Reads Around the Internets - Where Do Jobs Come From?

shocknews Welcome to the weekly roundup of great articles, facts and figures. These are the economic and financial finds that made our eyes pop.


Where Do Jobs Come From?

Economist Jared Bernstein has laid out in simple, easy to understand terms, the theory of stimulating the economy to indirectly create jobs. This article is in reference to Uncle Ben's latest quantitative easing.

FHFA Firestorm!

firestormThe FHFA just pooped on half a million Americans and denied those underwater on their mortgage to obtain partial debt forgiveness. Millions of American homeowners holding out hope are outraged. Acting FHFA director Ed DeMarco:

Today, I provided a response to numerous congressional inquiries as to whether the Federal Housing Finance Agency (FHFA) would direct Fannie Mae and Freddie Mac to implement the Home Affordable Modification Program Principal Reduction Alternative (HAMP PRA). After extensive analysis of the revised HAMP PRA, including the determination by the Treasury Department to begin using Troubled Asset Relief Program (TARP) monies to make incentive payments to Fannie Mae and Freddie Mac, FHFA has concluded that the anticipated benefits do not outweigh the costs and risks.

Given our multiple responsibilities to conserve the assets of Fannie Mae and Freddie Mac, maximize assistance to homeowners to avoid foreclosures, and minimize the expense of such assistance to taxpayers, FHFA concluded that HAMP PRA did not clearly improve foreclosure avoidance while reducing costs to taxpayers relative to the approaches in place today.

Who's the Big Bad Wolf Now on Foreclosure Fraud and Abuse?

three pigsWe all know the story of the three little pigs and the big, bad wolf.

Little pig, little pig, let me come in.
No, no, not by the hair on my chinny chin chin.
Then I'll huff, and I'll puff, and I'll blow your house in.

To date that's been the story of the banks as the big bad wolf, blowing houses down all over America with fraudulent foreclosures, viewing home owners as tasty piglet snacks of profit.

Will we ever see role reversal in this never ending grim tale? Will the big bad wolf finally be our government, blowing down the Banks' house of mortgage and foreclosure fraud? Can the government at least hand Americans just a few bricks at least? It's yet to be seen.

The latest seems to be dueling events. One the one hand, there is a foreclosure fraud settlement in the works for all 50 States, which supposedly gives banks immunity and waves all future legal actions. Yet at the same time, the New York Attorney General filed a civil fraud lawsuit against three major banks over MERS.

HARP Another Siren Song for Homeowners

siren with harpWith much fanfare and headline buzz, Obama announced a new program to help homeowners.  What is it?  They simply lifted the 125% refinancing cap for mortgages attached to residential properties.  Previously one could not refinance a home more than 125% of it's current value.   Now you can refinance your mortgage where the principle is twice what the value of your home is.  Nice huh?  Mortgages only held at Fannie Mae and Freddie Mac will qualify and the program is only open until 2013. Your bank must approve and any mortgage sold to Fannie, Freddie after May 31, 2009 also doesn't qualify.

house mazeWe have a name, HARP, for this program. Yet another mnemonic, similar to hopeless HAMP which was also released with much fanfare. Homeowners found HAMP to be a labyrinth of bureaucratic no help, designed to be a rat maze pretending somewhere there was some cheese.

Washington Post:

The Federal Housing Finance Agency, working with the Obama administration, said that up to 1 million “underwater” borrowers might benefit from an expanded program that targets homeowners who owe more than their properties are worth.

Beyond ForeclosureGate - It Gets Uglier

Michael Collins

The ForeclosureGate scandal poses a threat to Wall Street, the big banks, and the political establishment. If the public ever gets a complete picture of the personal, financial, and legal assault on citizens at their most vulnerable, the outrage will be endless. (Image)

Foreclosure practices lift the veil on a broader set of interlocking efforts to exploit those hardest hit by the endless economic hard times, citizens who become financially desperate due medical conditions. A 2007 study found that medical expenses or income losses related to medical crises among bankruptcy filers or family members triggered 62% of bankruptcies. There is no underground conspiracy. The facts are in plain sight.

Mortgage Deal Under Discussion - Obama Administration and Big Banks

Even if the settlement being offered by the Obama administration is accepted, it doesn’t give the banks relief on the securities fraud claims or evasion of back fees for recording mortgages.

