Tuesday, November 20, 2012


An event of extreme importance to the housing market has just happened; below is the Department of Justice press release made public at 5.01 pm today.

This will have tremendous impact on Banks, Servicers, Remic underwriters and most importantly will have a chilling effect on foreclosure proceedings nationwide.

Obviously thousands and thousands of homeowners have been deprived of their homes in proceedings tainted by these fraudulent documents.

And just as importantly many hundreds of thousands of mortgages and notes secured by them that were "lost" and replaced with fraudulently created documents that might have been used to effect transfer of these documents into various pools of mortgages subsequently sliced, diced and sold worldwide based on their legally owning these mortgages, will have to be scrutinized for validity.

And then, of course, the tax status of REMICs will also be brought into question if it turns out that they  contain mortgages that were transferred based on these fraudulent documents.

This is just the beginning of the next mortgage crisis.... and this one may lead to the failure of a major bank.

In the spotlight will be Bank of America and of course Wells Fargo to name just two of the biggest players.

Time for the Fed to step in and take care of this mess once and for all - after all it is the trade organization that represents the interest of it members only - the banks in the USA!

TUESDAY, NOVEMBER 20, 2012                                                                        (202) 514-2007
WWW.JUSTICE.GOV                                                                                    TTY (866) 544-5309


Over 1 Million Documents Prepared and Filed with Forged and False Signatures, Fraudulent Notarizations

WASHINGTON – A former executive of Lender Processing Services Inc. (LPS) – a publicly traded company based in Jacksonville, Fla. – pleaded guilty today, admitting her participation in a six-year scheme to prepare and file more than 1 million fraudulently signed and notarized mortgage-related documents with property recorders’ offices throughout the United States.

The guilty plea of Lorraine Brown, 56, of Alpharetta, Ga., was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Middle District of Florida Robert E. O’Neill; and Michael Steinbach, Special Agent in Charge of the FBI’s Jacksonville Field Office. 

            The plea, to conspiracy to commit mail and wire fraud, was entered before U.S. Magistrate Judge Monte C. Richardson in Jacksonville federal court.  Brown faces a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the crime.  The date for sentencing has not yet been set.

            “Lorraine Brown participated in a scheme to fabricate mortgage-related documents at the height of the financial crisis,” said Assistant Attorney General Breuer.  “She was responsible for more than a million fraudulent documents entering the system, directing company employees to forge and falsify documents relied on by property recorders, title insurers and others.  Appropriately, she now faces the prospect of prison time.”

            “Homeownership is a huge step for American citizens,” said U.S. Attorney O’Neill.  “The process itself is often intimidating and lengthy.  Consumers rely heavily on the integrity and due diligence of those serving as representatives throughout this process to secure their investments.  When the integrity of this process is compromised, illegally, public confidence is eroded.  We must work to assure the public that their investments are sound, worthy, and protected.”

            Special Agent in Charge Steinbach stated, “Our country is increasingly faced with more pervasive and sophisticated fraud schemes that have the potential to disrupt entire markets and the economy as a whole.  The FBI, with our partners, is committed to addressing these schemes.  As these schemes continue to evolve and become more sophisticated, so too will we.”

Brown was the chief executive of DocX LLC, which was involved in the preparation and recordation of mortgage-related documents throughout the country since the 1990s.  DocX was acquired by an LPS predecessor company, and was part of LPS’s business when LPS was formed as a stand-alone company in 2008.  At that time, DocX was rebranded as “LPS Document Solutions, a Division of LPS.”  Brown was the president and senior managing director of LPS Document Solutions, which constituted DocX’s operations. 

DocX’s main clients were residential mortgage servicers, which typically undertake certain actions for the owners of mortgage-backed promissory notes.  Servicers hired DocX to, among other things, assist in creating and executing mortgage-related documents filed with recorders’ offices.  Only specific personnel at DocX were authorized by the clients to sign the documents.

According to plea documents filed today, employees of DocX, at the direction of Brown and others, began forging and falsifying signatures on the mortgage-related documents that they had been hired to prepare and file with property recorders’ offices.  Unbeknownst to the clients, Brown directed the authorized signers to allow other DocX employees, who were not authorized signers, to sign the mortgage-related documents and have them notarized as if actually executed by the authorized DocX employee.

Also according to plea documents, Brown implemented these signing practices at DocX to enable DocX and Brown to generate greater profit.  Specifically, DocX was able to create, execute and file larger volumes of documents using these signing and notarization practices.  To further increase profits, DocX also hired temporary workers to sign as authorized signers.  These temporary employees worked for much lower costs and without the quality control represented by Brown to DocX’s clients.  Some of these temporary workers were able to sign thousands of mortgage-related instruments a day.  Between 2003 and 2009, DocX generated approximately $60 million in gross revenue.        

            After these documents were falsely signed and fraudulently notarized, Brown authorized DocX employees to file and record them with local county property records offices across the country.  Many of these documents – particularly mortgage assignments, lost note affidavits and lost assignment affidavits – were later relied upon in court proceedings, including property foreclosures and federal bankruptcy actions.  Brown admitted she understood that property recorders, courts, title insurers and homeowners relied upon the documents as genuine.

