Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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My January 25th commentary:

Commentary January 25, 2008

So, where are we now? The fourth quarter of 2007 has seen 90+% decreases in major banks net profits. Some of them for sure due to SIV and related losses (i.e., Sun Trust). Moody's predicts that the worst of the problems should be occuring this quarter

Alan Greenspan basically believes that hedge funds and others basically pushed the mortgage industy to create and securatize loans, even at the expense of underwriting standards. So I am not so sure that the poor SIVs are victim, but rather possibly the cause of the sub-prime mess to start with.

Then we have derivative nominal values sitting at around 8X the world's GDP. These are basically financial bets (financial weapons of mass destruction, Mr. Buffet), all based on people being able to predict what is going to happen. Clearly things are not going the expected way.

The US government (and other governments) are waking up to the problems. The question is (an it is about a 600 trillion dollar question), 'is it too late'?
See the featured story on my website (top item on homepage):

The black box economy

"Behind the recent bad news lurks a much deeper concern: The world economy is now being driven by a vast, secretive web of investments that might be out of anyone's control."

The Boston Globe   By Stephen Mihm  January 27, 2008


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Blossom, this conversation should be all yours if you're up for it.

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Thank you Mr. Wyatt this is an important issue for people to understand in order to explain the motive behind ms fraud.

Most people assume the bank and investors would lose a fortune the industry claims aprox $60,000 loss per home. Well is that was the sase you could be assured that whoever incurred that loss would surely prosecute the servicers to recover there losses.

While explaining the profit motive behind foreclosures hedge fund mangers and investment analysts have understood the concept that the profit is made by converting mortgages into securities in the form of CDO's and Ron Paul got it so fast he finished my sentence the vast majority of the people just do not get this.

Perhaps a simple way to understand this while not techincally accurate may get the point across to the lay person. Most people understand that lenders lend based on deposits and that they are allowed to lend out more than deposits though the fractional reserve system. They also understand that if everyone went to withdraw the "money" at the bank that it is not there but  in our homes as so well illustrated by Jimmy Stewart in the movie it's a wonderful life. For a fractional reserve system to function and not collapse it must have a safe debt ratio and external backing or insurance. It must be set up so that it is unlikely withdrawals never exceed deposits and if they do they must be replaced before it starts a domino effect of people panicking and withdrawing all the money from all the banks.

Well lenders and investors were not happy with this system where they could make money with other peoples money and lend money to people for homes when it is in fact the borrower providing the equity in the first place.  They came up with a Andrew Fastow of Enron fame amoung others came up with a plan to create a fractional on top of fractional reserve system. While at Continetal Illinois he strutured a sytem to convert mortgages into more money though SPE's (special purpose entitities), SIV's (structured investment vehicles), CDO'S Collaterized debt obligations, Derrivations are all basically ways to use a small amount of money to back a large amount of money.

To some extent leverged money provides capital for the economic engine and allows expansion of business and jobs for all of us but there is great danger of the whole system falling like domino's as one investment is backed by another. We can see that the risk today is much greater than at the time of the great depresion becuase we do not have gold backing and becuase we have an effective fractional reserve on top of fractional reserve system which is virtually unregulated as it is created outside of and on top of the Federal reserves roughly 8-1 deposits v loans ratio.

A typical ratio of CDO's for example is 30-60 to 1 that would mean an investor could convert a $100,000 mortgage into 3-6 million in securities but that is on top of the fact that these loans were made by leveraging deposits or collateral at an 8-1 ratio in the first place. The process as Mr. Wyatt has explained is complcated and it's not simple arithmatic but this is the general idea.

The point is a few billion in lost collateral is magnified to trillions in losses in liquidity in the greater financial system where the lions share of the money exists as finacial instruments many times the face value of the mortgage that backs them.

What does that mean in real world terms for us, it means that ms fraud or other finacial fraud or investment fraud could trigger a collpase that wiped out over 90% of the so called money

I appreciate the reference in Mr.Wyatts link to London as many of these loans are based on Libor (London interbank offered rate) Fitch ratings who helps proogate this intenational scam by artificially boosting the ratings of the sub-prime investments is dual based in London and New York and was started the year of the Federal reserve/Irs system and works hand in hand with validating the fractional reseve system. I fact the whole fiat money paper money system is based on the Bank of England which was created to fund wars which were to large to finance by monarchs. Like wise our Federal reserve fractional reserve private governent monopoly was formed on the eve of WWI to provide massive funding for WWI while the U.S. government officially remained opposed to entering the war both before and during the majority of WWI.

What we have as the basis of our entire economy is a sytem that was designed to create massive amounts of money without public scrutiny or oversite as it was designed to arm and fund a war we were officially opposed to.

It should be no great surpise that system designed to raise massive amounts of money for arms in secret in a short period of time would beome corrupt and unstable if used as a primary peacetime economy.

Our options now are to be self suficient or develop a parallel economy based on barter or hard money or recover the assets that have been looted and put some band-aides and regulation on the fractional and hope that bunch of greedy billionaires that engage in war profiteering will suddenly develope a conscience and serve our needs instead of theirs.

Personally I chose to support Ron Paul and impliment a sound economy in an organized, up front, voluntary, and legal fashion.

Again mr. Wyatt I appreciate your efforts and for posting at the ms fraud forum. As you said this is quite complicated and I'm sure there will be disagreements but the main point is that we have a system that allows a handful to use our money to create a vast fortune for themselves at great risk to all of us and as you said perhaps beyond the control of anyone at this point.

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This time bomb is derivative based. Not for nothing did Warren Buffet call financial derivatives Weapons of Mass Destruction. Derivative contracts are concentrated in a very small number of institutions. The largest five banks hold 97 percent of the total notional amount of derivatives, while the largest 25 banks hold nearly 100 percent. Credit default swaps are the dominant product in the credit derivatives market, representing 98 percent of total credit derivatives.  The CDS market is fairly new. The CDS was invented in mid '90s but was minor until the last four years. Since 2003, this market has grown in size 10 times, to a total notional amount of about $45 trillion.
What happens when troubled bond insurers can't pay up? ACA Capital has $60 billion of credit-default swaps that it can't pay.

No one will ever convince me that MSF was not conceived and utilized as a means to rig these bets, enriching players and knowing accomplices.  

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The legalized gambling behind mortage backed securities relied on the performance of a key part of the business model (servicing) to enforce the terms of the mortgage and ensure property would be liquidated and the loan made whole, without regard to whether the servicer would or could perform responsibly. The fools assumed servicers weren't willing to take advantage of their role.

When things were going well, like in the early part of the century where companies like Fairbanks could grind borrowers into dust without any repurcussions, it only emboldened the industry to dump more people into the sausage maker.  Everyone wanted more sausage.

Then came the infamous intervention of a couple of senators from Maryland who basicaly got tired of seeing news coverage on TV in Baltimore. They kicked the FTC into stretching their responsibilities into the "fairness" realm and sure enough, in order to make a dutiful public relations effort, a settlement was reached with the perpetrators and the industry fine-tuned the scheme.

Now that the gamblers on Wall Street have gotten away with this for this many years after seeing the handwritting on the wall, we shouldn't have any sympathy at all for them.

If there had been responsible and ethical corporate leadership, the perpetrators would have been called into the CEO's office and handed their dismissals years ago.

They are only getting what they deserved.
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Thanks for all your comments and support. I went ahead and put your forum on my links page. I need to add some more lnks and material.

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O -
You might want to fix the links wording. It's Mortgage ''Servicing'' Fraud Forum.

Mortgage Security Fraud Forum

Your web site is looking good so far.

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