Reports have begun to appear in the American business press of a possible settlement among banks and their regulators over the mortgage mess in the U.S. The various players in this settlement are leaking stories to business reporters in order to place on the public square their negotiating positions, which can often serve to define the terms of the discussions taking place in private. For those of our readers who are not Americans, we need to apologize in advance for the convoluted, and you might even say ugly, manner in which policy is made in Washington when so many different players are involved. We’ll try to keep the description of what is going on basic and understandable, but don’t be surprised if you feel like you’ve wandered into an abattoir where sausage is being made. First, let’s go down the list player by player, and see what they want out of a possible settlement.

MERS Leaves the Field

By Numerian
How the banks could inflict such damage on the country’s home title and mortgage registry system would take another investigation by Congress to determine – assuming Congress was interested.
The Mortgage Electronic Registration Systems company (known as MERS), which has been at the center of legal problems affecting the securitization of home mortgages and foreclosures, has given up one of its principal corporate objectives. It is now instructing its members to cease foreclosing on residential properties in the name of MERS, and to begin immediately to register all assignments of mortgages with local county recorders of deeds. (Image)

The whole purpose of MERS when it was established in 1996 was to by-pass the county recording process, and the billions of dollars of fees that banks and mortgage companies would have had to pay to comply with state and local real estate laws. MERS operated on a legal assumption that it could have its cake and eat it too, by acting as an agent for its member banks in their real estate transactions, but also acting if necessary as a principal in its own name when it came to assigning mortgages and foreclosing on properties.

Apocalypse When? Decline and Fall (Maybe) January 17, 2011

Michael Collins

For at least ten years the large US banks have been selling a product – the residential home mortgage – with a fatal legal flaw that renders it uncollateralized. Numerian

boston may benot
Apocalypse When? Round Up of Massachusetts Supreme Court Decision on ForeclosureGate, US Bank N.A. v Ibanez - Around 1995, the big bank lenders established their own rules for handling the various steps of issuing a mortgage. They knew well the contract laws of the states in which they operated. But they had bigger plans. They wanted to bundle up thousands of mortgages and sell them as Mortgage Backed Securities (MBS). To do that, they needed an electronic system (MERS) that could bundle mortgages and sell them repeatedly to investors here and overseas. Never mind that state law required specific documentation at every step, including documentation to prove a specific owner of the property. When banks resold the MBS product, as it were, they were interested in churn and more money, not tagging a specific mortgage with the latest MBS owner.

Oops! The big banks screwed up big time. Bankruptcy courts at the state and federal level are used to adherence to contract law and court rulings. Most people in foreclosure struggle to pay for representation if they go to court. Many settle out of court. But the Show Me the Note movement, in and out of court, has a powerful ally - the Ibanez decision.

The Arc of Justice - The Ibanez Case Ruling

By Numerian posted by Michael Collins

What is beginning to unfold before our eyes is a situation which can only be comprehended with jaw-dropping incredulity.

The Too Big To Fail banks have been waiting with trepidation for a ruling from the Supreme Judicial Court of the State of Massachusetts on the case titled US Bank National Association (as trustee) vs. Antonio Ibanez. They were right to be fearful. The state supreme court has ruled against the banks and upheld a lower court order that nullified foreclosures by US Bancorp and Wells Fargo, on the grounds that neither bank had the legal right under Massachusetts law to foreclose. Today’s ruling has far-reaching consequences for the banks and the housing market in general, as it throws into serious question the legal soundness of millions of mortgages in the US if, as expected, courts in other states come to similar conclusions as the Supreme Judicial Court of Massachusetts.

No Room at the Inn - No Mortgage Relief in TARP

Michael Collins

What do you get when you cross Tim Geithner and Peter Peterson?

Barack Obama; who would rather help the big banks and "balance" the budget than offer a helping hand for struggling homeowners. (Image)

The president demonstrated new heights of indifference toward the people in his handling of the mortgage relief program made a part of the Trouble Asset Relief Program (TARP). Citizens paid the full share for TARP and were to get a modest proportion. That's not the case. The November 2010 Congressional Budget Office Report on TARP was just issued. It showed that the funds for home mortgage assistance programs would be reduced from $50 billion to $12 billion, as reported in the Huffington Post.

Reading the details of the report, we find that the take back from homeowner relief through TARP funds is even more outrageous. The actual funds spent so far for homeowner relief is only $710 million.