            Brown also admitted that she and others also took various steps to conceal their actions from clients, LPS corporate headquarters, law enforcement authorities and others.  These actions included testing new employees to ensure they could mimic signatures, lying to LPS internal audit personnel during reviews of the operation in 2009, making false exculpatory statements after being confronted by LPS corporate officials about the acts and lying to the FBI during its investigation.  LPS closed DocX in early 2010.

            This case is being prosecuted by Trial Attorney Ryan Rohlfsen and Assistant Chief Glenn S. Leon of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mark B. Devereaux of the U.S. Attorney’s Office for the Middle District of Florida.  This case is being investigated by the FBI, with assistance from the state of Florida’s Department of Financial Services.  

Today’s conviction is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

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Tuesday, October 23, 2012

               Do we need the banks in their traditional form anymore?

Ben Bernanke has told “close friends” he may not stand for re-election even if President Obama wins, the New York Times reports.

Bernanke’s term as Federal Reserve chairman ends Jan. 2014. This may be the perfect time to switch to true Cloud Banking.

Some Landmarks to ponder in the era of negative real interest rates:

 On January 2 2011 the 13 week Treasury Yield (3 months)was was 0.12%.

 On July 2 2011 (the announced end of QE 2) this yield was still 0.01%.

 On January 2nd 2012 the 13 week Treasury Yield (3 months)was 0.001%. 

 By September 17th 2012 - the date that QE3 was announced the yield had gone up to 0.09%.

 Today October 23 2012 it stands at 0.10%  - that is an increase in yield of 99 basis points (nearly a full 1%!).

During all this time inflation as reported by "official" Government sources was far in excess of this 1% yield. So the stated goal of preventing deflation is achieved - inflation is definitely with us.

Also: money supply in the USA and Worldwide has exploded exponentially.

         deficits have continued to exceed a trillion dollars in the USA
            unemployment remains stubbornly above 8% in the population of       
              people still seeking work in the USA.
                real estate is barely budging off the bottom and the number of 
                   "underwater" mortgages has barely stopped declining.

The Fed balance Sheet has also exploded, tripling in size.

The fed achieved its goal of preventing deflation. What has this all done for the US economy and the rest of the world economies?

    the US dollar is worth significantly less than two QE's ago.

    The stock markets are up significantly as is the price of precious metals measured in US dollars. 

Is this the purpose of QE? 

Doesn't look good for QE3 that started a month ago, does it? we are very far from suffering from deflation.

And the US big banks are wildly profitable again....

     Why are you surprised? The shareholders of the Fed are exclusively banks.
The Fed was set up in 1913 to ensure the survival of the banking system. 

The Fed is wildly successful in that primary mission. That is the true purpose of all this QE.

A Government granted monopoly to print money, and manipulate interest rates primarily benefit the Fed's owners. Not the citizens of this country.

It creates money out of thin air and lends it to its member banks (and anyone else deemed qualified to play in this sandpit) and allows these banks to use the bulk of this funding to buy Government issued debt  that pays a significantly higher interest rate back to the banks and voila!!

The banks make a "riskless" positive return! They get healthier and the population languishes in stubborn unemployment, and inflation in a stagnant economy.

Do we need the banks in their traditional form anymore? 

In this electronic age where the chance of getting a loan depends on a mystifying creditworthiness determining algorithm.....

Why not simply apply to a credit rating agency and skip the banks altogether?

Why not have Google or Microsoft or Heaven Forbid, Facebook just set up a server farm and have everyones' earnings deposited into an electronic cloud account? Or dare I say it - have the IRS do this.

Then the individual could choose to lend his excess balance to whomever he/she pleases using the magic creditworthiness algorithm. All funds transfers once approved are made electronically between the accounts in the cloud.

The IRS gets to track everything and remove its share from the repayments as they are made (getting rid of the need for a whole layer of Taxpayer paid pencil pushers).

Ads are sold to cover the cost of the server farms and of course add to the taxable revenues to be collected.

Think of the benefits! 

We will know second by second how much revenue the Government has to squander er spend on "investments". 

Putting the Government on the same system will allow us to watch, second by second, how much the Government actually spends in real time. And to whom the money was transferred.

Instant budget deficit/surplus calculation to be displayed on the famous Debt Clock.

Instant accountability for the expenditures! 

No more crooked politicians, or devious lobbyists or foreign money inflows influencing elections!! No more corruption or tax evasion. Complete transparency for every aspect of your life.

Privacy? Who cares.. you lost that years ago.

I can but dream.

  This is a 28min video from Grant Williams of Vulpes Investment management (Singapore hedge fund managers). Grant is the author of the much acclaimed Things that make you go Hmmmmmmm!. The presentation details two bubbles, one about to burst and the other about to inflate enormously.
There is much money to be lost in the bursting by the unwary and conversely a great deal to be made by hitching a ride up with the other.

LINK to YouTube here: