Link 2/16/11

‘Bitten or crushed by other reptiles’ Chris Hiley (hat tip Richard Smith)

Tuscon Minuteman Found Guilty of Murdering 9-Year-Old Mexican-American Girl AlerNet (hat tip reader furzy mouse)

The South Dakota Bill That Could Legitimize Murder of Abortion Providers AlterNet (hat tip reader furzy mouse) and South Dakota Moves To Legalize Killing Abortion Providers Mother Jones (hat tip Ed Harrison)

“I’m considering all possible options” of fighting back Glenn Greenwald on Radio Free Dylan

Chevron’s dirty fight in Ecuador and Ecuador: finally, the polluter is commanded to pay Independent (hat tip reader May S). This story is getting far more play in the UK than here.

The Uprising in Egypt: Poverty, Inequality and Unemployment Paul Rivlin (hat tip reader Dr. B via Bill Mitchell)

Riots break out in Libyan city of Benghazi Financial Times

Defector admits to WMD lies that triggered Iraq war Guardian (hat tip reader May S)

Weber’s Exit Highlights Merkel’s Euro Problem Der Spiegel (hat tip reader Paul J). This is not getting the play it deserves in the US. Germany is getting much more ambivalent about the Euro project, and its diminished influence in the ECB will only make matters worse.

Irish Desert Dominant Party After Economy Collapses Bloomberg

Justice Thomas/Koch Brothers Scandal Rachel Maddow and Scrutinizing Clarence Thomas Steve Benen (hat tip reader furzy mouse)

Progress report on QE2 Jim Hamilton. Money quote:

Indeed, some observers had quite a passionate response that I find hard to reconcile with the fundamentally modest nature of what the Fed has been doing.

High Levels of Mimicry Can Be a Quite General Indicator of the Potential for Self-Organized Crises jck

On Tyler Cowen’s “Great Stagnation” Steve Waldman

MERS Can’t Transfer Mortgages Natalie Martin, Credit Slips. We pointed to this case in comments, probably should have posted on it given its potential significance. But this is only one decision.

Wisconsin’s Cheesy Tax Cuts Lee Sheppard, Forbes

Apple demands 30% slice of subscriptions Financial Times

Brookstone Law, PC, Files Landmark Mass Joinder Lawsuit Against Bank of America and Countrywide SFGate (hat tip Lisa Epstein). This is clearly a writeup of a press release and I’m not certain the case is solid (as in there have been some cases filed that might sound commonsensically true that were very badly argued legally and went nowhere). The sensationalism of the writing raises questions about the underlying legal thinking, but I’d certainly like to see the big banks skewered for their bad practices.

Goldman winds down proprietary trading arm Financial Times

From Prison, Madoff Says Banks ‘Had to Know’ of Fraud New York Times. This sounds credible but it also seems more that a tad self serving.

Legal Fees at Fannie Are Called Avoidable Gretchen Morgenson. This is a big deal.

Banks Push Home Buyers to Put Down More Cash Wall Street Journal. Um, when I was young, a 20% down payment was the minimum. This sounds like a return to prudent practices.

The House that Jack’s Bank Took Truth Partisan, Corrente. Today’s must read. This isn’t the only case where someone has seen banks as culpable, check out Rep. Bob Filner’s remarks starting at 1:10 on this clip

Screen shot 2011-02-16 at 6.33.30 AM

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  1. Ignim Brites

    The coming debacle for Fianna Fail (Irish Desert Dominant Party After Economy Collapses) is a foregone conclusion. The only question now is whether the Egyptian revolution will inspire the Irish electorate to abandon Fine Gael too.

    1. Jim Haygood

      While no one was looking (at least in the bubbly U.S. markets), Irish two-year notes yield 7.25%, while Irish ten-year yields are at a crushing 9.25%.

      Meanwhile, in ‘rescued’ Greece, ten-year yields have touched an eye-popping 11.75%. That’s a cool 850 basis points over the reference German 10-year issue, and approaching the 1000-bp level which would signify effective default.

