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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Jingle mail, jingle mail, jingle mail rocks, Jingle mail comes and destroys all their stocks. Hoppin' and boppin' , folks cut themselves loose, Leaving Ken Lewis to hit the holiday juice.

Ho, ho, ho to the biggest HO'S on the planet. What did they think would happen when real people started realizing that the country is made up of the "haves" and the "been hads" and the been hads finally said "enough!"? What did they think people would do when the fraud became so obvious to everyone and the been hads realized that they had really, REALLY been had? Do the been hads really want to put more money into the pockets of the haves? Nope, sure doesn't look like it.

Looks like they were all lying to each other, too. No insurance to be found, and I wish them luck trying to milk stones for the next few years. Most of the fed ups don't care anymore. I am looking forward to a year of watching the thieving companies fight each other for a change.

Welcome to 2008, Mr. Lewis. May your dreams become nightmares and your ulcers catch fire. It will be interesting to see who really has whom by the end of 2008, won't it?

Americans 'walk' from loans 

David Hirst

December 23, 2007


THE Dow soared 200 points in a Christmas rush on Friday that belied emerging details that US banking, mortgage companies and credit rating faced collapse while the nation's mortgage insurance industry plunged into chaos.

Nearly 180,000 US local councils were placed on credit watch, with the credit agency Fitch releasing another $US5.3 billion in credit downgrades involving 27 mortgage companies. The news emerged on Friday night, when the nation's newspapers, even if they were following the story, would miss it.

That one company could downgrade 27 major financial institutions in one stroke is stunning, but it follows a swathe of credit downgrades that swept the US on Thursday and Friday.

There has been a major falling out between mortgage insurers, credit rating companies, banks and mortgage institutions, which believed their loans were insured, only to be stunned to find themselves booted into the mire that is American banking.

Chinese, Singaporean and Arab sovereign investment funds seem to offer the only salvation for the US banking system.

The depth of the housing crisis was underscored by the head of one of America's largest banks, Bank of America, the straight-speaking Kenneth Lewis, who warned of a completely new attitude by Americans to their homes amid fears that as many as 20 million householders may "walk" from them, further deepening the crisis.

Lewis' comments came as a new expression - "jingle mail" - referring to the growing trend where Americans mail the keys to their homes to the lenders before vacating, entered the US lexicon. Figures for November revealed more than 200,000 US homes were foreclosed, a 68% increase on November 2006.

Perhaps most alarming is the credit standing of the major insurers of mortgage loans as Moody's, Standard & Poor's and Fitch Ratings slashed insurer ratings and placed the largest insurer under negative credit watch. The mortgage insurers, especially the giant MBIA, stand accused of further imperilling banks and mortgage companies by spending billions on risky CDOs (collateralised debt obligations) and even riskier "double" CDOs.

Lewis was no doubt speaking for all the banking and mortgage monoliths when he said he was "astonished" at the change of attitude Americans were showing to their homes in a country that, with Australia, has the highest home ownership rates in the world.

A combination of new circumstances and psychology seems to be gripping millions of Americans who are paying higher interest on homes that are plummeting in value.

A number of factors are at work. First, many mortgage companies, encouraged by Alan Greenspan during 2002-03, ended mortgage deposit requirements.

Then the banks "sliced and diced" and sold the mortgages in packages so the householder no longer owed their payments to their bank but to anonymous international conglomerates.

Mortgage companies have also, by selling "liar's loans" and "toxic" mortgage debt, lost moral authority. Householders see no reason to be loyal to them.

But the driving force is economic. The glut of cheap housing makes renting attractive and low wages give breadwinners no option but to decide between paying higher food and energy prices and higher rates on car loans and credit cards while seeing their neighbours abandon their homes.

In a repeat of the savings and loan scandal of the 1980s, but perhaps on a vastly greater scale, the downgrading of local councils will further threaten communities.

That period was characterised by cutbacks to police and council lay-offs, followed by degraded roads, and services to the poor and elderly.

The credit downgrades or warnings thereof - the effect is the same when it comes to municipal borrowing - is a direct result of the loss of land tax income by those councils. This has only begun to begin. Some councils take years to adjust their land tax to the new values and direct, urgent action is needed.

When former president George Bush faced the same dilemma in the early 1990s, with Bill Clinton and Ross Perot breathing down his throat, he acted swiftly, and although the savings and loan bail-out may have seen bad money following worse, the crisis was relatively soon resolved, in time for Clinton to take over an economy already beginning to improve. The same could not be said of the actions of his son, George W. Bush, who, as a self-proclaimed and self-starring war leader, cares little for economic management and cannot next stand for re-election anyway.

Late last week the respected website Calculated Risk figured that housing losses might reach $US1 trillion and even $US2 trillion.

