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The Servicing Fraud Settlement: the Real Game

posted by Adam Levitin

Warning: This is a long blog post. But if you follow mortgage servicing, I think you’ll find it worth reading. Despite lots and lots of media coverage of the servicing fraud settlement, nobody seems to understand the real story that's going on. I think that this post will explain a lot.

Let's start by recapping what we know.  Back in March we started hearing media reports of a proposed penalty for servicers in the $20-$30B range.  Then the American Banker published a 27-page term sheet from the AGs for servicing standards. Next, Huffington Post published a 7-page CFPB powerpoint presentation. Then came the draft C&D orders and then in April, the final C&D orders (which eliminated the ridiculous "single point of contact which need not be a single person" and replaced it with "single point of contact as hereinafter defined" and then failed—quite deliberately—to define it anywhere in the document).

Now there’s another round of activity and conflicting reporting. The American Banker reported that there was a new AG term sheet proposed and that principal reductions were off the table. That turns out to be incorrect, as Shahien Nasiripour reported in the Huffington Post. The new AG term sheet that the American Banker referenced deals only with servicing standards. The American Banker assumed that this mean that principal reductions were off the table because they weren’t referenced in the term sheet. In fact they are still very much in play. They’re just in a second, separate term sheet. So now there are two separate term sheets--one covering servicing standard and another covering monetary issues/principal reductions. (Recall that the original AG term sheet did not cover the monetary issues—that was clearly for a separate document.) We are also hearing news reports that the banks are offering to settle for $5B and won’t go above $10B.

So how do we make sense out of all of this?

The short answer is that the fight is not over a piddling $5B or $10B or even $20B. The banks would buy peace in a second for $20B and servicing reform. So what does that tell us? It indicates that the negotiations are over a substantially bigger figure than $20B. And this explains everything about the banks' negotiating strategy including the recent attacks on Elizabeth Warren by the Wall Street Journal's editorial page and by Congressional Republicans on the CFPB.

Now this isn't just my theory from reading between the lines. Instead, its exactly what follows from a careful reading of the documents and the rhetoric. The key, our Rosetta Stone, as it were is the CFPB powerpoint.  It hasn't gotten a lot of analysis, but careful analysis of it explains everything that's going on.

There are two important things to note in the CFPB powerpoint.

1.The CFPB powerpoint contains an analysis of how much money servicers' saved by failing to comply with the law. It concludes that they saved at least $25B, based on an assumption that it would cost 75bps more per year to service each of these loans. (One can argue about that assumption, but that’s neither here nor there.) So if servicers were simply fined $24B, it wouldn't include any actual penalty. It would only be disgorgement of wrongful profits.  

I don't think anyone has really understood the significance of this number.  It means that the CFPB's (frankly rather conservative) estimate is that the banks made $24B from servicing fraud. That's the largest consumer fraud in history. This isn't just some chump game with cutting corners on affidavits. It's that doing that (and lots of other bad stuff) has saved the banks $24B in costs. 

2. The CFPB powerpoint contained an analysis of the cost of various levels and numbers of principal reduction modifications. This is critical--the principal reduction modifications are separate from the $24B penalty.  In other words, the total cost to the banks of a settlement would not be $24B.  It would be $24B in disgorgement + the principal reductions.  

The grid on the CFPB powerpoint shows the costs of a range of principal reduction modifications to be done over 6 months. The axes on the grid are the number of modifications and the depth of the modifiations. There's an enormous range of costs on the grid--from $7B to $135B. In other words, the total settlement cost (putting aside the cost of implementing improved servicing standards) would be between $32B and $160B depending on the number and level of principal reduction modifications. I want to underscore, however, that the powerpoint does not indicate what the CFPB thinks is an appropriate number--and clearly that would be a negotiated issue.

Whatever that number, it's also important to recognize that not all of the cost of principal reductions would be borne by the banks. In the powerpoint, at least, the MBS investors would bear the costs of the principal reductions if NPV positive, but 2d liens (big 4 bank balance sheets) would be reduced too. But it means that the price tag for settlement being offered to the banks isn't $24B. It's substantially higher. We don't know how much higher--the powerpoint was simply showing a range of options and their costs, not recommending any particular option--but even at the low end of $7B that's a sizeable increase on top of $24B. 

