My Tea Pot Cracked!

There’s been so many, ‘Tempests in Tea Pots,’ these past few years that mine finally cracked. Mixing metaphors with great gusto here, it’s as if our financial Humpty Dumpty was pushed off the wall a few years ago, is smashed to pieces on the ground, and our elected officials walk on by howling up at the moon. The latest tea pot squall is President Obama’s new rule for immigration: don’t arrest kids who were dragged over the border by their parents. It’s a good and fair rule, but our President forgot to include the US Congress in his calculation. He’s supposed to enforce the laws of the United States, not circumvent the ones he doesn’t like. Most likely, there’s a few immigration Bills gathering dust in some committee room or other, as Members of Congress follow their own myopic agendas to keep themselves in power. The media is currently touting every possible viewpoint on the subject, while weeds grow over the Humpty Dumpty of our broken financial system. Another little tempest was the trading loss of $2 billion by JP Morgan Chase, the largest bank in the world. The media went nuts predicating a second financial crash. The bank had a $19 billion profit last year, even though an obscure IMF missive reports that approximately $14 billion of that was in U. S. government subsidies. I watched a portion of the CEO of JP Morgan Chase, Jamie Diamon’s, testimony before the Senate Banking Committee. It was a nauseating display of ass kissing by US Senators, who looked like valets outside a Vegas strip joint, simpering away in front of the blow-dried, rock star banker. It was obvious that they had no clue about the derivatives market as Senator after Senator stumbled while reading questions written by their staffers. Apparently, JP Morgan’s trading portfolio is still heavily weighted in mortgage backed securities. You know, Virginia, all those mortgage loans that were pooled into trusts and sold just like stocks worldwide, where thousands if not millions of borrowers on those loans have defaulted. They’re called, ‘derivatives,’ because they’re derived from mortgage loans. Nonetheless, Dimon is convinced that his bank really is too big to fail because they have hundreds of $billions in capital. He also said that his bank was forced to take TARP (Troubled Asset Relief Program) money that they did not need at the time. What? Why are they taking $14 billion a year? It’s estimated that 12 million mortgages nationwide are underwater; meaning the home values are less than the loan amounts owed.  Dimon wants the Congress to work with the big banks to, “fix the mortgage market.” Perhaps Congress will actually get some smarts and make a law, like the trashed Glass-Steagall Act, that prevents banks from gambling/trading with depositors’ money. Unemployment is said to be a little over 8%. When you take into account the underemployed and those folks who’ve just given up looking for a job, it’s probably more like 14% or 15%. Couple that with the falling value of the US dollar and we’ve got big problems. Our US Treasury Secretary and the head of the Federal Reserve Bank are printing money like wall paper, thereby devaluing the dollar. A very real, big fat tempest hanging over the horizon won’t fit in any tea pot: other countries are looking to get rid of the devalued US Dollar. Last summer a group of Asian countries announced their intention to form a trading block that excludes the USA. The Chinese are now arguing for the US dollar to be dropped as the world’s reserve currency. Currently, most international trades are done in dollars, a fact that keeps costs down for Americans. The Chinese are now insisting that trade with them is done in their currency, the renminbi, commonly known as the Yuan. Recently, they have opened a trade with Japan where the Japanese Yen is traded directly with the Yuan, thereby ignoring the dollar completely. China now has a bigger military, more reserves in cash, and more natural resources in terms of mines and oil wells they’ve bought around the world, than the USA. China’s policy is that any company doing business in China must give over their proprietary technology as a condition of doing business there. Our spineless Congress has done nothing to curtail China’s infringement on US technology because the US government is in hock to the Chinese by continually borrowing money to keep on spending. Instead, they grind out more and more repressive regulations for American businesses to follow. Meanwhile, back at the ranch, the Continue reading

Chewing Off Pieces of the American Soul

By day, I’m a Realtor; by night, I drink wine and eat chocolate while writing tales from a sexy ghost called, Charles Sutton. This is a real estate story. Joe called me the other day. He went through bankruptcy almost two years ago. In the bankruptcy court, Wells Fargo obtained permission to foreclose on his home. He feels like millions of disgruntled Americans who’ve ended up in the bankruptcy courts after soul-wrenching job losses, or those who couldn’t get their lender to give them a realistic home loan modification. Joe pretty much said, “Take my house and shove it!” Today, eighteen months later, Wells Fargo still hasn’t foreclosed on Joe’s home. He and I got to talking. You know, Virginia, how I love to babble on about interesting happenings. We discussed the real problem at the bottom the housing collapse—the securitization of home loans by Wall Street banksters. Home loan securitization is an ongoing process that politicians and attorneys, to a greater or lesser degree, either fail to understand or choose to ignore. The banksters designed it to baffle us all with bull shit while they raked in $billions selling home loans. While securitization appears complex, the basics are simple. You get a home loan from, say, Fred’s Loans Inc.; in many states, your mortgage consists of a deed of trust and a promissory note, the deed of trust attaches to your house, and the note gives the terms of payment. These are two separate legal documents. Fred then sells both the trust deed and the note to a Wall Street bank, who funnels hundreds, if not thousands, of similar home loans into a ‘loan pool.’ The next step is for that bank to sell them to a ‘Depositor,’ usually another Wall Street bank subsidiary. Your note and deed of trust are now with a ‘Depositor,’ and should have been assigned properly from Fred’s Loans to the Wall Street bank and then to the ‘Depositor,’ showing signatures on your original note each time it was sold. A real estate note is like a check. You receive it from one party, and you can sign it over to someone else by putting your signature on the back of the check—it’s a negotiable instrument that must be dealt with as per the law called, ‘The Uniform Commercial Code.’ Then, the ‘Depositor,’ assigns all the home loans over to a specially created, ‘Trust.’ The trust then sells interests in the loans to investors. Most of these trusts were formed under the Trust Laws of the State of New York. They all have ‘cut-off,’ dates. All the loans must be assigned to the trust on or before that date. These trusts have complex, ‘Pooling and Servicing Agreements,’ which describe what can and cannot be done by the servicing company, the company who collects your monthly mortgage payments. Every step of the process is designed to protect the trust from bankruptcy by any of the preceding parties. The trust is registered, together with a schedule of all the mortgages involved, as a mortgaged-backed security under the Federal Securities and Exchange Commission. When home values began crashing in 2007, banks tightened lending to the point that businesses across the nation were gasping for credit. Without credit, businesses folded or down-sized and job losses began. Millions of unemployed borrowers defaulted on their mortgage payments. By 2008, mortgage servicing companies were enthusiastically foreclosing all across the country. What many people don’t know is this: the mortgaged-backed trusts took out loan insurance. If a borrower, whose mortgage is in the trust, declares bankruptcy, the insurance kicks in and the loan is paid off. If a foreclosure happens, insurance kicks in and the loan is paid off. That’s why the Wall Street banksters wanted AIG, the huge insurance company, bailed out with taxpayer money. At $182 billion to date, it is the largest Federal bail-out in history. Most of the trust agreements allow the servicing companies to foreclose. So, the insurance has paid off the loan and the investors are happy; the servicing company now gets to sell the foreclosed home and keep the money. In effect, they’re stealing properties on the backs of taxpayers. Why should they bother with loan modifications? Nonetheless, some judges are stopping servicing companies from foreclosing. They are challenging the servicers to provide documents showing that the trust, which employs them, is the promissory note holder for the foreclosed property. In a growing number of cases, they cannot show that the homeowner’s promissory note bears all the correct endorsements Continue reading