Faces Of Foreclosure

SEC’s Goldman charges may be just the beginning

By Greg Gordon
McClatchy Newspapers

WASHINGTON — Goldman Sachs, whose tactics exiting the collapsing subprime mortgage market have been under government scrutiny for months, now faces federal fraud charges that it duped investors into losing $1 billion on a rigged offshore deal pegged to dicey home loans.

The suit, brought Friday by the Securities and Exchange Commission, accuses Goldman and one of its vice presidents, 31-year-old Fabrice Tourre, of allowing a Wall Street hedge fund to secretly select many of the securities in the deal.

The hedge fund, Paulson & Co., then bet that those subprime mortgage securities would fail. When they did, Paulson made a $1 billion profit and investors lost more than $1 billion, nearly all their money, the complaint charges.

In an e-mail to a friend in January 2007, the complaint says, Tourre remarked that, “The whole building is about to collapse anytime now” — an apparent allusion to a plunge in the housing market that would depress the value of the mortgage securities.

The case suggests that a reinvigorated SEC, after a long lull, is pressing to hold Wall Street accountable for its role in the worst financial crisis since the Great Depression. People familiar with the SEC investigation of Goldman said it could expand, and a special Senate investigations panel is preparing to hold a hearing that will put Goldman under yet another magnifying glass.

Elizabeth Nowicki, a former SEC attorney who’s a visiting law professor at Boston University, called the SEC’s fraud suit “a political case as much as it is a case that they needed to bring to stop this sort of favoritism.”

“The SEC wanted to convey the message that no, they’re not sitting back on their heels,” she said. “This is going after Goldman Sachs. You can’t really go after anybody bigger than that . . . . The SEC has the stomach to follow this out, absolutely, and they’ve got a bigger incentive now that they are clearly perceived as shamed and disempowered.”

It’s still unclear whether Goldman also could face legal exposure for failing to disclose to investors in 2006 and 2007 that it had secretly bet that the housing market would collapse when it sold off more than $40 billion in securities backed by subprime mortgages. McClatchy Newspapers described those dealings in a series of articles in November and December 2009, including Goldman’s role in betting on a housing downtown in at least a dozen offshore deals that it marketed.

The company, in a terse statement, denounced the charges as “completely unfounded in law and fact,” and vowed to “vigorously contest them and defend the firm and its reputation.”

Underscoring Goldman’s stature as the world’s most prestigious investment bank, the enforcement action triggered a 126-point drop in the Dow Jones index on Wall Street. Shares of Goldman led the way, plummeting nearly 13 percent.

After the market closed, Goldman issued a second statement, saying that it lost $90 million on the transaction and that all of the involved parties were “sophisticated” investors that were well aware of the risks.

Goldman said the largest investor, ACA Capital Management, selected the securities “after a series discussions, including with Paulson & Co.” Goldman called the exchange “entirely typical.”

Sylvain Raynes, a New York expert in structured securities of the type described in the SEC charges, said the stakes are huge for Goldman.

“To lose its reputation,” he said, “Goldman does not need to be found guilty many times. They only need one instance.”

Besides naming the company as a defendant, the civil complaint accuses Tourre of concealing Paulson’s role from investors in a synthetic securities deal known as ABACUS, 2007-AC1 — one in which investors didn’t actually buy any securities.

Instead, they effectively bet that a specified bundle of home loans to marginally qualified borrowers would perform well, while Paulson took “short” positions, meaning it bet that those bonds would founder.

Paulson profited grandly from the nation’s economic collapse, taking in a total of $3.7 billion from its bets. The SEC complaint says the firm paid Goldman $15 million to assemble the deal, which Tourre was principally responsible for structuring.

The marketing materials for the investment, known as a collateralized debt obligation, told investors that ACA Management LLC, an independent third party, selected the mortgage-backed securities. The Paulson firm wasn’t mentioned.

“The product was new and complex, but the deception and conflicts are old and simple,” SEC enforcement chief Robert Khuzami said in a statement. “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.”

The deal, one of about two dozen similar bundles in the ABACUS series, closed on April 26, 2007. Within six months, 83 percent of the mortgage-backed securities in the bundle had been downgraded and 27 percent were placed on negative watch by Wall Street ratings agencies, the complaint says.

By the following Jan. 29, it says, 99 percent of the portfolio had been downgraded, costing investors more than $1 billion.

Khuzami said that the Paulson firm, which isn’t affiliated with former Treasury Secretary Henry Paulson, wasn’t charged because it didn’t mislead investors.

However, the complaint charges that Goldman and Tourre “knew that it would be difficult, if not impossible,” to find investors for a synthetic CDO if they disclosed that a short player, such as Paulson, had a significant role in selecting the securities. Thus, they sought a third party for that role and approached ACA, calling it “important that we can use ACA’s branding” in an internal e-mail.

The complaint quoted Tourre, then 28, as saying in a Jan. 27, 2007 e-mail to a friend that was written in French and English: “More and more leverage in the system, The whole building is about to collapse anytime now . . . . Only potential survivor, the fabulous Fab(rice Tourre) . . . standing in the middle of all of these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities (sic)!!!”

A Feb. 11, 2007 e-mail to Tourre from the unidentified head of Goldman’s structured product correlation trading desk said, “the cdo biz is dead we don’t have a lot of time left,” according to the complaint.

Paulson said in a statement that, while it bought credit protection from Goldman via the ABACUS deals, “We were not involved in the marketing of any ABACUS products.”

It said that ACA “had sole authority over the selection” of all securities in the deal, noting that two Wall Street ratings agencies — Moody’s Investors Service and Standard & Poor’s — gave them Triple A grades, the highest investment rating.

Both Moody’s and S&P have suffered tremendous damage to their reputations as a result of issuing favorable ratings to pools of U.S. mortgages that turned out to be junk.

The SEC said the only other investor in the ABACUS deal, IKB, a commercial bank in Dusseldorf, Germany, lost nearly all of the $150 million it invested. Goldman said the largest investor, ACA Capital Management, put up $951 million. ACA lost nearly all the money.

Friday’s charges were the first to be filed by the SEC’s Structured and New Products Unit, formed to pursue abuses in highly sophisticated deals.

Many of these deals are sliced according to risk, with investors who take the greatest risk receiving the highest yield. In deals that were partially or entirely synthetic, Goldman or some of its clients would profit if the securities soured.

Gary Kopff, an expert in mortgage securities who’s studied Goldman’s role in betting against investors in deals it marketed though the Cayman Islands, said that, “They manifest, in my opinion, the same misconduct that the SEC asserts occurred in the ABACUS deal.”

Goldman created a structured product correlation trading desk in late 2004 or early 2005. A memo describing the ABACUS 2007-AC1 transaction to the company’s Mortgage Capital Committee on March 12, 2007, said that the “ability to structure and execute complicated transactions to meet multiple clients’ needs and objectives is key for our franchise,” the SEC complaint says.

Executing the deal “and others like it helps position Goldman to compete more aggressively in the growing market for synthetics written on structured products,” the e-mail said.

According to the complaint, Paulson came to believe that the underlying securities in the ABACUS 2007-AC1 deal “would become worthless.”

In late 2006 and early 2007, it charges, Paulson identified more than 100 mortgage bonds that it expected to collapse, favoring those backed by loans to borrowers with low credit scores, adjustable rate mortgages and located in overheated real estate markets such as Arizona, California, Florida and Nevada.