Recognizing the full potential cost of a settlement to the banks and how most of it could be in the form of principal reductions rather than a fine explains everything that's been happening with the negotiations and the Congressional Republicans' witchhunt against Elizabeth Warren.

If the cost of peace with the AGs and Feds was a mere $24B, the banks would settle. Remember, that’s $24B for all the banks, not $24B for any one bank. The mortgage servicing issues are an enormous drag on BoA generally, Wells knows that it is a huge litigation target in every state, Citi just wants to keep its head down, and Ally wants a clean bill of health for its IPO.  The banks really want to put these issues behind them.

$5B a piece for each of the big servicers isn’t a ridiculous price for putting the issue to rest. Indeed, news reports that the banks will consider $5B-10B show that this is only a matter of haggling about price, not principle (no pun intended).

That’s why I don't think the hold up is over the $24B. Instead, the sticking point in the negotiations has got to be the additional cost of the principal reduction mods, whatever that might be. At the extreme level, if the settlement would cost a total of $160B, that would be about a third of the equity of the four biggest banks.  (Compare that with the $750B in negative equity that exists.) 

If I'm right about this, then everything about the banks' negotiating strategy makes sense. If the banks are willing to pay $24B, but not the additional cost of principal reduction mods, it makes sense for them to run the clock, to focus on principal reductions in their PR, and to do everything possible to minimize the role of the CFPB. 

First, inflation alone will help reduce negative equity and thus the cost of principal reduction mods (unless we continue to see a double dip…which is likely, but why not take a gamble on it?).

Second, the AGs' main leverage here is the threat of litigation. But litigation would be incredibly slow, especially if the OCC has the banks' backs and raises preemption challenges at every step (as it might do in light of the consent orders). It might take 3-4 years to get to a judgment, by which time housing prices might have rebounded and lots of foreclosures would have been processed, so there wouldn't be that much negative equity outstanding to reduce through principal mods. Delay lets the banks avoid principal reduction mods.

Moreover, the banks know that the AGs can’t be too serious because they haven’t done any investigation. I’m just baffled how the AGs are conducting settlement negotiations without having done any investigation. It’s a serious problem. How can the AGs know the proper price for the settlement (high or low) without knowing what cards they hold? 

Third, the one agency that could really speed along litigation is the CFPB. The part of the litigation that will take up the time would be discovery, but the CFPB could speed that up significantly through its examination power. But the CFPB can only be effective with this if it has a Director. And that explains why the banks (and the OCC) brought out the Wall Street Journal editorial page and Congressional Republicans to wage war on Elizabeth Warren, the frontrunner to be appointed CFPB Director. Make Elizabeth Warren politically toxic on whatever trumped up charges can be found (she said "advised" when she in fact recommended! She was in the room during negotiations!  Gasp!).  The goal is to keep the Director position vacant, so the CFPB can't move along litigation. 

There was a lot of justified pushback (including from yours truly) against the attacks on Elizabeth Warren. So rather than beat up on Professor Warren, the bank strategy changed to attacking the CFPB itself under the guise of regulatory “improvement.” First, the GOP pushed several bills in the House Financial Services Committee meant to smother the CFPB in its crib. Then the GOP in the Senate said that they wouldn’t confirm any CFPB Director unless the House reforms were made, and then they started making unpleasant noises at the suggestion that there could be a recess appointment. (News flash: winning 1 house of Congress in a mid-term election ain’t an electoral mandate to do anything. You need the hat trick for that.) 

Every week that is spent on negotiations that get nowhere lets the banks run the clock a little further. So the banks will try to stay at the negotiating table as long as possible without every actually conceding anything.  But that's the strategy here--run the clock to avoid principal reductions.  What terrible is that this strategy seems to be working--the CFPB has been shut out of negotiations because the Wall Street Journal and Congressional Republicans have made such an issue over the CFPB. (This might turn out to be short-sited, but that's another story.)