      Isn’t this a Wile E. Coyote moment — right here, right now — when we’ve collectively raced right past the cliff edge, buoyed on the intoxicating vapors of QE II, but failed to notice that solid ground is miles beneath our feet?

      A spectre is haunting Europe, comrades …

        1. Tertium Squid

          I am not so philistine as to assume it actually meant “fail”, but philistine enough to not know the actual meaning.

          …the philistines were actually pretty advanced…

        2. MyLessThanPrimeBeef

          It’s confusing like sun roof and solar roof – one is to let in sunlight and the other is to absorb sunlight.

  2. Jim Haygood

    ‘The net effect of [QE2] is to lower the average maturity of the combined outstanding debt of the Federal Reserve and Treasury.’

    James Hamilton makes it all sound so anodyne. But this is a bank cartel, packing the banking system with excess reserves and — as a side effect — lowering the maturity of publicly-held debt. Oh, and exploding global food prices so that 44 million more poor people have been pushed into dire poverty, according to a news article yesterday. But never mind about those wretches; we’re technocrats!

    What Hamilton never questions, but should, is why (as illustrated in his chart) average debt maturity has sunk sharply since the mid-Nineties, while interest rates plunged to their lowest levels in fifty years. If there were ever an opportunity to lock in low long-term rates, THIS IS IT.

    Instead, the Treasury is doing what Greenspan advised home buyers to do in 2004: take out ARM loans keyed to short rates, so they would be pillaged senseless as Greenspan and Bernanke proceeded to crank short rates by 425% over the next two years.

    Evidently the Fed bankster cartel, advised to ‘think big,’ is planning to repeat this nasty little swindle on the biggest sucker of all, Uncle U.S. Sam. Which is why I advocate abolishing the Fed.

    Is James Hamilton a descendant of Alexander? They seem to have a lot in common.

      1. Cedric Regula

        But we still get to add them together don’t we?

        Tho if we split MBS and treasuries, then his “modest” definition is that a over $100B/month rate and a commutative treasury total that exceed China or Japan holdings (That makes Ben #1 in my book) is modest. A tripling of the Fed balance sheet is modest. I’d like to meet the women he hangs around with in San Diego.

        But Hamilton seems to be in awe of the Fed, and I think he likes getting invited to the public meetings, maybe a trip to Jackson Hole now and then, has Davos envy, and may even want to retire on the Fed board someday.

        But other than that he’s ok, and Econbrowser is a pretty good source for data and analysis.

    1. MyLessThanPrimeBeef

      Good point.

      I think that’s for winning the palm-nut cracking contest.

      These are very smart, rock-tool-using monkeys.

  3. Jim

    I had a house in foreclosure last year and it still had equity. Two weeks before foreclosure, my agent presented a signed offer from a buyer which would pay off the whole loan, where RE agents got paid, and I came out with $1000. Wells Fargo’s servicer(or lawyer) went ahead and foreclosed with offer in hand. They had some process in place that was unstoppable apparently.

    I got a foreclosure on my credit report.

    Turns out they had my old house listed for $85,000 a few months later.

    The funny thing is, now that I gave that one back per the contractual agreement layed out in the loan. I want to buy again now, but their don’t seem to be any banks around that will lend without a fannie or freddie backstop. Even though I would put 50% down the banking industry is in such a quagmire they can’t even figure out how to make a loan with 50% down on an income property!

    What a mess.

      1. Cedric Regula

        That’s why they let shrewd financial types make these decisions. The rest of us will never get it.

        But check out the FHA site. They indicate you may only have to wait 2-3 years to qualify for a 3% down FHA loan after a foreclosure. In the meantime I suggest you keep your cash in a FDIC insured ZIRP bank account (they need to earn themselves back to mental health and buy low risk treasury bonds) so you are assured that you still have 3% down when the time comes to re-enter the housing market.

      2. ScottS

        The servicer makes more money by charging fees for the foreclosure to the investors (which comes out of the sale price). If you had successfully sold the house, the servicer would have made much less.