In early January, Tourre forwarded a list of 123 mortgage-backed bonds under the heading “Paulson Portfolio,” leading to negotiations among Paulson, Goldman and ACA over the final portfolio, which included a sizable number of those selected by Paulson.

Read more: Read More . . .

Oregon Targets Piggyback Lenders To Stop Foreclosures

By Peter G. Miller

While many efforts to encourage mortgage modifications have been tried during the past three years, the state of Oregon has come up with something original and unique: It’s moving forward with an idea that costs taxpayers nothing and will, er, motivate many lenders to write down loans.

Passed in the Oregon house by a vote of 58 to 0, and in the state senate by unanimous consent, HB 3656 doesn’t fool around with cash payments to lenders or other niceties. Instead, the deal is very simple: In a foreclosure action the right of a piggyback second lender to sue for a deficiency judgment is eliminated.

In practical terms here’s what Oregon is getting at.

In 2006 the Todds bought a home for $500,000. On the advice of their lender, and with approval of the lender’s underwriters, they financed the property with a piggyback loan that included a $400,000 first lien and a $100,000 simultaneous second loan.

The result of the Todds’ piggyback loan was this:

• It allowed the Todds to buy property with no money down, a property which they otherwise could not afford
• It allowed the lender to originate a conventional first loan equal to 80 percent of the purchase price. Because it’s 80 percent financing, this mortgage was instantly sold to Wall Street banks and brokers, packaged with other loans, and used to create a mortgage-backed security. Having sold the loan, the lender could use the cash it received to fund additional mortgages and generate new fees.
• While the first loan was a conventional mortgage and easy to sell, the second loan was more risky and not-so-easy to market. It may have been sold separately from the first loan to produce cash, or in some cases it may have been retained by the originating lender to generate interest income.
• Because the piggyback financing had an 80 percent first loan there was no need for the Todds to buy private mortgage insurance (PMI). This reduced their monthly cost of ownership.

The lender got to originate two loans instead of one and thereby pocketed more fees and charges.

Higher Prices For All
One result of the creative financing offered to the Todds and many other buyers was that they could bid more for real estate. This forced other purchasers to also raise their bids even if they were buying for cash. Artificially increasing the pool of potential buyers with “nontraditional” financing was one reason home prices rose so quickly for several years — and then collapsed so quickly when such mortgages were no longer available.

Let’s now move ahead to 2010. Mr. Todd has lost his job and the first lender agrees to modified mortgage terms under the federal government’s Making Home Affordable program. However, the second lender doesn’t agree to a modification, and that forces the property into foreclosure — even though the second lender will get nothing from a foreclosure.

Here’s why the second lender will get nothing.

In a foreclosure sale lenders are paid in order: The first lender receives all the money from a foreclosure sale until its claim is entirely satisfied. Any money left over is paid to the second lien holder. In the case of the Todd property, it might sell for $375,000 at foreclosure so the first lender would get back most of its money while the second lender will get nothing.

In this situation, the second lender opposes the loan modification because it thinks it can get money by suing the Todds for a deficiency judgment after the foreclosure. If it wins, the second lender can then bankrupt the Todds and take their few remaining assets.

The Oregon Approach
Oregon bill HB 3656 says this is nonsense. Specifically, a House summary of the bill explains that “in cases where a second loan was created as part of the same purchase or repurchase transaction as the one on which the foreclosure action was taken, and when it was owed to or originated by the beneficiary of the foreclosure or its affiliate, the holder of the second loan cannot sue for restitution.” Translation: Holders of simultaneous second loans cannot get a deficiency judgment after a foreclosure, so they may as well try to get what they can through the modification process.

“The targeted legislation seen in Oregon is simply a state-sponsored mortgage modification program,” says Jim Saccacio, chief executive officer of RealtyTrac.com, the leading online marketplace for foreclosure properties and data. “It effectively changes the terms of many second loans in a way which gives more leverage to troubled borrowers and first mortgage investors. At the same time, it doesn’t impact all second mortgages, only those which were part of the piggyback lending process.”

You can see where this is going. One can easily imagine lawmakers in other states introducing similar bills. Or, they can start taking a targeted approach to other aspects of the lending process.

For instance, there could be legislation which prohibits deficiency claims for any mortgage which allows negative interest. Or legislation which extends the foreclosure process by six months for any mortgage with a pre-payment penalty. The angry mood of the country is beginning to make such rules at the state level more feasible if not probable — just look at the votes in the Oregon legislature.

Second loans represent a lot of risk which is why lenders get higher interest rates for making them. The Oregon proposal makes that financial exposure real, a reckoning many would argue is only fair and appropriate.

U.S. Probes Foreclosure-Data Provider
Lender Processing Services Unit Draws Inquiry Over the Steps That Led to Faulty Bank Paperwork

April 3, 2010
Amir Efrati and Carrick Mollenkamp
The Wall Street Journal

Read The Full Article

A subsidiary of a company that is a top provider of the documentation used by banks in the foreclosure process is under investigation by federal prosecutors.

The prosecutors are “reviewing the business processes” of the subsidiary of Lender Processing Services Inc., based in Jacksonville, Fla., according to the company’s annual securities filing released in February. People familiar with the matter say the probe is criminal in nature.

Michelle Kersch, an LPS spokeswoman, said the subsidiary being investigated is Docx LLC. Docx processes and sometimes produces documents needed by banks to prove they own the mortgages. LPS’s annual report said that the processes under review have been “terminated,” and that the company has expressed its willingness to cooperate. Ms. Kersch declined to comment further on the probe.

A spokesman for the U.S. attorney’s office for the middle district of Florida, which the annual report says is handling the matter, declined to comment.

The case follows on the dismissal of numerous foreclosure cases in which judges across the U.S. have found that the materials banks had submitted to support their claims were wrong. Faulty bank paperwork has been an issue in foreclosure proceedings since the housing crisis took hold a few years ago. It is often difficult to pin down who the real owner of a mortgage is, thanks to the complexity of the mortgage market.

During the housing boom, mortgages were originated by lenders, quickly sold to Wall Street firms that bundled them into debt pools and then sold to investors as securities. The loans were supposed to change hands but the documents and contracts between borrowers and lenders often weren’t altered to show changes in ownership, judges have ruled.

That has made it hard for banks, which act on behalf of mortgage-securities investors in most foreclosure cases, to prove they own the loans in some instances.

LPS has said its software is used by banks to track the majority of U.S. residential mortgages from the time they are originated until the debt is satisfied or a borrower defaults. When a borrower defaults and a bank needs to foreclose, LPS helps process paperwork the bank uses in court.

LPS was recently referenced in a bankruptcy case involving Sylvia Nuer, a Bronx, N.Y., homeowner who had filed for protection from creditors in 2008.

Diana Adams, a U.S. government lawyer who monitors bankruptcy courts, argued in a brief filed earlier this year in the Nuer case that an LPS employee signed a document that wrongly said J.P. Morgan Chase & Co. had owned Ms. Nuer’s loan.

Documents related to the loan were “patently false or misleading,” according to Ms. Adams’s court papers. J.P. Morgan Chase, which has withdrawn its request to foreclose, declined to comment.

Linda Tirelli, a lawyer for Ms. Nuer, declined to comment directly on the case.

Ms. Kersch said LPS didn’t actually create the document and that the company’s “sole connection to this case is that our technology and services were utilized by J.P. Morgan Chase and its counsel.”

While the majority of foreclosures go unchallenged, some homeowners have won the right to keep their homes by proving the bank couldn’t show, on paper, that it owned the mortgage.