And this ties in perfectly with the PR spin: the line coming out of the banks hasn't been an objection to $25B in fines. It's been an objection to principal reductions. The hackneyed moral hazard objection has been trotted out (despite the banks' doing some principal reduction mods already) and we've had Moynihan (BoA), Stumpf (Wells), and Jaime Dimon (JPM) saying that principal reduction mods are "off the table." 

Listen to the banks. Their rhetoric says it all--the game here is about the principal reduction mods, not about the servicing standards or the $24B fine. It's about the cost of the principal reduction mods. (There might be some ancillary issues like the number of mods, but it’s really gotta be about cost.)

Now lets be clear. Principal reduction mods are not about correcting robosigning. Robosigning is what's gotten the most media attention, but that's not the only issue around. There are a host of other flat out legal violations (just consider the $20M jury verdict in the Servicemembers Civil Relief Act cases to get a sense of what these violations cost-1,000 verdicts is $20B). There's another panoply of questionable, but perhaps not illegal acts (e.g., MERS issues). And if you want a doozy, how about the many loans that are endorsed like simply to Deutsche Bank as trustee, rather than Deutsche Bank as trustee for a particular trust (Deutsche is trustee for over 2,000 RMBS trusts). That didn’t fly in a North Carolina appellate court, and it wasn’t a fluke endorsement (and there are worse problems than that in terms of endorsements).

And then there's also lots of good policy reasons for pushing principal reduction modifications. Principal reduction modifications start to address the $750B in negative equity in this country and help the housing market to clear without the inefficiencies and social externalities of foreclosure. And of course principal reduction mods make the banks pay an appropriate price (and in an appropriate form) for the economic and social harms they caused with the housing bubble and foreclosure aftermath, including threatening our fundamental property title systems via corner cutting on paperwork. 

Finally, consider what it means that we're even seeing an eye-popping figure like $160B. It might be out there just to push the banks toward settling. But the amount of shit that the feds and AGs must think there is to come out with a number like that down on paper (especially for an agency under as much scrutiny for an sign of going off the rails as CFPB) makes my skin crawl. I worry that we don't have any handle on just how much rot is in the system and that we've been papering over it as the stock market rebounds. 

Now the banks have some legitimate concerns about principal reductions. If they are handled incompetently they will undoubtedly lead to a strategic default problem. And the banks know this—Countrywide’s settlement with the AGs’ was a paragon of foolishness. It made modification eligibility depend on delinquency status and applied prospectively. That’s virtually inviting strategic defaults.

But there are lots of ways to fix this. Here’s a simple one: principal reductions apply only retrospectively. Now there are problems with doing it just retrospectively. But prospectively, it could be applied to mortgages that fit particular criteria irrespective of default status (indeed, for mortgages that are 240 days delinquent, I’m not sure what good principal reduction is likely to do)—the biggest bang in terms of stabilizing the housing market might be to do principal reduction to homeowners who are not yet in default or to those who do strategically default because they’re the ones who are willing to gamble (and walkaway) from their homes.

Whatever the terms of a settlement, perhaps the most important question is what issues actually get settled. Obviously the AGs can’t settle for consumers or investors, and those issues are going to continue to plague the banks for some time to come. And the AGs can't bind the CFPB in terms of prospective regulation of the servicing industry. (Fat chance the banks clean up their act by July 21). But the AGs are the biggest dogs in the hunt at this point.

The banks are, of course, going to want the broadest possible settlement and if the AGs aren't careful, the banks will pull one over on them like they did on the merchants in the Wal-Mart interchange antitrust litigation settlement, where the wording was vague and then subsequently interpreted in the banks' favor.

The CFPB powerpoint also gives us a useful yardstick for measuring a final settlement. Anything less than $24B would let the banks come out ahead. Let me repeat that. Anything short of $24B means that the banks broke the law and got to keep some of the profits. If that's what the AGs settle for, it's a disgrace. $24B really has to be the baseline above which there's a settlement. I don't think the AGs are going to solve the foreclosure crisis in one fell swoop (they'd need to do some investigation to even have a shot at that), but settling for $5-$10B means that they'd let the banks keep 60%-80% of estimated illegal profits. Just keep that in mind. 