        Welcome to the new normal.

  4. Hubert

    re: WEber/Merkel/ECB

    The Spiegel article is typical: Pretending to know what Merkel and Weber really wanted and explaining thereby what happened.
    I do not want to look nitpicking here, especially as I do not know either. But the whole story looks like the usual Berlin/Frankfurt disinformation campaigns cooked up for Spiegel readers.
    I am not Webers shrink but from all I have heard he always was a political lackey too actively pretending not to be one. He walking out for “convictions” therefore looks fishy to me.
    And Merkel: All her decisions since 2005 have been tactical ones. She did not even take one strategical stand. So Occams Razor would imply this was just another tactical one (for whatever reasons).

  5. mo

    I was at a presentation by one of those “fund of funds” operators on the day that Madoff was sentenced. The guy smugly said “we knew there was something up with Madoff – we NEVER would have put client money with him”.

    Besides wanting to smack the guy for his Monday morning quarterbacking, I wanted to ask him why he never brought his suspicions to a regulator. But then someone HAD notified the SEC and they ignored him.

    I am convinced that, not only did banks & hedge funds know what was going on – but the SEC purposely turned a blind eye to the situation. Regulators can’t possible be that inept.

    I am a very small time financial planner and investment adviser and it makes me angry to this day that my colleagues get twisted into knots about compliance issues while Madoff was able stay out of trouble for so long.

    1. James

      Rationale: Do YOU want to be the one who kills the goose who lays the golden egg? Especially in the off/real chance that you’re wrong, and if you are, your career is done?

      Word. It takes MUCH COURAGE to take point on a contrary opinion in an openly hostile environment.

      Just sayin’

  6. Ron

    The Great Stagnation: Economist continue to dance on the head of a pin trying to explain why America’s economic recent past and present does not met expectations and constantly search under various themes but never talk about the elephant in the room..oil.
    Oil in the 40’s,50’s and 60’s hovered around dollar a barrel creating the massive road building, auto factories and suburban housing tracts. America created the most intensive energy footprint in the world and continued to do so after the 70’s oil shock. Today oil is closer to 100 bucks barrel and may reach $300 by 2020 per maxwell putting maximum pressure on those requiring auto’s for work and getting daily food supplies not to mention the coming shock in natural gas pricing as the U.S. follows the same path as oil creating huge demand while its cheap and available leaving itself wide open for large upward price movements in the future.

  7. Jackrabbit

    Yves: I think this is the money quote:
    Our conclusion is that if QE2 made a positive contribution to the improving economic indicators since the program began, it could not have been through the mechanism of shortening the maturity of publicly-held Treasury debt.

    Translated: We see no evidence of expected economic effects of QE2 (subtext: WTF???) He then wonders if QE2’s main effect may have been to change inflation expectations.

    Its not surprising that economists are scratching their heads because they have been trained to see Fed actions thru an economic prism that ignores non-economic policy goals like saving failed institutions.

    Could it be that open market purchases of Treasuries via the QE2 are actually very small because the banks are simply using QE2 to extend their QE1 loans?

    In QE1, the Fed provided well over $1 T of secured loans to the banks (secured by securitized assets, mostly Mortgages). The banks used these loans to invest in Treasuries, earning a riskless spread. They were roundly criticized for preferring this “free money” over making loans to small business.

    But Mortgages and other securitized assets (credit cards, car loans, etc.) have a short average life (due to prepayments, etc.) so the bulk of the Fed loans would essentially be called within a couple of years (currently running at about $50b/month). Thus the liquidity provided by the Fed would soon dry up.

    One can well imagine that the Banks, still smarting from the financial crisis (and still carrying big losses), would like to extend their Fed loans to a longer horizon. QE2 allows them to do that. When TBTF Banks could sell their previously purchased! QE1 funded Treasuries to the Fed, the only effective change is that the Bank’s QE1 loans are extended out to an average life of (nominally) 8-10 years AND the banks need to find higher yielding investments. Thus, there was never going to be new, additional purchases of Treasuries that would bring down longer term rates.