Some lawyers representing homeowners have claimed that banks routinely file erroneous paperwork showing they have a right to foreclose when they don’t.

Firms that process the paperwork are either “producing so many documents per day that nobody is reviewing anything, even to make sure they have the names right, or you’ve got some massive software problem,” said O. Max Gardner, a consumer-bankruptcy attorney in Shelby N.C., who has defended clients against foreclosure actions.

The wave of foreclosures and housing crisis appears to have helped LPS. According to the annual securities filing, foreclosure-related revenue was $1.1 billion last year compared with $473 million in 2007.

LPS has acknowledged problems in its paperwork. In its annual securities filing, in which it disclosed the federal probe, the company said it had found “an error” in how Docx handled notarization of some documents. Docx also has processed documents used in courts that incorrectly claimed an entity called “Bogus Assignee” was the owner of the loan, according to documents reviewed by The Wall Street Journal.

Ms. Kersch said the “bogus” phrase was used as a placeholder. “Unfortunately, on a few occasions, the document was inadvertently recorded before the field was updated,” she said.

Court Upholds Sanctions Against Chase

Excerpted from Sovereign Society’s newsletter:

. . . Banks are deadbeats on assets they acquire through foreclosure. And that’s not even counting the properties banks should be foreclosing on for non-payments, but aren’t.
It’s an ugly picture for real estate, with or without federal stimulus.

Banks are in the business of lending, and only want to seize these properties when the borrower defaults. They’re not in the business of owning, managing, or maintaining real estate. But some banks have been pretty aggressive about foreclosing . . .

But what you might not realize is that once banks do foreclose, they often don’t do anything with the property. This is a huge problem for condominiums or other communities that are dependent on an HOA (Home Owners Association) for common area maintenance, utilities, and the like.

Nevertheless, some banks have been so derelict in paying HOA fees on properties they’ve foreclosed on, that the HOA themselves have then had to foreclose on the property for failure to pay their HOA fees (so if you’re thinking of skipping on your mortgage but still want to live in your house, be sure to pay the HOA).

And it’s not just homeowners facing problems.

Consider the city of Atlanta, who had problems with illegal tire dumping on a property.

After looking at the books, they determined that J.P. Morgan Chase owned the property through one of their subsidiaries, and tried to take them to court for failure to pay fines. The bank never showed up. So here’s where it gets crazy…

The city issued an arrest warrant for CEO Jamie Dimon for illegal dumping. Of course, running the bank through New York means Dimon was nowhere near Atlanta . . . but that got the bank’s attention, and a judge cancelled the arrest warrant.

Nevertheless, as banks foreclose on properties, they’ll have to learn to take responsibility for them, lest the properties further decline in value due to the bank’s negligence.

Markets, however, are rewarding banks for refusing to lend, as well as refusing to maintain foreclosed properties. That will change . . . but until it does, expect the bank stocks to continue rallying (which will make put options cheaper).

So, is there anything banks can do competently?

After all, they’re not doing much in the way of lending . . . yield spreads make it a better option for banks to borrow nearly for free from the Fed, then buy riskless assets like Treasuries. They know how to drag defaulting borrowers to court, but then prove worthless at managing properties themselves.

Banks are looking overvalued to me based on their inability to act like a bank . . . and markets will reach that conclusion eventually too.

This is a followup eMail re this post: 545 vs. 300,000,000.

To all 535 voting members of the Legislature,

It is now official: You are ALL corrupt morons:

• The U.S. Post Service was established in 1775. You have had 234 years to get it right and it is broke.
• Social Security was established in 1935. You have had 74 years to get it right and it is broke.
• Fannie Mae was established in 1938. You have had 71 years to get it right and it is broke.
• War on Poverty started in 1964. You have had 45 years to get it right; $1 trillion of our money is confiscated each year and transferred to “the poor” and they only want more. You owe me is their attitude. Get off of your sick asses an do something, like WORK.
• Medicare and Medicaid were established in 1965. You have had 44 years to get it right and they are broke.
• Freddie Mac was established in 1970. You have had 39 years to get it right and it is broke.
• The Department of Energy was created in 1977 to lessen our dependence on foreign oil. It has ballooned to 16,000 employees with a budget of $24 billion a year and we import more oil than ever before. You had 32 years to get it right and it is an abysmal failure.

You have FAILED in every “government service” you have shoved down our throats while overspending our tax dollars

This should be read and understood by all Americans
Democrats, Republicans, EVERYONE!!
To all 535 voting members of the Legislature,

The letter to the FBI (way down there) comes from a group digging into the foreclosure crises, all of whom are finding absolute non-cooperation by lenders, no matter what the background, ethnic group, income level, hair color, married or single, kids or sans kids, sexual preference, West Coast or East Coast denizen, etc.

It doesn’t matter whether you have a job or not — you either make too much for a loan modification or too little or it’s stated income and lenders will discount a percentage (as though a “real” job were more secure during these days of massive layoffs).

A portion of a friend’s income is through rental of two rooms; Wachovia decided they wouldn’t count all of it because rental income is not stable. Really? Her renters have been in her home for many years, the rent is reasonable, they all get along well. Where might they go?

Americans across the board are getting shafted in the current drill being exercised by mortgage lenders.

It is a fascinating time: In my 60+ years, I’ve never seen equal prejudice . . . There’s generally a “selection” process relating to skin color, height, race, income level, drug use . . . or some guy whose wife hates him decided he hates all women who resemble her. When I first moved to Marin County, California, it was reserved for the car you drive, i.e. foreign vs. domestic (domestic was declasse).

Mortgage companies have managed to level the playing field across this country; it doesn’t matter who you are, how tall you are, what color your eyes are, they are NOT going to cooperate. As every cloud has a silver lining, so does this one: We can all finally acknowledge that we ARE in the same boat; if we work together we can beat them back; perhaps this is the lesson here.

It IS fascinating!

The group I’m working with have noticed that Wells Fargo bundled and sold defaulted loans to HSBC. Wells Fargo and HSBC have agreements on a commercial level: Wells Fargo HSBC Trade Bank. They are in bed together:

The Wells Fargo HSBC Trade Bank is the only nationally chartered bank in the U.S. exclusively devoted to international trade . . . (per PR Newswire)

HSBC is not owned out of China, as many seem to think (due to its original name of HongKong Shanghai Bank of China; that was started by a Scotsman and had something to do with opium wars). HSBC is an English bank and “HSBC” has been all too frequently in the same paragraph as the words “money laundering”:

• Reuters (a reputable media company) reported, on February 17, 2010, that HSBC is accused of assisting in money laundering;
• HSBC is being questioned in Ireland in connection with Bernard (Bernie) Madoff schemes (and for those of you residing in Ireland reading this, please take into consideration that Wells Fargo is trying to open banks in Ireland . . . trust me, you DO NOT want that bank in Ireland;
• HSBC is accusing an employee of stealing client data and selling it to French authorities (from the “Office of Inadequate Security” . . . don’t you love the internet?);
• HSBC, Europe’s largest banking institution “created” dummy corporations to avoid one billion dollars offshore tax evasion . . . which is considered by the FBI to be Britain’s longest running organized criminal conspiracy and corruption case. FBI Interpol and Scotland Yard are investigating this one!;
• The chairman of HSBC is implicated in the above-mentioned “major criminal conspiracy case.”

When the City of Baltimore sued Wells Fargo Bank in 2009, HSBC was mentioned along with them in various news stories.

