more parts to build the bonds faster (and thus not put their modest bonuses at risk). THIS IS WHERE THE CRIMINAL NEGLIGENCE AND WILLFUL NEGLIGENCE BEGAN. The subsequent decline of reasonable underwriting guidelines furthered this frenzy, and thus created the environment in which a massive ponzi-fraud was perpetrated on both the investors and the the public at large. The argument that homeowners “knew what they were signing” is disingenuous at best. And as Moody’s rubber stamped these suckers with AAA ratings, the investors were duped as well. When this tale has its day in criminal court (Which I believe it will), it will be in a RICO setting because this was a vast criminal enterprise. Believe it.

    The greed got so overwhelming and vast that the rest reads like the keystone cops. They didn’t even stop to sign the bond doc’s properly (a delicious irony), which would be akin to closing on your home, but not signing the paperwork until a few months later. Its that tiiiiiny little detail that will (hopefully) lead to the bank’s legal downfall. And they all knew exactly what they were doing, the real comedy lay in the fact that they did it so poorly.

    The real pickle is explaining this mess in a clear understandable fashion to someone with no prior knowledge or legal/economic fashion.

    Read the Foster case (filed 3 weeks ago)

    http://www.scribd.com/doc/38654717/Class-Action-vs-Mortgage-Electronic-Registration-Systems-Gmac-Deutsche-Bank-Nation-Star-Aurora-Bac-Citi-Us-Bank-Lps-Et-Al

    Start around page 23 and read until you vomit in your mouth a little.

    The best part of all of this? Its all available to see for yourself.

    http://www.sec.gov/Archives/edgar/data/1269518/000112528205004023/0001125282-05-004023.txt

    Thats a Countrywide MBS prospectus. Read the PSA for yourself.

    ALL ROADS LEAD TO MOZILO…

  14. MinnItMan

    takeresponsibility said:

    “No one would be dealing with the banks if they paid the $$ they KNOW darn well they owe for the priviledge (not a right) to own a home.

    ***

    We wouldn’t be in this mess if not for the current economic policies of this administration….”

    The first statement is a pretty good example of the authoritarian personality. You set up a power relationship dichotomy for me, for example, employer/employee, landlord/tenant, lender/borrower, prosecution/defense, etc., and I can tell you with accuracy approaching 100% where takeresponsibility will come down. Ironically, I bet he even thinks he’s a libertarian (of sorts).

    As for the current administration’s policies (I’m not huge defender, btw) what are they? And how are they qualitatively different from President Bush’s? I have a hard time not seeing Medicare Part D and ObamaCare pretty much on the same block in the same neighborhood, maybe even a duplex – is that just me? Seriously, that’s the only thing the right has got to push the “Pres. Obama is a socialist menace” theme. And in light of Pres. Bush and Med. Part D (and in light of Gov. Romney providing the blueprint for O-care) … my head explodes.

    People can discuss theory all they want, but the way I saw the last “choice” in the presidential election was this: two candidates with the least administrative/executive experience between them since 1968 (although Nixon had been VP, FWIW). If not 1968, then 1960 (Nixon, again), and if not then, you have to go waaaay baaaack.

    The two viable alternatives (who lost in the primaries) were a Private Cap CEO, and Mormon (Romney) and a bank lawyer (Sec. of State Clinton). I suppose we would have gotten radically different policies from either one. Or Mike Huckabee?

    I realize most of the folks here at this site are not Republicans, at least from what I can tell. And maybe too many of them see answers on the viable left (I don’t, so far, and I’m a little surprised). But I sure as heck (I’d usually use another word ending in “ck”) don’t see any answers from the right, except the highly-marginal view of dissolving the Fed. That ain’t gonna happen.

    My teenage kids have a link on facebook to a “whatever” called “you cannot fathom the intensity of the f**k of which I do not give.” I tell them that GAF is actually pretty hard work, seldom rewarded, usually dissappointing and makes thinking clearly exceedingly difficult.” But paraphraising Mother Teresa: “do it anyway.” Don’t be such a moron.

    And btw, consult a lawyer before you spout off on the difference between privileges and rights (or at least read something on the subject – there only, like, a thousand years of law that prove you wrong). I only charge $250 an hour. It will save you so much embarassment.

    I got beer to drink. See you all tomorrow.

    1. Darby Shaw

      “I tell them that GAF is actually pretty hard work, seldom rewarded, usually dissappointing and makes thinking clearly exceedingly difficult.” But paraphraising Mother Teresa: “do it anyway.” Don’t be such a moron.”

      well said

  15. Ron

    The current phase of the credit crisis is now large scale foreclosures in middle and upperclass white neighborhoods at a scale in the millions and predictably many of these folks unlike the strawberry pickers in prior years are able to put up a fight to keep their property. Here in Calif the problem is not the first time homebuyers overpaid though this is an issue but the cash out refi during the boom years has and is generating the volume of current and future foreclosures.
    Friday I looked at a foreclosed home, 1972 Weiss Ln Penngrove, CA 94951, a nice upscale house that was purchased in 98 for 280K and eventually went into foreclosure with a mortgage over 900K all in a few years. Its inflation adjusted value should be around 375K today but the bank initially listed it for 770K and now down to 659K and soon to be lower.
    The foreclosure crisis is more then a banking and legal story but also a way of life for millions of Americans who live on OPM and leveraged speculation. Americans need to return to a productive lifestyle but at this point in the crisis the emphasis is on keeping the credit binge alive by the government,banking industry and J6P.

  16. F. Beard

    Wow! I tend to believe that we are all, including bankers, victims of a fundamentally unstable and unjust money system and we should all work peacefully to resolve our problems.

    However, the current need is money. The US Treasury should act as a benevolent uncle and just send every American adult a HUGE check of new, debt and interest free legal tender fiat. That would buy us all time and partially reverse the unjust transfer of wealth from the poor and middle class to the rich.

    Debt forgiveness (and forgiveness in general) is Biblical. We are risking quite a lot if we ignore that. The folks in the time of Jeremiah could have been spared the destruction of Jerusalem and the 70 year Babylonian Captivity if they had not reneged on freeing their Hebrew debt slaves:
    Jeremiah 34:8-22

    But if we insist we can risk the Lord’s wrath instead. He get’s angry about oppression of the poor, widows, aliens, and the helpless such as bankers are likely to do.

    Gee wiz, bankers. Wake up!

    Or not. The “jokes” about burning peoples houses make me question whether anyone should bother to try to save you from yourselves. Where will you flee to bankers?

  17. MinnItMan

    “Debt forgiveness (and forgiveness in general) is Biblical. We are risking quite a lot if we ignore that. The folks in the time of Jeremiah could have been spared the destruction of Jerusalem and the 70 year Babylonian Captivity if they had not reneged on freeing their Hebrew debt slaves:
    Jeremiah 34:8-22”

    It’s a helluva a lot less relevant what you say you believe in – consubstantiation, transubstantiation, the “presence”, karma, dharma or whatthefuckarma, etc… – than whether you feel statement above, and if not, why not.

    Discuss.

  18. MinnItman

    Note: My favorite “God” debate is between Jerry Lee Lewis and Sam Phillips as to the “inerrant Word of God.”

    It really is.

  19. Bill

    Ives –

    Keep giving the banks h..l ! God knows the politicians won’t .
    As far as your attack on 10/7 , I would expect more . You can contact the Gov’t Cybersecurity branch , but thats probably a source of the attack . May I suggest you speak with Karl Denninger of the Market Ticker , he has set up a pretty bug free format for himself , perhaps he would help . Another Allie in the War on lies and propaganda in high places .

    Good luck

  20. Psychoanalystus

    While I agree 100% with this article, and, as everyone here knows, I am anti-bank and anti-establishment, I am nonetheless amazed seeing the reaction of the American people. Instead of seeing people organizing, exploring viable options, and resisting the ongoing abuse, what I see are morons pointing the finger at their neighbors who have strategically defaulted or have lost their jobs and then lost their homes. I see more of that stupid individualistic, pull-yourself-up-by-the-bootstraps mentality, the same retarded clichés that this semi-illiterate nation has come to think in. Nobody gives a sh*t about the exploding homelessness in this country – what I keep hearing is the same selfishness speaking about how “my home lost value”. It continues to be about Me, Me, Me.

    I see no attempt whatsoever at building even a semblance of community. No attempt to connect with fellow human beings. No attempt to reconsider the mindset that has got this nation into this mess. No attempt to even reconsider the choices of the past as possibly flawed. I don’t see parents spending more time with their children, no children taking care of their aging parents. All I see is the same mindless greed at all levels, the same lust for things, not only on the behalf of the banks, which are obviously criminal, but amongst the vast majority of the American people. The malls are still full of people, buying, charging, lusting. SUV sales are still going bunkers.

    I also see the same stupid phony-patriotism that got this nation into so many useless wars, and allowed the War Party to successfully brainwash the masses of morons into supporting these wars. Two days a week I work in a rural area here in California, and on my way there I drive through some truly third world townships. Unbelievable poverty, decaying mobile homes inhabited by alcoholic and meth-addicted white trash, cars raised on bricks with their engines swinging from trees, and filth everywhere. However, half of these third-world mobile homes have a US flag in front. This is what I call stupidity.

    Just some random thoughts for this otherwise fine Sunday.

