Monthly Archives: November 2015

‘The Big Short’ Blows Away Bogus Argument That Poor People Caused The Financial Crisis

Huffington Post:

Nearly a decade ago, I wrote an article about how workers in a peculiar American industry were beginning to worry about subprime home loans. They were Wall Street lawyers who specialized in a dark financial art called securitization — bundling up assets, such as home mortgages, into bonds for sale to investors.

The financial pipeline supplying the loans was beginning to dry up as more and more people fell behind on their mortgages, the lawyers told me.

It was the beginning of a two-year slide that culminated in the failure of Lehman Brothers and brought the American economy to the brink of collapse.

Like most people, and most journalists, I didn’t see it coming. I wrote my story, then unwisely turned to other topics. I had no idea that the entire mortgage industry was wormed through with rot and disease and fraud, that the mortgage bonds that had fueled an unprecedented run of growth and profit were stuffed with adjustable-rate loans doomed to fail.

I didn’t realize that ratings agencies like Standard & Poor’s and Moody’s were bought-and-paid-for tools of the Wall Street banks, and that their supposed oversight of the industry was a complete sham.

I didn’t realize that a multi-trillion-dollar shadow market had emerged that allowed hedge funds and other investors to place wagers on the performance of mortgage bonds in the same way that gamblers in Las Vegas can bet on the outcome of the Super Bowl.

But not everyone was so dumb. A handful of oddball investors, working independently from each other, began to short the housing market — or bet against it — in a big way. Michael Lewis, the great nonfiction storyteller, profiled a few of these people for his 2010 book, The Big Short, which has now been made into an improbably compelling movie of the same name.

I saw a screening of the film last week at a theater in Manhattan. Brad Pitt’s production company made the movie, and at a Q&A afterwards, he explained why he felt it was important to tackle a subject as complex as the mortgage crash. “It’s a story that needs to be told because nothing has changed,” he said.

“The Big Short” should be required viewing for every mortgage and banking professional in America, and maybe every high school civics class, too. It is a direct, frontal assault on the bogus claim peddled by Wall Street and conservative media that poor people and irresponsible borrowers were to blame for the housing crash and the resulting chaos.

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HUD watchdog issues warning on fraudulent, inflated reverse mortgage appraisals

In the run-up to the financial crisis, fraudulent appraisal schemes ran rampant in the housing industry, eventually leading to the complete overhaul of the property appraisal system and the rise of appraisal management companies.

In many cases, property appraisals were dramatically overstated as part of schemes to extract more money from lenders, and by extension, Fannie Mae and Freddie Mac.

As it turns out, schemes like that have not been completely forced out of the industry.

In fact, they appear to be alive and well, at least in one corner of the industry, prompting one government watchdog to issue a stern warning to the housing industry.

In an industry alert published Monday, the Office of the Inspector General for the Department of Housing and Urban Development said that it has identified instances of fraudulent property appraisals being used to increase the loan amount for the refinancing of HUD’s Home Equity Conversion Mortgages.

According to the HUD-OIG, its investigators have uncovered fraudulently overstated appraisals being used to qualify senior borrowers for HECM refinancing.

Read on.

Retired Florida Judge Dresnick Sued for Work in Foreclosure Case

Retired Miami-Dade Circuit Judge Ronald Dresnick is facing a lawsuit for allegedly acting without jurisdiction in a foreclosure case when he was on the bench.

Dresnick, now a partner with Kluger Kaplan, entered a $2.37 million final judgment in 2013 for the defunct BankUnited FSB against mortgagor Doris McNulty. The property’s current titleholder now alleges Dresnick entered the judgment without a trial on the merits and away from the foreclosure division.

Coral Gables-based BankUnited filed the foreclosure action against McNulty in 2006. Three years later, the federal government shut down the bank and named the Federal Deposit Insurance Corp. as receiver. The newly chartered BankUnited N.A. acquired the assets and most of the liabilities of the closed bank.

Cesar Balbin got the title from McNulty in a 2011 settlement after lending her $580,000 as a purchase-money mortgage.

Dresnick presided over Balbin’s case against McNulty, and Balbin repeatedly filed to have Dresnick disqualified for allowing “BankUnited counsel to run the show.”

Balbin also claimed Dresnick made erroneous decisions, such as labeling Balbin’s complaint against McNulty a “sham” and allowing a default against McNulty in the foreclosure case to stand, “even though the plaintiff admitted that they had mailed the motion to the wrong address.”

Now Balbin is claiming Dresnick helped commit fraud on the court and civil rights violations. In his Nov. 4 complaint, Balbin alleges Dresnick ruled in the foreclosure action without BankUnited producing the relevant mortgage note. The FDIC has the note because it’s the receiver for BankUnited FSB, Balbin claims.