March 14, 2009, L.A. Times, E. Scott Reckard
The NAACP sued subsidiaries of two major banks Friday for allegedly steering African American borrowers unfairly into costly subprime mortgages. The suits — against Wells Fargo Bank and Wells Fargo Home Mortgage Inc., owned by Wells Fargo & Co., and against HSBC Mortgage Corp. (USA) and HSBC Bank USA, owned by HSBC Holdings — arrive at a time when the housing crisis and soaring unemployment already are causing disproportionate harm in black neighborhoods, leaders of the rights group said.

How does any of this affect you? Check the sales pattern of your home loan (if you can find it).

If you have a Wells Fargo loan, we can almost guarantee that somewhere along the line it was sold to HSBC. When I asked Wells Fargo about the location of my note (which WAS sold to HSBC per the County Recorder in mid-2009 even though Wells Fargo denied that transfer), Wells “assured” me that they are the holders of my note. IF they are, it would only be because of questions I am asking about HSBC and their “sales pattern.”

The FBI may be our best hope. Apparently, they bow to no one. God Bless ‘em. And if you were passed through HSBC, I think it’s worth contacting Scotland Yard. (Oh, God, I’m starting to sound like group members Gregory and Kraig . . . but our group has learned a LOT from them and we have saved 26 homes to date! — well, some are pending, but they are not gone yet).

So, if there is a mortgage broker or financier out there, woudl you kindly inform us of the pattern? Banks lend on the homes, bundle and sell them at discount to a lender that bundles and sells at discount to a lender . . .

Who takes the hit for the loss when they are sold at discount? My guess is that it gets back to taxpayer dollars.

If you are in the midst of dealing with these duplicitous lenders, try contacting the FBI with the following, which is from one of my committee members (the full PDFs of this will follow in a week or so). You have absolutely NOTHING to lose by calling their cards, and given that many of us have 10-12 pages of notes about their mistakes, lies in court, and incompetencies, you stand to win; sadly, they do not know what they are doing and they WILL be the demise of America if left unchecked. So check them:

Mortgage Company Name
Address
Your Property Address
Account Number

NOTICE OF FRAUD AND INTENT TO LITIGATE

This is Constructive Notice to you that I have discovered extensive fraud in regard to the mortgage and transactions associated with it on certain real property as noted below. It has come to my attention that you are involved in selling my promissory note without my knowledge, to finance the alleged loan. I have also discovered that COUNTERFEITING and CONSPIRACY TO DEFRAUD were committed during and since my real estate settlement, during the purchase of the above mentioned property; documented fraud has occurred.

This is your Constructive Notice that evidence in this matter will be personally delivered to the FBI and SECRET SERVICE, for investigation and prosecution, resulting from violations of Federal Law including, but not limited to, COUNTERFEITING and CONSPIRACY TO DEFRAUD if you refuse to accomodate. Information, including your identity, and what appears to be your participation in these violations of Federal Law, will be provided to additional Federal Agencies, and local authorities, for investigation and prosecution as well. Whether complaints are filed is your decision. It is based on your response to this serious notice.

If you were not previously aware of the above mentioned fraudulent and criminal activity, and may be an innocent party in this matter, I would urge your utmost cooperation with the notice demands as well as ceasing all activities relating to the ongoing fraudulent action. If, however, you would choose to move forward in any manner and participate in any way in the attempt to initiate foreclosure action at any time, you will demonstrate your complicity and willingness to be a party to the COUNTERFEITING and CONSPIRACY TO DEFRAUD. You have been noticed and will become subject to potential criminal prosecution and civil litigation for varying damages, if you fail to meet each demand.

You have hereby been lawfully noticed of this fraud and your involvement, whether knowingly or unknowingly, and you therefore may make no future claim of a lack of knowledge of these criminal activities, and your participation therein, which could absolve you of liability or culpability. If ignored, it is my intent to pursue any and all legal remedies against any and all participants regarding these fraudulent acts as necessary. The bonding companies of those involved will be notified of claims regarding any civil matters. Conduct yourself accordingly.

TAKE NOTICE

This is but one part of a substantial nationwide investigation, by law enforcement, of the mortgage industry and the complicit fraud therein. This is a very real and serious matter that is being, and will be, pursued with all those who are identified as being complicit in any fraud being prosecuted to the fullest extent of the law and civil action taken to recover varying damages as necessary.

In order to avoid preventable actions taken against you, you must comply with the following and provide evidence of the same to me within thirty (30) days:

1. Provide a full “Satisfaction of Mortgage”, filed with the Recorder of Deeds.

2. File a full re-conveyance of the property with the Recorder of Deeds, conveying full rights and title.

3. Release any and all liens in all public records.

4. Refund all profits associated in full.

If you refuse to cease all further pretense that you lawfully hold a claim to my property, you will be charged, investigated and convicted of each of the aforementioned crimes committed. Immediately after your refusal to cease is confirmed, complaints will be filed with the FBI, SECRET SERVICE, the UNITED STATES DISTRICT COURT and the CRIMINAL INVESTIGATION DIVISION of the INTERNAL REVENUE SERVICE.

It is in your best interest at this juncture to cease all forms of criminal activity and to accommodate immediately. If you for any reason do not complete processing the above demands, all complaints will be filed immediately, as warned. Prior to all litigation, your counsel must provide evidence first of holding a license to practice law, issued by the Secretary of State where the property is located.

Thank you very much for your prompt, righteous response and resolution of this urgent matter.

Sincerely,

I’m equally fascinated by how desperate these lenders are? Is money truly so important? The Bible has it that “the LOVE of money is the root of all evil” . . . money itself is not. It’s why you want it and what you do with it.

I cannot help but feel sorry for the trap these major lenders are in, and I can guarantee you that my life, for one, has been far more interesting and informative than anyone who lives only for the Almightly Dollar.

Bank tries to take wrong house

Posted by Teresa Mears on Friday, February 12, 2010 6:39 PM

Bank of America failed to listen to its own realty agent, lawsuit says . . . You’d think that one sure-fire way to avoid foreclosure would be to pay cash for your house.

But Charlie and Maria Cardoso of New Bedford, Mass., who paid $139,000 in cash for a retirement home in Florida in 2005, experienced the embarrassment and expense of a foreclosure anyway, they say, when Bank of America tried to take their house by mistake.

In a lawsuit filed in federal court in Massachusetts, the couple said the bank changed the locks, took away family photos, power tools and other possessions, scared their tenant into moving out and disconnected the utilities, which caused the pipes to freeze.

Even Bank of America’s real-estate agent knew the bank had the wrong house, according to a St. Petersburg Times story about the lawsuit, and the bank still moved forward. Between the time representatives of Bank of America first showed up in July to change the locks until Charlie Cardoso arrived in Florida to reclaim the property last month, the bank was told several times it had the wrong house.

The foreclosure was supposed to take place on a house about 10 doors down and across the street. The bank was able to find that house and foreclose on it in September, the Times reported.

“This is absolutely devastating for the clients and their worst nightmare,” Carlin Phillips, one of the couple’s attorneys, told The National Law Journal. “(Bank of America) invaded their home that was bought and paid for. They had to travel to Florida to prove they owned their home.”

Charlie Cardoso is an unemployed construction worker and his wife is disabled. They spent their life savings on the three-bedroom retirement home in Spring Hill, Fla., about 70 miles northwest of Tampa.

