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Wednesday, March 21, 2012

Secret Deals, Forclosure Settlements, Stress Tests and Vampire Squid Whistle Blowers: You Just Can't Make This Stuff UP

© Associated Press
Secret Deals, Forclosure Settlements, Stress Tests and Vampire Squid Whistle Blowers: You Just Can't Make This Stuff UP by L. Randall Wray

 No Hollywood scriptwriter could plot a more implausible story. Here is the plotline sequencing:
  1. Bankers make NINJA loans, securitize them, and sell on to government GSEs
  2. Bankers destroy all the loan documents and begin random and fraudulent foreclosures, throwing millions of innocent victims out on the street
  3. GSEs sue bankers and force them to take back bad mortgages
  4. Bankers sell servicing rights for the same bad mortgages back to GSEs, who overpay
  5. GSEs resell servicing rights to companies run by former GSE officials
  6. Bankers slapped on wrist with puny foreclosure settlement in return for government promise it will never sue them for past foreclosure fraud
  7. Government stress test claims banks are healthy
  8. Bankers get sweet deal, counting mortgage mods for best borrowers toward the settlement
  9. HUD report released demonstrating massive foreclosure fraud that reached to highest levels of banks
  10. Vampire Squid Executive Director fires off resignation letter decrying bankster culture
  11. Banksters walk away scott-free as statute of limitations runs out for criminal behavior
This would have to be a fantasy because no one would ever believe it could have been true.

Beginning in the late 1990s the biggest banks and GSEs created MERS to end-run around county recorders so that they would not have to pay fees to properly register sales of mortgages that would be securitized.

They then proceeded to lose or destroy all (or virtually all) the written documents, broke the chain of title, and screwed up even the electronic records. Nobody knows who owes what to whom, so the loan servicing arms of the biggest banks decided to go on a foreclosure frenzy to seize as many homes at random before anyone found out.

Read complete report..

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