    The Big Short Redux?
    Armed with this knowledge, the Banks COULD have shorted the Treasury market knowing that rates would not be going down as expected by the market (and trumpeted by Bernanke). This “added supply” would actually RAISE rates, causing a dramatic change in market psychology that would also tend to increase rates. No one except the Banks could be sure enough of how much actual market purchases would occur to be able to make large directional bets in the Treasury market. (Note: They could have also used the futures market to lock in their Treasury gains before rates began to rise.)

    IF the TBTF banks with the greatest funding needs “played” QE2 like the ruthless masters of the universe we have come to know them to be, they will have restructured their QE1 loans as well as obtained a hefty trading profit.

    While Bernanke claims that he can reverse QE2 at will, under this scenario, the aim of QE2 is to provide a soft landing for Banks so QE2 will is designed to NOT be unwound for many years.

    Also, as I noted previously, pumped up earnings from QE2 trading could be leveraged by an equity offering. The recent moves for Banks to start paying dividends are consistent with plans for such a raise.

    Banks that are healthy enough to tap the public markets before 2012 would be a big “mission accomplished” WIN for the Obama hopes for re-election.

    1. Cedric Regula

      There is too much BS here for me to even bother with. Go back and get some news on Ben’s special programs, then look at what Ben bought in QE1 and 2, then try and straighten out in your mind the nuances between short term collateralized loans to banks and the Fed buying 10 year treasuries.

      1. Jackrabbit

        So why do you think Treasury rates have risen so quickly?

        Is it due to an economic recovery as Bernanke claims? (Is the recovery really that strong? If so, is it necessary/wise to continue with QE2?) Or is QE2 a failure because the market has assumed the worst? (If so, shouldn’t it be terminated early?)

        OTOH, could it be that the TBTF Banks (the largest primary dealers and holders of Treasuries as part of their Trillions in assets) have market power and insight that allow them to benefit from QE2 (more than just getting a few basis points in spread). And wouldn’t it actually be somewhat appealing to the Fed if QE2 would, if nothing else, strengthen the Banks?

        I’m not claiming to know all the details, but I’m speculating that QE2 HAS been a significant help to the Banks. I lay out one possible scenario.

        FYI has a list of the many programs created by the Fed and other Government Agencies during the financial crisis and economic downturn.

        1. john bougearel

          I commented on rising rates yd. I took issue with the BCA Research observations on rising rates and have a different perspective than BCA on why bond yields are rising and what that is signaling.

          From BCA: “A rise in yields that reflect upward revisions to the growth outlook should not spell trouble for stocks. In contrast, rising inflation expectations would clearly be negative for the equity markets.”

          But consider a third scenario not imagined by BCA ~ one where the rise in yields reflects upward revisions to QE-related asset inflation and not upward revisions for growth.

          Consider further that the growth outlook could run into headwinds when state and Federal budget cuts for FY 2012 kick in. Congress’ temporary spending authority for 2011 expires on March 4. They have about 2-3 wks to come to some budget resolution. Dave Rosenberg concurred with these concerns in his comments yd morning: “What isn’t being discounted is the degree of fiscal austerity that is coming down the pike, and likely sooner rather than later.” Obama wants to cut the budget deficit in half by the end of his first term in 2012 and the House-controlled GOP wants even further cuts. See Obama to Submit $3.7 Trillion Budget, GOP Promises Fight

          (Course, BCA and the bond mkt might be ignoring rhetoric on Capitol Hill entirely as not credible. Rhetoric like this might only be credible when rates do actually spin out of control as it did in the late 70s)

          Consider further that global outlook for growth can be downwardly revised as emerging markets and other developed economies tighten monetary policies and implement capital controls in response to QE-related inflation signals. Consider further, there will be no inflationary signals other than food and energy in the US economy if other economies weaken in response to their tightening cycles and austerity measures.