Bank of America declined to discuss the issue with the Times, but issued this statement by e-mail: “We have reached out to the Cardosos’ representatives and hope to have the opportunity to work with them to properly assess and address their allegations. We are reviewing the allegations in the lawsuit, the actual events that led to them and the causes of those events, and will consider any hardship that resulted.”

This isn’t the first time Bank of America has been accused of trying to foreclose on the wrong home. Two other homeowners, neither of whom had mortgages with Bank of America, filed suit after they said the bank refused to reimburse them for the costs of cleanup.

In Galveston, Texas, Dr. Alan Schroit and his wife arrived at their vacation house to prepare for a Halloween party last year, only to find the locks changed and a bank notice on the door. When they finally managed to get in, they were greeted by the “overpowering putrid smell of rotten fish,” from 75 pounds of salmon and halibut that had been in the freezer, according to the lawsuit as reported by the Galveston County Daily News.

“It was the most unbearable stench,” Schroit told Laura Elder at the Daily News. “It was so unbearable the police officer asked if we could leave the house so he could take the report; it was absolutely horrible, a gooey mess.”

Bank of America officials told the Daily News they had not had an opportunity to review the lawsuit. “Based on previous discussions with Mr. Schroit, we do not believe the case will show merit,” spokesman Rick Simon said.

A Kentucky man has also sued Bank of America after his home was damaged in an erroneous attempt at foreclosure, the Floyd County Times reported.

We’d like to be able to give you advice on how to avoid erroneous foreclosure, but we’re not sure even the savviest consumer can combat errors of this magnitude. We’ll only suggest that when you’re dealing with banks on major issues, be sure to get the name of everyone you talk to, keep notes and then follow up your complaints in writing to create a paper trail. Taking video wouldn’t hurt, either.

Charley Reese has been a journalist for 49 years. He is a former columnist of the Orlando Sentinel Newspaper.

545 PEOPLE
By Charlie Reese

Politicians are the only people in the world who create problems and then campaign against them.

Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits?

Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes?

You and I don’t propose a federal budget. The president does.

You and I don’t have the Constitutional authority to vote on appropriations. The House of Representatives does.

You and I don’t write the tax code, Congress does.

You and I don’t set fiscal policy, Congress does.

You and I don’t control monetary policy, the Federal Reserve Bank does.

One hundred senators, 435 congressmen, one president, and nine Supreme Court justices equates to 545 human beings out of the 300 million are directly, legally, morally, and individually responsible for the domestic problems that plague this country.

I excluded the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered, but private, central bank.

I excluded all the special interests and lobbyists for a sound reason.. They have no legal authority. They have no ability to coerce a senator, a congressman, or a president to do one cotton-picking thing. I don’t care if they offer a politician $1 million dollars in cash. The politician has the power to accept or reject it. No matter what the lobbyist promises, it is the legislator’s responsibility to determine how he votes.

Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.

What separates a politician from a normal human being is an excessive amount of gall. No normal human being would have the gall of a Speaker, who stood up and criticized the President for creating deficits.. The president can only propose a budget. He cannot force the Congress to accept it.

The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating and approving appropriations and taxes. Who is the speaker of the House? Nancy Pelosi. She is the leader of the majority party. She and fellow House members, not the president, can approve any budget they want. If the president vetoes it, they can pass it over his veto if they agree to.

It seems inconceivable to me that a nation of 300 million can not replace 545 people who stand convicted — by present facts — of incompetence and irresponsibility. I can’t think of a single domestic problem that is not traceable directly to those 545 people. When you fully grasp the plain truth that 545 people exercise the power of the federal government, then it must follow that what exists is what they want to exist.

• If the tax code is unfair, it’s because they want it unfair.
• If the budget is in the red, it’s because they want it in the red.
• If the Army and Marines are in Iraq, it’s because they want them in Iraq.
• If they do not receive social security but are on an elite retirement plan not available to the people, it’s because they want it that way.
• There are no insoluble government problems.

Do not let these 545 people shift the blame to bureaucrats, whom they hire and whose jobs they can abolish; to lobbyists, whose gifts and advice they can reject; to regulators, to whom they give the power to regulate and from whom they can take this power. Above all, do not let them con you into the belief that there exists disembodied mystical forces like “the economy,” “inflation,” or “politics” that prevent them from doing what they take an oath to do.

Those 545 people, and they alone, are responsible.
• They, and they alone, have the power.
• They, and they alone, should be held accountable by the people who are their bosses.
• Provided the voters have the gumption to manage their own employees.
• We should vote all of em out of office and clean up their mess!
• What you do with this article now that you have it . . . is up to you.

This might be funny if it weren’t so darned true.
Be sure to read all the way to the end:

Tax his land,
Tax his bed,
Tax the table
At which he’s fed.

Tax his tractor,
Tax his mule,
Teach him taxes
Are the rule.

Tax his work,
Tax his pay,
He works for peanuts
Anyway!
Tax his cow,
Tax his goat,
Tax his pants,
Tax his coat.
Tax his ties,
Tax his shirt,
Tax his work,
Tax his dirt.

Tax his tobacco,
Tax his drink,
Tax him if he
Tries to think.

Tax his cigars,
Tax his beers,
If he cries
Tax his tears.

Tax his car,
Tax his gas,
Find other ways
To tax his ass.

Tax all he has
Then let him know
That you won’t be done
Till he has no dough.

When he screams and hollers;
Then tax him some more,
Tax him till
He’s good and sore.
Then tax his coffin,
Tax his grave,
Tax the sod in
Which he’s laid.

Put these words
Upon his tomb,
Taxes drove me
to my doom . . . ‘

When he’s gone,
Do not relax,
Its time to apply
The inheritance tax.

• Healthcare tax
• Energy tax (Cap & Trade)
• War tax (proposed)
• Accounts Receivable Tax
• Building Permit Tax
• CDL license Tax
• Cigarette Tax (Editor’s Note: This can’t possibly be high enough. Cigarette smokers cost this country a fortune.)
• Corporate Income Tax
• Dog License Tax (Editor’s Note: Which should be raised to clean up after errant dog owners who let their dogs run free in public parks and do not clean up after them.)
• Excise Taxes
• Federal Income Tax
• Federal Unemployment Tax (FUTA)
• Fishing License Tax
• Food License Tax
• Fuel Permit Tax
• Gasoline Tax (currently 44.75 cents per gallon)
• Gross Receipts Tax
• Hunting License Tax
• Inheritance Tax
• Inventory Tax
• IRS Interest Charges IRS Penalties (tax on top of tax)
• Liquor Tax
• Luxury Taxes
• Marriage License Tax
• Medicare Tax
• Personal Property Tax
• Property Tax
• Real Estate Tax
• Service Charge Tax
• Social Security Tax
• Road Usage Tax
• Sales Tax
• Recreational Vehicle Tax
• School Tax
• State Income Tax
• State Unemployment Tax (SUTA)
• Telephone Federal Excise Tax
• Telephone Federal Universal Ser vice FeeTax
• Telephone Federal, State and Local Surcharge Taxes
• Telephone Minimum Usage Surcharge Tax
• Telephone Recurring and Non-recurring Charges Tax
• Telephone State and Local Tax
• Telephone Usage Charge Tax
• Utility Taxes
• Vehicle License Registration Tax
• Vehicle Sales Tax
• Watercraft Registration Tax
• Well Permit Tax
• Workers Compensation Tax

STILL THINK THIS IS FUNNY? Not one of these taxes existed 100 years ago, and our nation was the most prosperous in the world. We had absolutely no national debt, had the largest middle class in the world, and Mom stayed home to raise the kids. What in the hell happened? Can you spell ‘politicians?’ And why do I still have to ‘press 1′ for English!?