The prominent New York University economist Nouriel Roubini, who is predicting an extremely hard landing for the US economy and an acute recession, said on television that Wall Street's latest rises represented a "sucker's rally" and stated the nation was in its "most severe liquidity crisis for 50 years".

"We are heading to a severe recession," he said. In his blog, he referred to Calculated Risk's loss estimate of $US1 trillion plus, and said "could prices fall that far? Oh yes they could".

But the drama now unfolding surrounds the mortgage bond insurers and the credit agencies.

Insurance is taken out in the hope it will never be claimed. However, the insurer has to assume it will be claimed and therefore ensures the premiums are safely invested. The banks, some earlier than others, realised the threat to their mortgages and took some, not nearly enough, insurance from companies such as MBIA and ACA.

As the loans had been sliced and diced, it must have been difficult for actuaries to calculate what insurance was necessary. Even to this day, no one knows who owns and owes exactly what. The CDOs are, after all, collectivised.

It turned out the risk was great and the insurance was needed. Then came the surprise.

The insurer had invested in the very thing the insured was fearful of, the collapse of the value of the CDOs.

Morgan Stanley then commented: "We are shocked that management withheld this information for as long as it did. MBIA simply did not disclose arguably the riskiest part of its CDO exposure."

But they did. Not to JPMorgan or Merrill, but to the insurers, which evidently didn't hear, didn't realise or didn't think it worth passing on to the major mortgage institutions that their insurance money was tied up in the same risky ventures these companies were trying to protect themselves from.

How is it so? Obviously relations between the bastions of Wall Street are cascading into cataracts of ill feeling and anger. J Kyle Bass, the highly respected authority on the housing industry, recently released details of a study his company has concluded on the vast "Inland Empire" region of California where millions of new homes have been built in the past decade, and said he found the situation far worse than he expected, with over 90% of housing loans containing some sort of fraud.

He said "50% of applicants overstated their incomes by more than 50%" in what is the starkest condemnation of the "liar's loans" this correspondent has seen.

The relationship between capital and insurance, and the trust between them is as old as capitalism itself. One cannot survive without the other.

David Hirst is a journalist, documentary maker, financial consultant and investor. His column "Planet Wall Street" is syndicated by News Bites, a Melbourne-based sharemarket and business news publisher.
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Thanks for this article arkygirl.  Nice jingle mail song, too. LOL

As for the contents of the article, although it hadn't occured to me to mail my keys to my servicers, Litton and Wilshire, this is exactly what we plan to do.  By that I mean walk away.  If we feel so moved I could see us mailing in the keys - but then again why waste the postage?

This whole situation feels just like watching a train wreck.  "he found the situation far worse than he expected, with over 90% of housing loans containing some sort of fraud." - astounding!
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I hate to hear of anyone having to give up their homes. Some people have so much invested and many years of payments behind them that it would make no sense for them not to fight.

For people with little invested it may make more sense to consider the payments made as rent and walk. With all the lawsuits going on it is getting harder to find a lawyer who is "untainted" by the industry. Litigation just makes them rich while borrowers stagger under massive legal bills and develop health issues.

Jingle mail may prove to be the ultimate anti-fraud. It will certainly cause the banks and servicers to eat the fruits of that poison loan tree it planted many years ago much sooner. It will also over time strip away their ability to hide what they have done because investors will get more and more restless and will soon want blood. In fact, the investors are pretty blood thirsty right now. The banks and servicers miscalculated when they assumed that every single borrower would "fight to the death" for their homes. REO numbers are going through the roof and have become massive liabilities; the banks cannot sell them even at deep discounts lately. But they will have to pay taxes on them or lose them to the county government.

As people walk away the credit bureaus will become less useful because between the mortgage mess and rabid credit card companies, it will soon be a given that the majority of people will have dinged credit. Thus credit bureaus will become marginalized. Loans will have to become more personal again. Look how much credit card interest rates have risen as B of A, Chase and Citi attempt to make up their mortgage mess shortfalls by shifting higher interest to card users. People are getting sick of that, too and will either choose not to use the cards or there will be mass defaults. Either way, bad for the banks.

I look for 2008 to be the year of massive rebellion. Americans are sick of being treated like mindless commodities and milk cows. The number of fed ups are growing and the banks will be left holding the bag, not the other way around. Americans are beginning to push back in ways the banks never considered and it is creating a siege mentality among the banks now instead of among consumers where it has been all this time. There will be a tsunami's worth of fraud crammed back down their throats for a good while yet. This is going to force a massive shift in the way loans and banking are done and it is well past due for that. Banks will either change or die and at this point either is fine IMO.

Good luck to you, April. Always remember that you are a victim of the fraud and greed running rampant in America today and keep those mortgage papers as evidence should you ever need it. Many, too many good, good people are having to make these hard decisions right now. I hope all goes well for you and your family. And I hope you stay with us here throughout this interesting new year. The tide is turning in unexpected ways now.
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