          Best to consider that the rise in bond yields has been a “short term QE2 related phenomena” and not signaling either upward revisions to the growth outlook or inflation expectations ~ until proven otherwise.

          The QE2 related distortions on rising treasury yields may diminish if other headwinds offset or trump them. All may be less well” in the US and global economies then presently assumed, though irrefutable evidence of that may not show up until 2H 2011.

          Under QE2 and everything is “goldilocks” if you own equities. No wonder long term treasury yields are tanking at present. The corp economy (ex the job mkt) is firing on all cylinders. No wonder the stock market is pricing in perfection.

          But, how long do you think the stock market’s honeymoon under QE2 and payroll tax cuts can last amidst rising food and energy costs, imminent US job destruction and budget cuts at both the state and federal levels for FY 2012? Offsets to the goldilocks economy and baseline growth story are looming and no one is daring to price those downside risks in they absolutely have to. (again this may be precisely because the govt is simply not credible about cutting the deficit, simply because creditors aren’t willing to shut down their profligate ways. In which case say hello to Zimbabwe and the Weimar Republic. The politicians can croon “I did it Zimbab-way. What a legacy they have to look forward to, Geez Louise!)

          As and when either US hyperinflation or austerity headwinds kick in….it won’t look good for baseline scenarios that track Post WWII baseline scenarios for economic recovery.

          I close with an old 2006(?) quote from market maven Stephanie Pomboy which is still applicable today to the US economy: “We Can’t Handle Higher Rates.” If we end up with higher rates due to fiscal irresponsibility, God Help US. If we end up with lower rates due to austerity measures, God Help Us.

          And where will Yahweh be, where will Allah be when the day of reckoning comes to greet US citizens in its full glory? Whose side will “I AM” be on when the full force of the “Shock Doctrine” Tsunami hits US shores?

          I AM will simply be on the side of all plutocrats, Elitists, and Banksters. I AM will not be pro-Islam, pro-Judaism, pro-Christianity, or any other mundane faith.

        2. Jackrabbit

          Banks are something of a blackbox. My thesis was that Banks might effectively extend the average life of the liquidity provided by the Fed, but the shorting opportunity might be the same if the banks excess reserves were matched by excess Treasury holdings in a barbell strategy.

          This is another scenario (maybe more realistic) where Treasuries held by Banks are sold to the Fed. In any case, TBTF Banks, having a superior understanding of, and positioning in, the market are likely to have an advantage.

          Maybe, at some point after selling off their excess Treasuries and “scalping” those who thought rates would fall, Fed purchases of Treasuries in the open market WILL occur, and then rates will fall (at that point Banks COULD then turn to buyers and drive down the market).

          Again, trying to connect the dots is difficult. This is speculation based such things as:

          – Banks having been accused of preferring Treasury investment over making loans.
          – The super quick run up in 10-yr Treasuries after QE3 got underway.
          – Banks continuing difficulties and the FedTsy desire to help — especially (where possible) in nonpublic, hard to detect ways.
          – Banks positive experience with QE1 and a natural extension to a Treasuries-focused QE2 (causing me to surmise that QE2 is motivated more by Bank needs than by helping the economy). In fact, a year or so ago there was talk about how the Fed would like Banks to make more loans instead of holding Treasuries.
          – Low rates and a preference for excess reserves make a barbell investment strategy plausible.

      2. Jackrabbit

        The WSJ commented that the rise in yields from October to mid-December was the fastest in decades.

        1. Cedric Regula

          The short answer is perhaps the Fed raised “inflation expectations”. This reason has bounced around a bit in the financial news.

          As far as the economy, we had a recovery in corporate earnings, some pickup in consumers sales data the last 6 months (they include gasoline and food in the data – whoopee), we know the employment picture is still grim, and housing still declining. Some pickup in food and gas inflation of course, but the commodity charts went thru the roof. All and all it’s hard to attribute the jump in rates to the market deciding the economy got better with that weak backdrop. But they did jump from extremely low levels of around 2.6% on the 10 year last summer when we were still fretting over a double dip.