I hope this goes around THE USA at least 100 times!!! YOU can help it get there!!! GO AHEAD – - – BE AN AMERICAN!!!

Whether or not anyone should receive a loan modification has become a moot point. A group of hard-working Americans who have been requesting loan modifications is unearthing extraordinary ineptness on the part of America’s largest lenders. One year into the request for loan modification, one binder is five inches thick with at least 20 bank errors in those pages and contains 12 typed pages, single spaced, of who said what to whom. Absolutely no one at this bank knows what anyone else is doing!

Of note recently is that Wells Fargo has sold a number of loans to HSBC after those loans have fallen in some type of default. Most believe that HSBC is based in China; it isn’t. It was started in China in the 1800s by a Scotsman . . . something to do with the opium trade. HSBC was incorporated in Wales/England prior to Hong Kong goin back to the Chinese. HSBC is the largest bank in England with holdings around the world. It is not globally answerable to anyone because, as it notes, each bank/branch is subject to local rules/regulations.

HSBC has partnered with Wells Fargo on commercial banking levels. Because of that, and because is bundling and selling defaulting loans in bulk to HSBC, don’t you wonder if this is some type of money laundering/offshore banking on a high level.

Following is text from HSBC’s web site; these are the rules they subject themselves to. (I did the same with Wells Fargo . . . if you are having trouble with loan modifications through Wells Fargo, you may want to read their code of ethics — it will amuse you, I’m sure.)

Both of these entities purport to act fairly and honestly at all times and insist that their employees do also. My apologies to them, but that is not what we are seeing and many of the employees are in the dark; I have heard repeatedly that they do not know what is going on.

HSBC USA Inc. – Statement of Business Principles and Code of Ethics

The Fundamental Principle

In all its endeavors, it is the policy of HSBC North America Holdings Inc. and each of its subsidiaries (collectively referred to herein as the “Corporation”) to act honestly and fairly at all times. It is the Corporation’s policy to comply with the spirit as well as the letter of all applicable laws and regulations in all that it does. Each employee of the Corporation is expected to do the same.

Violations of this policy and failures to report known violations will subject the employee to disciplinary procedures, including termination of employment. In addition, employees who should have, through the exercise of due diligence, discovered violations of this policy, but who fail to do so, may be subject to discipline, including termination of employment.

In dealing with employees, customers and suppliers, the Corporation makes decisions without regard to race, ancestry, color, religion, national origin, citizenship, marital status, veteran’s status, gender, gender identity, sexual orientation, age or disability that can be reasonably accommodated . . .

In dealing with customers, the Corporation is dedicated to offering top quality products and services and to supplying only honest information about them. The Corporation will offer products and services on a competitive basis and will not tolerate the use or attempted use of improper incentives to obtain business . . .

Compliance with Laws and Regulations: Numerous laws and regulations, both domestic and foreign, specifically govern various aspects of the Corporation’s business: the Foreign Corrupt Practices Act, the Financial Institutions Regulatory and Interest Rate Control Act (FIRA), the Community Reinvestment Act, the Truth-in-Lending Act, the Fair Credit Reporting Act, the Bank Secrecy Act, and various federal and state usury laws, to name just a few. In addition, laws and regulations of general applicability, such as the securities, equal employment, wage and hour and antitrust laws, affect us. Failure to comply with these laws and regulations can have serious consequences, including legal liability for damages and other penalties. You have a responsibility to learn and understand the laws and regulations applicable to the activities of your department and your particular responsibilities within your department. If you identify unresolved legal questions you should bring them promptly to the attention of your supervisor or department head. The General Counsel’s office is always available to provide further help.

The banking industry has concerns that money laundering schemes will increase and, if successful, will lead to the erosion of public confidence in the banking system. Bank personnel therefore must comply aggressively with the provisions of the Bank Secrecy Act — particularly the reporting of unusual cash transactions. Compliance will not only help the Corporation avoid stringent penalties, but also will assist us in fulfilling our obligations to our fellow workers, our parent company and our communities.

Corporate Sustainability: Our goal is to be one of the world’s leading brands in corporate sustainability. This is not solely an environmental or social agenda, nor is it confined to governance and ethics. Sustainability is about bringing all of these issues together into our business model, and about maintaining the long-term growth of a successful business for the benefit of our stakeholders. For HSBC, sustainability is about making decisions that maintain the right balance between the environment, society and the economy to ensure long-term business success.

We believe that it is our duty to our customers, investors and employees to foster an ethical, responsible and sustainable corporate philosophy.

While our biggest contribution to society is the responsible provision of financial services, we have also long sought to strengthen our ties with local communities through philanthropic partnerships. Education continues to be the primary focus for our corporate giving. The second philanthropic area we support is the environment.

Conflict of Interest: . . . A “conflict of interest” arises when your personal interest in a transaction, or an obligation you owe to someone else, comes into conflict with your obligation to the Corporation and its customers. This includes using your position to advance your own personal gain or advantage on the basis of sensitive information gained during your employment, whether or not you obtained this gain or advantage at our expense or at the expense of any entity of the Corporation or its customers . . .

Self Dealing, Fiduciary Appointments and Powers of Attorney: You may never participate in the consideration or approval of any extension of credit, any waiver of fees or any other transaction between the Corporation and yourself or anyone in your immediate family, or with other people, corporations, partnerships, trusts or other organizations in which you or any member of your immediate family have a significant financial interest . . .

Gifts from Suppliers or Customers: The Bank Bribery Act and other applicable laws prohibit you from seeking or accepting for yourself or any other person anything of value (including services, discounts or entertainment) from customers, suppliers or anyone else in return for any business, service or confidential information of the Corporation . . . exceptions to the general prohibition against seeking or accepting anything of value as follows:

(i) Lunches, dinners and other customary entertainment (e.g., sports events, golf, etc.) provided in the ordinary course of a supplier’s or customer’s business and in situations where we would normally reimburse the cost as a proper business expense;
(ii) Services or discounts customarily afforded by suppliers or customers in the ordinary course of their business;
(iii) Promotional gifts such as lighters, pencils, calendars and the like, routinely distributed by the donor; and
(iv) Gifts in connection with customarily recognized events (e.g., holidays, job promotions, etc.) not exceeding a $100 value.

You must promptly report to the General Counsel’s office anything of value beyond those items listed above if offered to you, received by you, or if you anticipate receiving such an item.

NOTE: Employees may never accept gifts of cash, checks or gift certificates convertible to cash, regardless of amount.

Borrowing Money from Suppliers or Customers: Employees are not permitted to borrow from any of the Corporation’s suppliers or customers . . .

Note: Because the Corporation is engaged in the business of lending, the Corporation’s employees must set an example. Failure to timely repay loans from the Corporation may place the employee in a conflict of interest situation. Therefore, the Corporation believes it appropriate to disclose an employee’s delinquent debt to the employee’s business unit manager.

