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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Nye Lavalle

Seeking Hidden Losses,
Regulators Comb Books

Of Wall Street Titans

By RANDALL SMITH and SERENA NG
August 10, 2007; Page C1

Securities regulators are checking the books at top Wall Street brokerage firms and banks to make sure they aren't hiding losses in the subprime-mortgage meltdown, said people familiar with the inquiry.

The SEC is looking into whether Wall Street brokers are using consistent methods to calculate the value of subprime-mortgage assets in their own inventory, as well as assets held for customers such as hedge funds, the same people said. The concern: that the firms may not be marking down their inventory as aggressively as assets held by clients.

While the issue is a technical one, and such checks occur routinely, it is sensitive for the markets. That is because, at least through their latest earnings reports, few big Wall Street firms have reported big subprime losses despite the turmoil roiling the markets.

The SEC checks are expected to include the top five Wall Street firms and the securities units of major commercial banks. Among the first firms to be looked at are Goldman Sachs Group Inc. and Merrill Lynch & Co., according to people familiar with the inquiry.

Some analysts and investors have raised questions about whether firms have experienced as-yet-unreported losses in markets such as subprime mortgages and collateralized-debt obligations. The checks may also yield information about whether the hedge funds themselves have reported their results accurately to investors, according to one person knowledgeable about them.

Cross-checking to see whether the firms use the same methods to mark their own positions as they do to mark those of their customers could increase the accuracy and clarity of how the firms report their earnings to investors. Some firms "don't come clean" about such losses in earnings reports, said analyst David Trone of Fox-Pitt, Kelton. "You don't know when people take losses; it's buried."

Marking subprime assets to market is controversial because unlike stocks or bonds listed on an exchange, they can't be readily bought or sold. That makes it hard to establish an accurate price for them. Fund managers have broad discretion in attaching a value to these assets, and often don't reveal many details of their trades.

"No one really knows how to price asset-backed securities and CDOs and that's a real problem in the market now," says Ann Rutledge, principal of R&R Consulting, a structured finance consultancy in New York.

While the markets were choppy in February and March, they settled down in April and May. The turmoil resumed in June. The most damage has occurred in July and August, after the big firms reported their most recent results for quarters that ended in May and June.

The regulators are looking at marking methods used by the Wall Street divisions that make loans to customers such as hedge funds and other money managers. In addition to prime brokerage that provides trading and financing to hedge funds, they also include so-called repo desks, which provide financing to customers secured by assets including the kind of securities that have plummeted in value.

Repo desks manage repurchase agreements, which are essentially short-term loans with collateral such as Treasury bills and bonds, corporate bonds, and other debt securities.

Such repo desks monitor the value of the collateral, most often daily, and if they believe the value has declined, they may ask the customer for more cash or more securities to ensure that, in the event the loan isn't repaid, the collateral can be seized and sold quickly enough to make the lender whole.

Such a scenario unfolded at two subprime-mortgage hedge funds operated by Bear Stearns Cos., which took a hit in June because a decline in the value of mortgage securities in the fund prompted some of the funds' lenders to seize assets and force sales.

In late June, the SEC said it had opened about a dozen probes involving CDOs, which are backed by mortgage bonds or other types of debt. Much of the turmoil in the debt markets has been tied to uncertainty involving the pricing and valuation of complex instruments such as CDOs.

The SEC also is looking at the implosion of the Bear hedge funds. SEC Chairman Christopher Cox said at the time the agency was looking into how hedge funds value their assets.

As there isn't an active trading market for some of these types of securities, many hedge funds and mutual funds rely on dealers to provide them with market prices. Those prices are usually estimates or the result of financial models, and can be highly subjective. In recent weeks, these marks have varied widely among different dealers, creating pricing problems for some funds.

The pricing issue is crucial for brokers and banks, some of which hold significant amounts of mortgage or CDO securities on their books. Analysts said it was common in past years for Wall Street underwriters to keep portions of the securities of CDOs or mortgage bond deals they arranged.

The SEC's market-regulation division has been in touch with all big brokerage firms to ensure their risk-management systems are up to speed in light of the quick deterioration in the subprime market. The asset-pricing inquiry is being conducted by the agency's office of compliance, inspections and examinations.
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Ed

What does this all mean? I don't understand unless you mean maybe we're investors and have to watch out? I don't get it?

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Digger
Ed:

For more than a decade, regulators have been told to look into the books.
They were repeatedly advised that the books would provide conclusive 
evidence of the Mortgage Servicing Fraud scam. 

They failed to do so, and as a result, countless INNOCENT homeowners had their homes stolen.

Nowwwwww they are doing it... but it is far too late.  The damage is done and Wall Street is going to pay for their criminal activity.
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I was watching CNBC Investment news today and saw something that caught my eye.  It showed brokerage houses red today, i.e. Goldman Sachs, Merrill Lynch, and Lehman Brothers.  Interestingly I noticed one I had not seen before, which was Friedman.

Does anyone have any information on "Friedman" and were they fit into this sub prime lending mess.

Thanks!

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Nye Lavalle
Friedmam billings they had a subprime unit where I had a hottie giving me info about all the fraud she and they were commiting. Was First NLC in FLA and they blew up, but not before I got valuable info from her!
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Ed

But the SEC only protects investors from the crooks. What can they do for borrowers?

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If they defrauded investors it proves a pattern of behavior. It makes it much easier to prove they defrauded us. It also shows people that if they do not stick up for us then they will suffer as well. They could be carpenters , executives, seniors etc. it doesn't matter everyone will be hurt by not stopping ms fraud. Think of union people or any people who have retirement funds affected by the stock market. People will also be hurt by an economic collapse and people are certainly hurt by falling home values and criminals moving into abandoned homes.

Ms fraud hurts foreign investors and very well could get us into a major war so millions could and probably will wind up dying over it unless we get to the bottom of what is going on and make fundamental changes in the economic/monetary system preferably it would be self correcting and the incentives would to reward honest and wise investing, lending , and business practices.

We really need a thorough audit of all parties involved. Ideas like government bailouts to put a band-aid on a mortal wound are just absurd and positively criminal. The politicians are trying to get the taxpayers to bail criminals who steal homes for a living, because they get huge political donations from them.

If these financial criminals stole homes and laundered the money and placed investors and the greater economy at risk they should pay damages and go to jail.
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Anonymous
greg collins wrote:
If they defrauded investors it proves a pattern of behavior. It makes it much easier to prove they defrauded us.


Nonsense. Find a case where some wise guy attorney managed to get that one to stick. Oh, nevermind. It doesn't exist.

greg collins wrote:
It also shows people that if they do not stick up for us then they will suffer as well. They could be carpenters , executives, seniors etc. it doesn't matter everyone will be hurt by not stopping ms fraud. Think of union people or any people who have retirement funds affected by the stock market. People will also be hurt by an economic collapse and people are certainly hurt by falling home values and criminals moving into abandoned homes.


You're confused. Mortgage servicing fraud HELPS PREVENT INVESTOR SUFFERING. It helps perpetuate their profits. And there are investors everywhere you turn. If you're in a 401 or have a retirement IRA that is diversified you're probably an investor.

greg collins wrote:
Ms fraud hurts foreign investors and very well could get us into a major war so millions could and probably will wind up dying over it unless we get to the bottom of what is going on and make fundamental changes in the economic/monetary system preferably it would be self correcting and the incentives would to reward honest and wise investing, lending , and business practices.


That's one of the dumbest things I've ever read. Again, servicing fraud helps perpetuate their profits. There will be no fundamental changes in the monetary system no matter how many kooks trott out myths about the Federal Reserve, international banking conspiracies and crap like the Illuminati.

greg collins wrote:
We really need a thorough audit of all parties involved. Ideas like government bailouts to put a band-aid on a mortal wound are just absurd and positively criminal. The politicians are trying to get the taxpayers to bail criminals who steal homes for a living, because they get huge political donations from them.

If these financial criminals stole homes and laundered the money and placed investors and the greater economy at risk they should pay damages and go to jail.


At least that part of the post posits a rational goal. But investors are driving the train. It's their money. They have a position from which to bring suit. Criminal investigations if they ever get started will be stalled for years, even decades.


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If It Smells Like A Skunk
Anonomoose,

You obviously don't know Greg.  You are obviously a plant.  Go somewhere else and try to steal another house.

We're coming for you!

Phew!
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TO Anonymous:

You need to be "BORN AGAIN" in your physical life and spirtual life. Go back to wearing diapers and start pre-K all over again.  By the way, start with the 3 R's.

In each ENTITY classification, THE WHOLE DA** THING IS AN ACCOUNTING SCAM".

As the JUDGE said in my case, quote:  "In other words, they don't know how to "ADD AND SUBTRACT".
 
THEY CANNOT EVEN READ THEIR VERY OWN FINANCIAL STATEMENTS. THEY HAVE FIXED AND COOKED THE BOOKS SO MUCH, THEY DON'T EVEN KNOW WHAT THEY OWN, if anything at all.  BLANK PAPER! 

Some Power Big Wig comes along and tells some one, by the way, throw in a million in this account, no on second thought, put a billion, no..oo..oo, we need a trillion on balance sheet. No paper trail, no journal entry backup, don't know who told to do it, don't know who sat at computer and threw in an asset somewhere and adjusted the RETAINED EARNINGS.  NO PAPER TRAIL, MUST HAVE BEEN A MISTAKE. 

Next time they need to fix $$$,$$$,$$$,$$$,$$$.$$ on the forward looking statement, same procedure, undo the previous, increase that amount to... 

What about the Profit and Loss Statement (P&L), Accrued Bonuses, Overhead Expense, etc?

What about SALES, COST OF SALES equal GROSS PROFIT?
What about AFTER TAX NET PROFIT/LOSS? 

Are these entity's paying IRS?  If so, how much?



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