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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For years, the servicers have been advancing funds and money to investors and covering up the real rates of delinquencies, defaults, suspected fraud and foreclosures. This allowed them to paint a rosy picture to investors and to continue selling bonds and securities.

They covered and concealed things with fancy derivative products and accounting that few of the investors understood. A critical component of all of this were the special servicers like EMC, Ocwen, SPS and Litton which are WIDELY known in the industry as "toxic waste dumps" since such "scratch and dent" loans are regarded as the toxic waste needing disposal.

For a while, while Wall St. "pumped up" the real estate market, this was a very powerful tool to create "paper profits." Look at Bear Stearns stock price at around $10 a share in early 90s when they started the EMC and MBS strategy. The share price was almost $180 a share weeks ago before the collapse which to date has taken over 33% off their market cap [see lawsuits coming...]

People marveled at Jack Welch when he earned 20 to 25% annual returns and stock appreciation at GE. Here, Bear was earning over 100% on an annual return! Hardly anyone noticed or paid attention to it and HOW it was making such huge amounts and returns.

You see, they learned how to push through foreclosures in a new way after their experience in the RTC collapse and government looked the other way since they were helping government in the mess that the prior S&Lers got the nation into.

With their new found knowledge, they helped companies who were cooking their books to look like they were solvent [Savings of America and others] and took the mortgages and securitized them. They also showed how they could hide the relationships and the real players since they needed to protect the bond and trusts from being sued which would have killed their strategy.

They created inside trusts and hedge funds to deal with the toxic waste by giving these "players" HUGE returns on their investment. Many Bear executives owned personal positions in these funds [personal lawsuits coming] and trusts. How they got the huge returns was by targeting "equity rich" homes and creating defaults in order to "extinguish the legal liability" and reap Big profits they could split around the table to feed the "money machine!"

Homes with little or no equity or in areas that were difficult to market due to poor neighborhoods were offered forbearance or ignored until they came back and could be sold or they could get someone to buy the toxic waste.

Loans that came "off the books" of the companies that held this toxic waste were bought for 30 to 80 cents on the dollar, depending on what BPOs and appraisals showed were the LTVs for each home. Those with the high equity had P&Ls created for them and targeted for "equity extraction."

This plan worked like a gold mine for everyone until one common problem GREED!! They had such a well-oiled machine with time lines, hedge fun money, cash, insurance, counter party risk etc... that they kept pushing more drugs to the dealers [cash to brokers] that they said "we don't care about the quality, just sell it and look the other way." Terms like idiot and liar loans were commonplace.

Hot looking young men and women who had drug problems where interviews and tests showed were "highly motivated" or had "blind ambition" were hired to sell and push the drugs and do whatever it took to get a loan close.

You see, as long as there was a note that supposed secured a property that had SOME value, they could bundle and sell these notes on the market to the Chinese, Japanese, Europeans and our pension and their hedge funds for high returns that they claimed were guaranteed.

When they overbuilt and home prices started coming down and after the Katrina losses that are still being hidden, the cash machine started breaking down,

EMC and Litton could no long extract the equity anymore because it wasn't there. The servicers couldn't fudge the books and reports of losses, defaults, foreclosures, and delinquencies since their cash money had dried up and people could not afford these exotic mortgages. Home values went down so now there were far more properties "upside down" and no equity to steal.

They tried to mod the loans, but investors and others who "bet" on the downturn cried foul in that Bear was "changing the rules in midgame!" Now, faced with double whammies, Bear & EMC jumped into the game itself by making direct loans since it needed more notes to sell and others were falling by the wayside.

When they went to market, investors had gotten spooked and the money supply wasn't there anymore. People started asking questions and when they couldn't get answers started asking to cash out their investments. With money going out and no money coming in and with no equity to extract anymore, they started hitting up everyone to raise cash.

They started asking lenders to buy back the troubled loans that they knew were bad and helped make bad to raise cash [see MortgageIT case in Dallas]. They started trying to unload their toxic waste and the markets said NO.

As more and more realized the game was over, they wanted to "cash in their chips" but the casino had issued to many chips in the game and spent all the money whereby Bear current and past CEOs has amassed for their and their trusts over $2 billion in assets!

Bottom-line, they couldn't rob you and Peter to pay Paul anymore!

You will soon see a collapse of confidence not experienced in decades. However, in the coming investigations, lawsuits, congressional hearing etc... remember one thing, you all heard it here first and on this forum!

Nye

PS, that's why I have attacked the Wall St. angle from investor side since I unraveled and exposed this den of crooks! The "end game" is government bailout and luxury for the crooks unless caught and their Viagra taken away!
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