Read more: http://www.dailybusinessreview.com/id=1202743584736/Retired-Judge-Dresnick-Sued-for-Work-in-Foreclosure-Case#ixzz3t0bnRz70

Fannie & Freddie 2016 Loan Limits; Agency Requirements After a Bankruptcy or Foreclosure

There are 50 states in the U.S., and 3007 counties in those states. (The numbers of counties per state ranges from the 3 in Delaware to 254 in Texas; Louisiana and Alaska have parishes – functionally equivalent.) Out of the 3,007 counties, 39 of them had their conforming loan limits increased by the Federal Housing Finance Administration (FHFA) – the overseer of Freddie Mac and Fannie Mae and the 11 Federal Home Loan Banks. For the remaining 2,968 the FHFA announced that the $417,000 baseline conforming loan limit for the GSEs would remain unchanged in 2016. As a result, the high-cost ceiling will remain $625,500 for 2016.

The FHFA increased the loan limits for 39 counties between 1% and 8% due to slightly higher median home prices in those areas. Most of them were in California, Colorado, Tennessee, Massachusetts, or New Hampshire.

So in most of the country the loan limit will remain at $417,000 for one-unit properties. For those of you, mostly in urban areas where markets are still “on fire”, hoping for a bump, remember the requirement that prior price declines be fully offset before a loan limit increase can occur. And prior price declines (remember 2006-2010?) haven’t been fully recouped. The Housing and Economic Recovery Act of 2008 (HERA) established the baseline loan limit at $417,000 and mandated that, after a period of price declines, the baseline loan limit cannot rise again until home prices return to pre-decline levels. The FHFA has determined that the average U.S. home value in the third quarter of this year remained below its level in the third quarter of 2007.

If you have any complaints or questions, send a note to LoanLimitQuestions@fhfa.gov

Read on.

Ford Agrees Union Deal To Offshore American Jobs And Hire Low-Paid Workers

Zerohedge:

It appears that demand, supply, and capitalism briefly won – while ‘fairness’, ‘patriotism’, and all the other non-free-market interventionism lost – in the UAW-Ford negotiations…

Ford Motor Co. said its new four-year contract with the UAW will increase its U.S. labor costs by less than 1.5 percent annually by letting the company hire more low-cost workers and move production to factories in other countries.

The agreement – ratified by 51.3% of Ford production workers allows..

The contract allows Ford to hire an unlimited number of entry-level workers, who start at a lower wage than veterans, after a previous limit of 20 percent of its workforce as new hires.

 

In addition, Ford said it will be able to use more temporary workers, who also are paid less.

 

The agreement gives the automaker “the flexibility to leverage Ford’s global manufacturing footprint to improve cost competitiveness,” according to the statement.

 

The Ford deal, the richest of the contracts the UAW negotiated with the Detroit 3 this fall, promises $9 billion in factory upgrades and expansions that create or keep 8,500 jobs in the U.S. The pact provides across-the-board raises and $10,000 in bonuses upon ratification.

So to translate – union workers just agreed a contract which “creates or keeps” some jobs – sounds familiar; provides some short-term bonuses… but enables Ford to offshore American production and rotate from high-paid to low-paid jobs

Fed adopts new rule limiting ‘too big to fail’ bailouts

Amid pressure from Congress to rein in its power to prop up a troubled financial institution, the Federal Reserve did just that Monday, adopting a new rule that will limit its ability to bail out failing financial institutions.

The Fed announced Monday that its board of governors approved a final rule for its “emergency lending” program, criticized by some as establishing that there are some banks that are simply “too big to fail.”

Read on.

 

Walmart Used Defense Contractor Lockheed Martin To Monitor Employees

Big Walmart is watching you.. And people talk about the government watching them???

lmwisdomgrab

As a growing number of Walmart employees began demanding higher wages, with some also calling for workers to unionize, the nation’s largest retailer hired one of the world’s largest defense contractors to follow the online activities of critical employees.

A lengthy report from Bloomberg Businessweek details Walmart’s multi-pronged approach to keeping track of its employees in response to rising pro-union sentiment, like calling the FBI Joint Terrorism Task Forces when it learned that supporters of the Occupy movement might protest Walmart HQ.

The part that really caught our attention was Walmart’s use of Lockheed Martin, a company associated more with fighter jets than labor disputes.

But since 2011, the folks at Lockheed’s data analytics division have offered a product called LM Wisdom, which the company’s own brochure [PDF] markets as a tool for fighting things like drug/guns/human trafficking, organized crime, and gang violence, but which Walmart used in 2012 and 2013 to track Walmart staffers.

Read on.