          As far as helping banks, the primary dealers make there little cut. If banks want they can sell their treasuries for cash, but so what? Unless they have prop trading and commodity desks that have some use for it.

          My own wild theory is maybe bond traders are starting to worry if the Fed can really, or will be willing, to execute their exit strategy when it becomes time to withdraw a couple trillion in excess liquidity and do their job of controlling inflation. Or maybe they worry the Fed does like Ben said (on 60 minutes, “I can raise rates in 15 seconds”) and dumps a couple trillion of MBS and Treasuries on the market, traders are wiped out and then somehow the derivatives market explodes and wipes out the rest of surviving humanity.

          Or maybe they are starting to think QE is as dumb as I think it is and are worried we get QE3.

          But I don’t know any professionals in the field, so I’m just guessing.

  8. bob goodwin

    “Tuscon Minuteman Found Guilty of Murdering 9-Year-Old Mexican-American Girl AlerNet ”

    I am so discouraged by titles like this (on both sides of the political debate.) It might have well have read “democrat found guilty of murder.” As the article points out this was a murder during the act of a robbery, not a border action. Clearly the perp is a dangerous nut cake, which has nothing to do with her being a democrat.

    1. lambert strether

      Well, for some definition of “nothing to do with,” that is. From the Arizona Star, mainstream:

      The story of the beautician who founded a border militia group then orchestrated a deadly robbery with the hope that anticipated spoils of dope and money could help fund her border-watch endeavor, has made the Forde trial one of Tucson’s most-followed trials. …

      Prosecutors Rick Unklesbay and Kellie Johnson presented evidence they said showed Forde recruited Gaxiola, Bush and others to rob Flores because she suspected he was a drug smuggler and she needed a way to fund her Minuteman American Defense border organization.

      They put a handful of witnesses on the stand who testified Forde either recruited them or spoke to them of their plans. The prosecutors also presented incriminating text messages and tape-recorded phone conversations.

      Walks like a duck, swims like a duck, and quacks like a duck, so far as I’m concerned.

      So, I too am discourages, both by the denial that some exhibit, and the false equivalence between the political parties (along the axis of both eliminationist rhetoric and violent action; in most other ways, the two legacy parties are truly equivalent).

      There are plenty of other questions to raise about the story, including the role of the BI and guns, but the accuracy of the headline isn’t one of them.

      1. bob goodwin

        I respectfully disagree. The accruacy of the headline was all I was calling attention to. “Leftist kills millions” is accurate, as Stalin clearly quacked like a duck. But it anti intellectual.

        1. Anonymous Jones

          You have to be kidding me or incredibly stupid. Stalin was not a leftist but an authoritarian dictator. They are not the same thing. They are not even close to the same thing. Just because he pretended to be a communist and cloaked himself in such labels does not mean he was in fact a leftist. You understand that concept, no? Or is it too advanced for you?

          The headline was accurate. The subject crime here was a robbery, yes, but it was also motivated by terrorizing those who have Latino ancestry. It does not all have to be about one thing, obtaining money in your head-in-the-sand analysis. Yes, the person was a nut job, but specifically a nut job *about* immigration. It’s called a raison d’etre. Shocking level of delusion and/or stupidity, as usual.