Final thought:  If I'm right about this, and that the number being bickered about isn’t $5 vs. $10B but something more like $40B-$60B, I worry that all hell is going to break loose. Progressives that were hating on the AG settlement for being too light on the banks, might rethink that position. And the howl we are going to hear from the right is going to be unparalleled. The idea that businesses could have done multi-billion dollars worth of harm to consumers (or the legal system) simply isn’t within the conceptual grasp of the Wall Street Journal editorial page and its ilk. The only possible explanation they have for this is a shake-down. Oh it’s going to be a fun summer.

Thanks for bearing through to the end. I hope it was worthwhile. 

Comments

hopefully title insurance companies will start suing banks for bevilacqua type third party buyers and they will take each other down...

Awesome POST.. Will take me a day or so to digest this... Thank you!

$24 billion is the amount the mortgage bankers saved by cutting corners. This figure is dwarfed by the amount of money stolen from taxpayers, pensioners,investors and homeowners through fraudulent loan origination, securitization and servicing fees in foreclosure and bankruptcy. All roads run through Fidelity/LPS to the big mortgage bankers sitting across the table from the AGs. If they AGs want leverage, they need to travel these roads.

Great post. It is my sense that most of the strategic default talk is unfounded. I see it as just another macguffin that the banks are using to push the "contracts are moral obligations" nonsense. It's almost as if the strategic defaulter is this decade's "Cadillac-driving welfare queen."

As a practitioner, I'm hoping that we see some serious principal reductions coming down the line. While I'd agree that making default a condition for receiving one is a bad idea, I would argue that making it a disqualifier is also a bad idea.

In my practice, I see plenty of potential clients that are months behind because they are already in active foreclosure. Many of those homes are underwater. Reducing principal while also tacking the back payments onto the loan balance would give many of them a chance.

We tried to modify our loan to our own detriment of $100k underwater but they came back twice with higher payments. Then they said they would put a sharper pencil to it and, boom! here came the foreclosure papers!'All we wanted was relief with lower monthlies while my husband got a new business going. What about banks that bargained in bad faith??? Why should we be excluded from a pricipal reduction when they were the liars?

Adam -- Great post, but I want to answer your question about why the AG's haven't done an investigation. The real dollar amount of possible harm is to be found in the defendants' data, and four of the five banks are national banks. The states cannot do any pre-litigation discovery to get at the data, unless the banks volunteer it. That was part of the Cuomo case that the states lost. And if the AGs were to file lawsuits now, in order to do post-litigation discovery, then -- as you point out -- we're talking another 2-3 years and preemption battles.

It's my understanding from public sources that the AGs have done (are doing) an investigation of the one target they are legally empowered to right now. But as for the other four -- blame the Supreme Court for tying the AG's hands, the Civil War era Congress for writing the law like that, and the OCC for not having looked at all this during their examinations of these guys for the last -- how many years has it been?

Your analysis is helpful in understanding the real issues behind the rhetoric.

My real concern extends beyond the banks' liability in perhaps the largest swindle in history.

The corruption of the land records in every county of every state in our country resulting in a nonviable and unreliable record of the chains of title to property nationwide has financial ramifications well beyond anything the banks will ever face. These ramifications will be faced by the every day people of this country...not the financial elite.

The AG's are obviously political animals who do not have the intestinal fortitude to do their jobs and protect the interests of the people of each of their states nor the land records in their respective states.

The behavior of the judicial system nationwide to the millions of wrongful foreclosures taking place indicate that many judges within our judicial system, state and federal, have vested interests in defending the MERS scheme and the hundreds of "DocX like" foreclosure mills engaged in class warfare on behalf of those who have invested in mortgage backed securities----non performing mortgage backed securities, btw....

The thousands of forgeries and frauds upon the court on the land records of this country seem to be meaningless to the powers that be...

Follow the money, as they say.....

"The Emperor has no clothes...."

Besides principal reductions, there is another way to make the banks pay and ensure that they can't continue to steal property that doesn't belong to them:

Give homeowners the wherewithal to fight back and conduct a "fundraiser" at the same time:

Pass legislation in each and every state mandating that anyone seeking to foreclose on a property MUST record an unbroken, complete and verifiable chain of title with each and every assignment included.

