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
... in Hel to be eaten up by the vultures of Wall Street. Will keep you abreast...

Bear Stearns to Get Backing
From J.P. Morgan, N.Y. Fed
Firm's Shares Sink Amid Liquidity Fears
By KEVIN KINGSBURY, ANDREW DOWELL and SERENA NG
March 14, 2008 12:36 p.m.
NEW YORK -- In a dramatic move Friday, J.P. Morgan Chase & Co. and the Federal Reserve Bank of New York stepped in with emergency funds to keep beleaguered investment bank Bear Stearns Cos. afloat.

The move, during a week of worry about whether Bear could continue to meet its obligations, took the credit crisis to a new, more serious stage and was a reminder of how quickly an erosion of confidence can undermine even leading financial institutions.


The involvement of the Fed -- coordinating with the Treasury Department and the Securities and Exchange Commission -- made clear authorities were concerned about the risks to the broader financial system. Bear is the smallest of Wall Street's big five investment banks, but it is a significant player in markets for debt, particularly for securities backed by mortgages.

Bear Stearns's problems built this week, as counterparties in the market grew extra cautious about entering deals with the bank. Bear's executives tried all week to reassure markets that its financial position was solid. But in a week that also saw the collapse of the $22 billion, mortgage-focused hedge fund
Carlyle Capital, those reassurances went unheard, and Bear ultimately was forced to seek help.

"We have tried to confront and dispel these rumors and parse fact from fiction," CEO Alan Schwartz said in a release. "Nevertheless, amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated. We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations."

Officials at Standard & Poor's and Moody's Investors Service have been meeting Friday to discuss whether the developments at Bear Stearns require a downgrade of the company's credit rating, and if so, by how much.

A ratings downgrade or update by at least one of the credit ratings agencies is expected later today, a person familiar with the matter said. Currently, Moody's, a unit of Moody's Corp., rates Bear debt A2, while S&P, a unit of McGraw-Hill Cos., rates the Bear Stearns debt with an A. Both those are five notches above junk level and five notches below the top triple-A level.

Fed Steps In

Specifically, J.P. Morgan will borrow funds from the Fed's discount window and relend them to Bear Stearns for 28 days. The borrowings from the Fed will be secured by collateral furnished by Bear Stearns, and the Fed, not J.P. Morgan, is bearing the risk of losses if that collateral falls in value. The size isn't predetermined, but is limited by the available collateral.

The arrangement employs a little-used Depression-era provision of the Federal Reserve Act. New York-based J.P. Morgan, unlike investment banks like Bear, has the advantage of being able to borrow directly from the discount window and, with just over $3 billion in write-downs thus far, has weathered the credit crisis far better than commercial banking peers like Citigroup Inc.

The timing of the move made its urgency clear: If Bear could have held out until March 27, it could have borrowed directly from the Fed itself under a new program announced just Tuesday.

The developments could mean the end of independence for Bear, founded in 1923. J.P. Morgan said it is "working closely with Bear Stearns on securing permanent financing or other alternatives for the company" -- Wall Street lingo for a sale or other strategic-level change -- and CNBC reported that the bank is "actively being shopped" to potential buyers.

The cost of protecting investments in Bear Stearns debt against default jumped sharply, indicating growing concerns about Bear's creditworthiness. Similar protection for other financial companies also rose in value, a sign of rising worry in the markets.

Bear's shares plunged, dropping by more than half at the day's low. Shares recently were trading nearly 41% lower at $33.90, knocking about $3.3 billion in market value off the stock. The options market signaled a dim outlook, with contracts giving the right to sell Bear Stearns stock for $25 soaring in value.

The shares have fallen by two-thirds in the past three months. The news also unnerved the broader markets, which just yesterday were cheering a report from Standard & Poor's that suggested the end might be in sight for write-downs related to subprime mortgages.

The intervention by J.P. Morgan and the New York Fed shows Bear "didn't have enough money to turn the lights on this morning," said Carl Lantz, strategist at Credit Suisse. "And in a big picture sense, this isn't that comforting."