  9. John Wright

    Hi Lisa Epstein:
    Thank you for your comment on my lawsuit, which was regarding the press release above that said: Brookstone Law, PC, Files Landmark Mass Joinder Lawsuit Against Bank of America and Countrywide . I agree with you that there are a lot of law firms out there that are sensationalizing their lawsuits that have no basis. However, it is important to point out that my lawsuit has not been sensationalized enough, once you consider the qualifications of the dream team I have brought together, which consists of the 25 law firms. I have brought them together to fight Bank of Destroying America’s potentially irregular, fraudulent and simply abusive home loan modification program, but these are not just any attorney’s Lisa.
    Therefore, please allow me to cut and paste a section of my blog that describes these attorneys, simply because I think you will agree that it makes my lawsuit stand out:
    “The fact remains that my dream team is not made up of just any attorney’s, but they are simply experts on the issue at hand, while leading with 25 years of experience. The fact remains that I have built a force that will prove that and myself are a power to be reckoned with. Even just four of the 25 attorneys look like this:
    Attorney: Used to be A BofA attorney
    Attorney: Has won 60/60 cases. Never lost
    Attorney: Served as lead counsel of the fraud unit in one of our states
    There is also William Levin, who was one of my favorite attorney’s on the team to work with, even though I enjoy working with them all. I am constantly impressed with how much knowledge Mr. Levin has, as well as his ability to make a person feel confidently represented. After reading William Levin’s extensive qualifications, I am sure you will see why!

    One: Was Bank of America’s attorney (and Wells Fargo and others) for unfair competition and related intellectual property law litigation and matters.
    Two: Obtained what was the largest unfair competition jury verdict in the world until recently, $ 143 million
    Three: The author of a 2 volume, leading treatise on an area of unfair competition law.
    Four: Has represented high profile cases, while he also knows how to deal with PR.
    With that being said, I have made a youtube to announce my lawsuit to everyone. So please take a look at it and let me know what you think Lisa. I really worked hard on it, and it really reflects how excited I am about my lawsuit.
    In conclusion, if you have any questions at all, please feel free to contact me at my at . I will always be happy to answer any questions that you might have concerning my lawsuit. You are also invited to take part in the “Live Chat” section, where people tend to come out at around 6:30 pm (pacific) .
    I look forward to meeting you there Lisa!
    My name is John Wright AND I AM FIGHTING BACK!
    John Wright

    1. Cedric Regula

      I guess I don’t like the thought that our internet blog comment spam may come from Uncle Troll and Big Whatever. I was somewhat content thinking it was just idiots.

  10. johnbougearel

    Yves, btw, either you are on fire this week with your posts, links guest posts, or my week has been too chopped up to barely keep up. Posts and links and comments have been great this week!

  11. ZN


    Philly homeowner forecloses on Wells Fargo

    Cory Doctorow at 1:07 PM Tue

    Patrick Rodgers, an independent music promoter in Philadelphia, has won a judgment against his mortgage lender, Wells Fargo, which Wells hasn’t paid, and so he’s foreclosed on them and arranged for a sheriff’s sale of the contents of Wells Fargo Home Mortgage, 1341 N. Delaware Ave to pay the legal bill.

    Rodgers made all his mortgage payments on time, but Wells decided out of the blue that he had to carry insurance for the full replacement value of his home — $1 million — and started to charge him an extra $500 a month in premiums. When Rodgers sent a formal letter to the lender questioning this, they did not answer in good time, so a court awarded him $1,000 in damages, which Wells wouldn’t pay. So the court is allowing him to sell the contents of the lender’s office to make good on the bill.


    “It’s a completely unreasonable demand,” says Irv Ackelsberg, a mortgage expert at the Philadelphia law firm Langer, Grogan & Diver. “Their interest is in protecting their mortgage, not ensuring that the house is rebuilt.”

    Rodgers’ next step put him at some risk, he concedes now. He refused to renew the higher-cost policy. Instead, Wells Fargo bought him so-called forced-placement insurance – a policy that typically costs much more than ordinary coverage and only protects the mortgage-holder’s interests.

    But he fought back with his suit under the Real Estate Settlement Procedures Act (RESPA). Last month, Wells Fargo sent him more than $1,000, and Menke says it intended to fully satisfy the judgment. “We had considered this matter closed,” he says.

    What about Rodgers’ four-page letter demanding answers about how much Wells is trying to charge him – charges that have added $500 a month to his statement?

    Menke says Wells Fargo sent a written response “within the last month.” As of Monday, Rodgers hadn’t seen it.

    Phila. homeowner wins judgment against Wells Fargo over mortgage fees

    greetings, ZN (^_^)

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