Outside Employment and Business Activities: Other potential sources of conflict of interest include holding any outside employment position or conducting personal business which may interfere with the employee devoting full attention and loyalty to the Corporation during working hours; holding a direct or indirect financial interest in a competitor company or in any firm or entity with which the Corporation does business (excepting normal investments in publicly owned companies); holding a direct or indirect financial interest in any firm or entity that is a supplier of or vendor for the Corporation (excepting normal investments in publicly owned companies); holding or acquiring an interest in any property or business in which the Corporation has or proposes to acquire an interest; serving as a director or officer of any firm that is a competitor, customer or supplier of the Corporation; or conducting business on behalf of the Corporation with an individual related by blood, marriage or adoption. Accordingly, you should disclose and obtain approval for any outside employment from your manager or Human Resources . . .

You should know that certain types of outside employment, such as with other financial institutions or securities dealers, are prohibited by law. Refer questions relating to the appropriateness of such outside employment to the General Counsel’s Office.

Soliciting or Accepting Legacies or Other Favors: We do not allow you to solicit any legacy or other favor granted by an individual or organization where your relationship to the individual or organization arose primarily during the course of your employment.

Information About Our Customers and Employees: We expect you to treat information entrusted to us by our customers and employees as you perform your duties for the Corporation as confidential and privileged. This includes information relating to deposit and loan balances, information concerning the management, financial condition and future plans of our customers’ businesses, employee/salary information and information obtained in the course of fiduciary relationships. You must not disclose confidential information to anyone either inside or outside the Corporation except in compliance with the Corporation’s information protection policies. Your obligation to maintain the confidentiality of the information continues even after you leave the Corporation . . .

Limited Use of Confidential Information: While recognizing the need for a constant flow of information for the smooth operation of the Corporation, we expect you will not disclose confidential information pertaining to our customers’ affairs to your fellow employees unless they have a clear business need to know the information for the performance of their duties. You must exercise particular care in communicating confidential information to persons in other departments or in other corporate subsidiaries and affiliates who may have different responsibilities and possibly conflicting obligations . . . you cannot communicate nonpublic information . . .

Disclosure of Information to Outsiders: Apart from routine credit inquiries, you cannot release information concerning our customers’ affairs to outsiders, including law enforcement authorities, except in response to a valid subpoena or similar legal process within strict compliance of the Corporation’s established internal operating procedures. Treat information concerning the Corporation, its affiliates, or any of their customers as confidential . . .

Information About HSBC North America Holdings Inc., its Subsidiaries or Affiliates: Because of your position, you may obtain information about your business unit or HSBC North America Holdings Inc. or other HSBC subsidiaries or affiliates not otherwise available to the public. You cannot disclose confidential financial or other proprietary information concerning any of these entities to outsiders until it has been published in reports to security holders or otherwise made generally available to the public. HSBC policy requires the coordinated communication of sensitive information about HSBC or its affiliates to investors, security analysts and the press through properly designated representatives in our Investor Relations and Public Affairs areas. Your obligation to maintain information about HSBC and its affiliates as confidential remains in effect even after you are no longer employed by the Corporation. In addition, you may have legal liability if someone inside or outside your immediate family obtains a personal gain or advantage on the basis of confidential information obtained directly or indirectly from you.External Communications: You must refer all media inquiries directly without further comment to Public Affairs. Likewise, Public Affairs must coordinate all ongoing media contact. This ensures the preparation of official statements is consistent with corporate policy, monitored contacts and anticipated news coverage . . .

Personal Gain: You must not use confidential information about the Corporation or any of its affiliates, customers, or suppliers entrusted to you in the course of your employment for your personal gain or the personal gain of your family, friends, or others.

Securities Law Penalties: The improper or personal use of confidential information concerning the Corporation or its affiliates, customers or suppliers is a violation of the Corporation’s policies, and may subject both you and the Corporation to penalties under various securities laws and regulations . . .

Competition: The Corporation believes in the free enterprise system and is dedicated to the maintenance of fair competition in an open market. Employees are to avoid any circumstances that will, or would appear to, violate antitrust or competition laws . . . Normal business activities occasionally require contacts with competitors, but on such occasions discussion of any of the above-mentioned subjects must be avoided. Any violation of these conditions should be reported immediately to the General Counsel’s office . . .

Employees are prohibited from making, offering or soliciting any payment that is in the nature of a bribe, kickback or other illegal payment to any customer or supplier of the Corporation or to any other person. If any customer, supplier or any other person solicits or requests such a payment, that solicitation or request should be reported immediately to the General Counsel’s office.

Corporation Records: The Corporation’s books and records and other essential data are to be maintained with accuracy and honesty in strict compliance with applicable laws, accounting principles and management’s general authorization. When preparing such records, employees are not to make false or misleading entries in records nor permit to exist any fund or asset or liability which is not fully and properly recorded on the Corporation’s books. No transactions, agreements, programs, plans, obligations or payments shall be entered into, made or recorded with the understanding that their use is for other than the stated purpose.

Employees shall not make any false or misleading statements about such records or conceal information from management or the Corporation’s auditors . . .

Government and Public Affairs
The Corporation advocates the democratic system and is committed to upholding the political, legal and governmental processes of the local, state and federal systems of the United States and other countries where the Corporation operates.

Further the Corporation recognizes that participation by citizens in civic and political activities is necessary for this system to function properly. The Corporation encourages employees to exercise their right to vote, to participate actively in the political process, to be informed on public issues and on the positions and qualifications of public officials and candidates for public office and to support issues, candidates and parties of their choice, as individual citizens.

Employees should not use the Corporation’s name or the name of HSBC Holdings plc or any of their affiliated entities, either directly or indirectly, to endorse any public issue, political candidate, political party or business interest, product or service, unless otherwise authorized by the General Counsel’s office.

Political Activities and Contributions: Federal and state laws and regulations restrict, and in some cases prohibit, corporations from making payments or using their property to support candidates for political office or political parties or committees. As a matter of policy, HSBC and its subsidiaries do not use corporate funds to make contributions to federal, state or local candidates or committees. We prohibit the use of the Corporation’s employees or property, including office supplies, printing facilities, postage and equipment, to promote political candidates or parties. We prohibit you from making any expenditures for such purposes through travel and expense accounts and we do not allow recovery of any such expenditure.

Both state and federal laws, however, permit voluntary personal contributions to segregated funds established for political purposes, such as H-PAC, the political action committee (PAC) for employees of the Corporation. The Corporation may legally pay for the PAC’s administrative expenses, but the employees voluntarily provide the funds the PAC uses to financially support candidate campaigns.

The solicitation of the Corporation’s employees for political contributions on the Corporation’s premises is limited to H-PAC.

Holding of Public Office: Under the laws of the State of New York and most other states in which the Corporation does business, the holding of public office, elective or otherwise, may give rise to an illegal conflict of interest or could prevent us from having normal business relationships with the governmental body involved, including depository relationships and the purchase of its debt obligations. Whether or not the public official receives any salary or participates in the actual deliberations leading up to any contract or transaction does not affect this rule . . .

Improper Payments: The Corporation prohibits the use of corporate funds for bribes or for making improper payments of any kind to any persons or organizations in order to obtain their business or to influence their policies or decisions, or for any other reason. This prohibition includes any payment to any foreign or domestic government official, employee or agent not required by law. We also prohibit the making of any “kickback” or the sharing of fees with those who represent customers or suppliers of the Corporation.

We remind you that the Corporation and its affiliated companies conduct business throughout the world and that the Corporation will strictly comply with the applicable laws and regulations of the countries in which we do business. However, you must remember that laws and business customs vary from one foreign country to another and from the laws and customs of the United States. We forbid foreign practices that violate a U.S. law or regulation even when acceptable locally.