U.S. Treasurys surged, as investors sought a safe place for their money, and the dollar fell. "It's just pure fear across the board right now," said Geoffrey Yu of UBS. "All the promising news this past week has been undone over this Bear Stearns news....I don't think the market has seen anything of this magnitude before, such a big bank."

Lehman Parallels

Analysts and investors say Bear's predicament has parallels to what Lehman Brothers went through during the late 1990s.

During the credit crunch of 1998, which was sparked off by the Russian debt crisis and the implosion of hedge fund Long-Term Capital Management, Lehman was the subject of rampant market speculation that it might face financial difficulties, because it held emerging market bonds and other assets that were falling in value. As Lehman's shares and bonds dived on the rumors, the Wall Street firm, which at the time depended heavily on short-term funding, ran into problems obtaining such financing. It fought its way out of the trap without having to turn to the Fed, however.

"The nature of financial companies is that they are pretty much a black box," says Jeff Houston, a bond fund manager at American Century Investments in San Francisco. "If people start to worry about what's in the box, there's not much the firms can do to demonstrate that they are not as weak as they appear to be."

At the end of November, Bear had short-term borrowings of $24 billion, of which $11.6 billion was unsecured and $12.4 billion was secured. It also had $68.5 billion in long-term borrowings and $21.4 billion in cash or equivalents, according to regulatory filings.

--Greg Ip, Aaron Lucchetti, Kate Haywood, Riva Froymovich and Robert Curran contributed to this article

Write to Kevin Kingsbury at kevin.kingsbury@dowjones.com8, Andrew Dowell at andrew.dowell@dowjones.com9 and Serena Ng at serena.ng@wsj.com10




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Doesn't this sound like COUNTRYWIDE all over again?  or is it just me?
 
And the powerful and famous Caryle Group?  There was no "Sub Prime" their, it was all AAA rated paper.  Its time for the press to figure this out that they were sold a bill of bad goods, that it was a "Sub Prime" problem!  No way in hell!
 
Oh and all those Pooling and Servicing Agreements that were "Securitized" that have had their equity stripped away by Manufactured Foreclosure's, who is going to audit them?  I'm guessing the Feds are finding it prettying interesting with CBASS right now!. 
 
And Nye,  GREAT JOB ON EXPOSING THE BEAR!

 

 

And

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Wounded Bear
this goes out to our thorn in the a$$  :

Nye , you wounded us  ,  were so sorry  " uncle ALBERT "

         WE SHOULD NOT HAVE STOLEN FROM YOU  !
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Nye Lavalle
I want the ugly infested fur rug on my floor and your head on Jack's wall you f ing MORON. Then your azz in jail getting poked with some of youd bed buddies!
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Jospeh Mason said...

Joseph Mason, a finance professor at Drexel University, had little sympathy for Bear Stearns' problems.

'Once an institution is insolvent, the only responsible thing to do is to unwind it in an orderly fashion,' Mason said. 'It's not a business enterprise worth saving.' http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-23783566.htm
                                    

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H. Gosh

OK, some forward thinking here - the Bear is a rug - what happens to EMC and all of their victims??????  Don't forget, they can create documents and undo time and history at the snap of a finger!!!  Come on guys lets brain storm, because the victims will wind up bearing the load of the golden parachutes!!

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Nye Lavalle
Simple, sue the executives personally for what they did and know
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Blossom
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what happens to EMC
 

Surely Lazard is also shopping EMC Mortgage Corp. around to find a buyer who is not the least bit put off by knowledge that they are acquiring an egregious scumbag home stealing operation.
Fitch Affirms 25 & Downgrades 20 Classes from 10 EMC Mortgage Loan ...
"The mortgage loans were acquired by EMC Mortgage Corporation from various institutions and include loans which had defaulted in the past and are re-performing or are performing under the provisions of a bankruptcy plan or a forbearance plan, or loans which are performing under the terms of the related original notes or such notes as modified."
What a smart business plan, acquiring damaged loans so they can crank up default manufacturing machinery.  So much more credibility in FC actions to be able to say borrowers had bad payment histories.
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and all of their victims?????? 

No restitution beyond being skrewed and scarred for life!

 
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