    Gotta scoot. Time to hit the waves.

    Psychoanalystus

  21. Piggly

    Is it time to look at the other side of the coin ?

    We now know that the notes were not transfered to the holding companies and that in many cases the actual possession (ownership) of the note is not known. This is why there are apparent cases of homes being forclosed on while the home owner is current.

    So the question is “What is to stop the asset holder (mortgage security holder)from being defrauded by the bank ?”

    Couldn’t the bank just say “Sorry you bought an asset that is now in default” ? When the bank doesn’t actually know for sure.

    In the end I expect we’ll find that the banks are playing both ends against the middle.

  22. Neil D

    As an early morning commenter prone to calling out mortgage deadbeats, I was disappointed to see the odd charge about targeting NC repeated.

    Otherwise, I commend the author for his effort to frame the the debate in moral terms. As Dan Duncan hilariously points out, there is a wee bit of a problem with this line of reasoning. Skipping past his heated rhetoric, DD’s larger point about being responsible for your financial decisions (good, bad, lucky, or unlucky) is part of our American character. It may very well be a character flaw, but is still part of the American creed. It’s very hard to resist the temptation to be paternalistic given all that has happened. On the one hand, there is a predator class in America that needs to be smacked around. On the other hand, there are lots of people unable to handle the complexity of modern family finances who need babysitting by big brother. It’s pretty clear we don’t have the balance right just yet.

    It’s sort of a shame that the debate over title transfers and proper foreclosure due process is confounded by this larger debate over what caused the housing bubble. Ultimately there is no excuse for cutting corners the way the banks did. They loosened underwriting standards, preyed on the greed and housing envy of millions of Americans, and still managed to screw up the basic business processes required to securitize the mortgages. At the same time they opened up the housing finance industry to massive fraud rings that devestated even more neighborhoods and enriched the criminals who ran them.

    The corruption was, it seems to me, so pervasive that the moral cause advocated by the author is tainted. Still, I’m game for massive intervention by the government to straighten it all out. That would, unfortunately, require all Americans to pull together toward the common goal of fixing the problem for all and ignoring the fact that some unsavory and unworthy characters will benefit. Oh, and probably a hefty tax hike too. Given the ill wind blowing through the electorate, I’m not holding my breath.

    1. F. Beard

      That would, unfortunately, require all Americans to pull together toward the common goal of fixing the problem for all and ignoring the fact that some unsavory and unworthy characters will benefit. Neil D

      You mean the average “respectable” banker?

      Oh, and probably a hefty tax hike too.

      No new taxes or debt is necessary; the US Treasury could bailout the entire population with United States Notes. But that would set a horrible (to a banker) precedent, wouldn’t it, debt and interest free money?

      Given the ill wind blowing through the electorate, I’m not holding my breath. Neil D

      If a few of those evicted families should cry to the Lord for justice would you want to be a member of the counterfeiting cartel?

      The bankers and uber-rich should really count their blessings, still being able to breath. They would be wise to lobby for a bailout of the population.

  23. Darby Shaw

    The very rule of law is what allowed all the diverse views on this blog to gather, assemble, and debate. Its this very same rule of law that has been broken on a massive scale. Period. This cuts to the heart of who we are as a nation. We are all both good and bad, right and wrong. But would you give up your freedom to post on this blog? Or to peacefully assemble? If we seek a redress that creates new laws to cover up for old laws that were broken,what will that say about us? Like it or not, right or left, these were the bedrock principles that some really wise men came up with a little over 200 years ago. It is the issue that we declared our independence, its why our millions of our people have died defending not our country, but rather the ideals for which this republic was founded. Would you have that blood spilled in vain?

    Anon, you work for the IRS no? If you read the complaint I linked on a post earlier, you will find so many violations of the REMIC IRS codes that you of all people should know about, even if you don’t respect them, or the rule of law. Do you not consider that “empirical evidence”?

    I refuse to accept that this will lead us to new lows and a desecration of our constitution, but rather, I believe this is an opportunity for our country to shine in it’s finest hour, by rising above this fray and doing the right thing, by exercising the Law in regards to the massive corruption we have been seeing and bringing to justice those who have defrauded not just us, the american people, but our ideals as well. We have collectively strayed from our ideals, our roots, our cause. But I do believe its not too late to turn back and embrace the fundamentals of what our nation has represented in the past, and can still reconcile with in the future. We are not right or left, democrat or republic. We are all Americans.

    If we don’t make a stand now, the next stop will be the Gestapo. I’m sure 6 million Jews didn’t see it coming either.

    And our true enemy is apathy.

    1. Doug Terpstra

      A very moving and inspring comment. Thank you. (Very much worth repeating, BTW, seriously.)