If you have questions concerning the legality of any payment, or any suspicion of a kickback, bribe or other illegal arrangement, you should report it immediately to the General Counsel’s office.

Personal Investments: Subject to any more restrictive divisional policies and procedures, you and the members of your immediate family may invest at your discretion in stocks, bonds and other corporate securities, as well as foreign currency, interest rate and commodity forwards, futures and options. However, because of your position with a financial institution, you should avoid excessive speculation or risk in your personal financial activities. You may easily measure excessive risk by determining if the loss of a particular investment would significantly affect your standard of living or cause you to encounter extreme financial hardship.

You also must avoid particular investments affecting your judgment with respect to making decisions for the Corporation or giving rise to the appearance of a conflict of interest if reported on the front page of The New York Times.

You must limit investments in the obligations of customers, suppliers and other parties doing business with the Corporation to securities publicly traded on a national securities exchange or in the over-the-counter market, unless you obtain the prior written approval of the General Counsel’s office. Investments in such publicly traded securities in excess of 1% of the company’s issued and outstanding shares require prior approval of the General Counsel’s Office.

In making your personal investment decisions, you must carefully avoid the use of any confidential information you have obtained through your employment. In order to avoid potential conflicts in this area, you should avoid investments in the securities of any corporate customer for which you currently have or anticipate having direct or indirect account responsibilities.

Trading and Margin Accounts: Subject to compliance with divisional policies and procedures applied because of your position with the Corporation, officers and employees may maintain accounts, including margin accounts, for their own personal trading and investment activities and those of members of their families and others. You are permitted to maintain these accounts with HSBC affiliates, such as HSBC Brokerage (USA) Inc., or with independent securities, foreign exchange or commodities firms.

The Rules of Fair Practice of the National Association of Securities Dealers restrict NASD registered broker dealers, including HSBC Brokerage (USA) Inc., from selling securities distributed in a public offering (i) to senior officers of commercial banks, investment companies and registered investment advisers, or (ii) to any employees of such entities engaged in buying or selling securities for such entities or their customers. These restrictions also apply to family members sharing the same household.

In addition, rules of the New York Stock Exchange provide that member firms may open margin accounts for bank employees if they first obtain the employer’s consent. Your supervisor or divisional compliance officer can provide such a consent, if requested to do so. Of course, officers and employees should not engage in trading or investment activities conflicting with their employment duties or considered imprudent under their own personal circumstances.

Reporting and Inquiries: The basic principles presented in this statement are intended as general guidelines rather than rules and regulations for all situations. Should any question arise as to the interpretation of a particular principle or situation, the employee shall refer the question to the General Counsel’s office.

Inquiries and information reported under this policy will be kept in confidence except as may otherwise be required to protect the Corporation’s interests. There shall be no reprisals for reporting information pursuant to this policy.

Violations of this policy and failures to report known violations will subject the employee to disciplinary procedures, including termination of employment. In addition, employees who should have, through the exercise of due diligence, discovered violations of this policy, but who failed to do so, may be subject to discipline, including termination of employment.

Reporting Violations: If asked or ordered to participate in, or you otherwise become aware of, any event violating the Corporation’s policies, applicable laws and government regulations, or both, you should report the information to the General Counsel’s office and/or contact the Employee Integrity Tip Line at 888-560-1777. The Employee Integrity Tip Line Unit will notify Corporate Security, if appropriate. Corporate Security conducts such investigations as are required under the circumstances and has responsibility for coordinating the related involvement of the Corporate Security Department, Human Resources Division and related division management . . .

Last Revised: July 23, 2008

A last-ditch loan-mod effort . . .

Borrowers place hopes on forensic loan reviews
Steve Bergsman
Inman News

. . . The forensic loan review is expensive (pricing is usually $2,000 to $5,000) and even if it is successful in discovering problems in your underlying mortgage documents, that’s usually not enough to make a difference with your bank.

The forensic loan review is an in-depth scrutinization and subsequent report on all documentation, transactional data and associated aspects of the residential loan origination process. The review often focuses on the closing documents to see if they contain violations of the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), or if there was any kind of fraud or misrepresentation.

This type of review is only successful if you, as a consumer, go the next step, which is to bring a lawsuit against your lender.

“An audit by itself is not some magical way to make everything go away — it is just a beginning,” notes Dean Mostofi, the founder of National Loan Audits in Rockville, Md. “Borrowers who contact lenders with an audit don’t get too far. It’s in their best interest to go in with an attorney.”

Editor’s note: It is our experience that lenders will NOT modify unless you go in with an attorney in any case; so we have been working with a group named Marin Family Action in Marin that has been raising funds to hire attorneys to represent us in court. It works!

The good news is most lawsuits based on the findings of a forensic loan review are generally successful in attaining for the borrower a loan modification. The bad news: hiring a law firm is just another big expense at a time when you are so hurting financially you are in danger of losing your home.

More than 50 percent of the loans our company reviewed have material misrepresentations, says Jeffrey Taylor, managing director and chief business development officer for Digital Risk LLC in Dallas, which does work for large banks and government agencies, not individual consumers.

One of the first companies to do forensic loan reviews for consumers was You Walk Away LLC in Carlsbad, Calif. “We found about 80 percent of the loans we looked at had some type of violation in them. Clearly, a lot of adjustable-rate mortgages had violations,” says Jon Maddux, CEO . . . lenders were, and still are, so overwhelmed with foreclosures that even if you walked into an office and handed them proof that there were problems in the original loan documentation, they still put you in the queue along with everyone else. Meanwhile, the clock continued to click down on the foreclosure process.

Maddux realized even with a forensic review no progress would be made with your lender unless you actually sued.

“The borrowers are struggling to get the attention of overworked loan servicers, who are scrambling with as many modifications, workouts and deals as they can come up with,” says James Thompson, an attorney in the Chicago office of Jenner & Block LLP. “You can get to the head of the line sometimes if you show up with an attorney and a forensic loan examination saying there is a TILA violation.”

In researching the short history of consumer forensic loan reviews I hadn’t come across even one situation in which a homeowner lawsuit had actually gone to the end of the court process, mostly because if there is an actual, verifiable violation it would be difficult for lenders to win a case. So why should they bother to fight?

. . . Here’s the way it has usually worked out: The homeowner’s attorney goes to the lender with this message, “If this goes to litigation it is going to cost you $200,000 in penalties plus the cost of legal work when all the borrower really wants is an affordable mortgage and affordable interest rate to stay in the home.”

“I don’t see very many of these litigating,” says August Blass, CEO and president of National Loan Auditors in Walnut Creek, Calif. “Most of these settle. This brings the settlement offer to the table a little bit faster. It’s not to say a lender would have not been brought to the table without the audit, it just seems to fast-track it a little bit as the lender knows you are being handled by an attorney and there are illegalities being claimed on the loan.”

So, what do you get for your dollars and efforts?

If the object of the forensic loan review and, perhaps, lawsuit, is a loan modification, then this is a very attainable goal. If you instead believe the mortgage should be totally rescinded, then you need to consider what that means.

What it absolutely does NOT mean is that you that simply wash your hands of the loan and walk away as if it never happened. What it does mean is that the consumer gets to buy back the loan. In short, the borrower has to be able to repay the amount that was borrowed . . .

As Blass observes, most homeowners want a loan modification that will let them remain in the house where they currently live — “they don’t actually want the loan rescinded.”

From Steve Bergsman, a freelance writer in Arizona and author of several books, including “After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade.”

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Copyright 2010 Inman News

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