  24. Darby Shaw

    The very rule of law is what allowed all the diverse views on this blog to gather, assemble, and debate. Its this very same rule of law that has been broken on a massive scale. Period. This cuts to the heart of who we are as a nation. We are all both good and bad, right and wrong. But would you give up your freedom to post on this blog? Or to peacefully assemble? If we seek a redress that creates new laws to cover up for old laws that were broken,what will that say about us? Like it or not, right or left, these were the bedrock principles that some really wise men came up with a little over 200 years ago. It is the issue that we declared our independence, its why our millions of our people have died defending not our country, but rather the ideals for which this republic was founded. Would you have that blood spilled in vain?

    Anon, you work for the IRS no? If you read the complaint I linked on a post earlier, you will find so many violations of the REMIC IRS codes that you of all people should know about, even if you don’t respect them, or the rule of law. Do you not consider that “empirical evidence”?

    I refuse to accept that this will lead us to new lows and a desecration of our constitution, but rather, I believe this is an opportunity for our country to shine in it’s finest hour, by rising above this fray and doing the right thing, by exercising the Law in regards to the massive corruption we have been seeing and bringing to justice those who have defrauded not just us, the american people, but our ideals as well. We have collectively strayed from our ideals, our roots, our cause. But I do believe its not too late to turn back and embrace the fundamentals of what our nation has represented in the past, and can still reconcile with in the future. We are not right or left, democrat or republic. We are all Americans.

    If we don’t make a stand now, the next stop will be the Gestapo. I’m sure 6 million Jews didn’t see it coming either.

    And our true enemy is apathy.

  25. TC

    So many deadbeat borrowers … so little due diligence. “So it’s the banks and government themselves who are overwhelmingly responsible for the wave of defaults.” Agreed. How long, though, before the “burning houses” are owned by judges dispensing bank grease?

  26. noash

    The more I read about “foreclosure gate” the more I am reminded of the documentary “Enron.” The folks at Enron thought they could get away with it too – and many of them did, except for good old Ken, who conveniently had a heart attack, and J Clifford Baxter, who took a shot to the head. Meanwhile, people lost their homes because they could no longer pay the electrical bill, which had skyrocketed to thousands of dollars, and the employees of Enron (most of whom had invested a majority of their 401k dollars into the company) walked away with a box and not much else.

    Why is it so impossible to believe that the banks are any different?

    I often think of the scene in the movie where they replay calls that the Enron traders made to various power stations in California. They would call them and tell them they needed to shut down for a few hours or a full day for “maintenance”. In reality, they were shutting them down to create a momentary flux in availability of energy, which of course pushed up prices and helped the traders to line their pockets with the extra cash. You could hear many of them cackling in the background as each of these calls were made. They sounded like a pack of hyenas. They didn’t care that they were impacting people’s lives. They only cared about the money they were making with each brownout.

    Greed is a might powerful thing. It only takes a few people to say it’s okay before the rest of the herd follows along. That documentary certainly showed me that. Sadly, I have no faith that the banks will be held accountable. There is simply too much money flowing between the banks, our government and our system of justice for anything to change what they are doing now.

  27. Doug Terpstra

    Coming late to the party … but fantastic post, Attempter.

    I also enjoyed the troll drama from anon48 and Dan Duncan. It looked like a setup — you baited them with expert lures. By itself, your eloquent, compelling analysis could never been so well proven without them to underscore your points so perfectly—as if on cue. They also serve to keep DownSouth’s sword wickedly sharp.

    1. attempter

      Thanks, Doug. I agree, this is a good comment thread. And you’re right, the debtor-bashers look more desperate and pathetic all the time. That’s because to defend the banks is so obviously depraved, and affords rational, practical, or moral arguments at all (since all such arguments are on the anti-bank side), they’re reduced to the Orwellian pseudo-morality of whining, “what about debtor responsibility?”

      I agree, debtors do have a responsibility, but it’s the opposite of what the pro-bank trolls think. Their responsibility as citizens and as moral agents is to systematicall jubilate this odious debt they’ve so far been mostly passively defaulting upon in an ad hoc manner.

      The banks’ goal is clearly to politically and economically liquidate us all and reduce us to literal debt slavery. The prison structure is under construction and visible, but construction is still incomplete.

      The time for a breakout is now. Every system debtor should take an axe to the piece of the wall he’s tending instead of helping to reinforce it the way he currently is.

  28. Eagle

    Sort of disappointing to see Yves give more prominence to the “people who disagree with me are evil” strain of thought.

    As for calls for and “jokes” about violence – I estimate I’ve read at least 90% of them from attempter himself.

  29. hermanas

    I did not enjoy the troll drama from anon48 and Dan Duncan. I was reminded of the tragic position of educators whose pay may be based on test results of the uneducable.

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