Banks without the proper title chain will not be able to foreclose. After a prescribed amount of time (say 2 years) homeowners will be allowed to formally quiet title. Mortgage gone and equity returns in it's entirety to the homeowner.

Land records get cleaned up, either with the banks filing and recording the complete chain of title or through quiet title by homeowners.

Local counties get back all the money they have been cheated out of by MERS and others that have not properly recorded note assignments. Can you spell F.U.N.D.R.A.I.S.E.R? Again, more money comes back to the localities where is belongs from the banks that destroyed our land records in the first place.

PRICELESS!

No doubt that North Carolina case is a game changer.
Next question is , do the Mortgage/DoT need to be assigned specifically to the trust as well... I say yes.
If the answer is yes the land record system is completely busted and is due for a huge clean up.

david
Great idea, how much money do the banks have off shore? I think we can do without all those big banks. I believe they are trying to control us anyway.

By giving the homeowner back what is rightfully theirs, they will start to spend, move, improve their homes.

We can use our local banks and get away from all this power and greed and fraud.

There is a lot of anti-bank rhetoric that fills these comment threads. However, I think its likely that if the banks were fully called to task they would all need a second round of bailouts.

While it is nice to clawback some money for consumers, a lot of that money has gone to money heaven and doesn't belong to anyone.

Adam, between yourself and Matt Taibbi with your writings this week, I'm in justice and angst shock and overload.

I will say this further: First I appreciate a man of your acumen and training to risk stating the issues plainly and clearly. There is real risk in that. Thank you.

Secondly, I would like to say to many other scholars and practitioners of the law as well as educated merchants and traders: If not you and now then when will the people, the country and her beloved and revered statutes, laws and principles be restored? If not now, when?

I hope there is just one attorney and just one hedge fund manager that will read this post and be inspired to take a very hard look at what is really going on here. One man, one woman can make all the difference, as history reflects.

Adam, your statement hit at the crux of the issue when you said: "I worry that we don't have any handle on just how much rot is in the system and that we've been papering over it as the stock market rebounds."

Kathleen, I take your point about preemption concerns. I'm not sure that the AGs need to be as worried about it as they are, however. Remember that some of the AGs are already litigating with the banks over foreclosure related practices (OH, NV, AZ, e.g.).

First, there are lots of entities in the foreclosure system (LPS, MERS) that are not national banks or their subsidiaries. There are also bank service companies, for example.

Second, OCC preemption regs specifically exempt debt collection, and what is foreclosure but debt collection?

And third, there's a lot of investigation that could be done simply from the public records.

I have read this post and I am in agreement except for one thing. Principle reductions will not cure the problem. What is not being addressed is that during the BOOM of real estate prices, banks OVERVALUED real estate properties to the tune of 200% in most cases and maybe more. The difference between the REAL value of the real estate and the INFLATED value simply does not exist. THis ponzi scam is similar to the ENRON debacle. That said, in my un Harvard educated - but subprime victim opinion - the BANKS have to take a LOSS. 1. Homeowners who have been defrauded and have clear fraud, should be made whole and not suffer with a mortgage note. FRAUD cancels the contract. 2. Homeowners who are paying their mortgages need to have either EVIDENCE of the ORIGINAL NOTE or a NEW NOTE needs to be issued to their benefit reflecting any appropriate FORGIVENESS of the deficiencies of their loans. Why? Because if they pay to maturity the bank will FORECLOSE on them because they do not have the original note.

This fraud was not perpetrated without help from local governments. State Court Judges are LANDLORDS and routinely, and wrongfully rule against pro se litigants. THe Recorder's office will threaten to throw a homeowner in jail for ATTEMPTING to record a document in their defense but allow any bank to record whatever it wants. This must change.

The County Assessor's office must stop the practice of returning Homeowner's tax payments in lieu of accepting tax payments from other parties based upon FRAUD.

If immediate steps are not taken to address all these issues, foreclosure will become and ACCEPTED practice. Homeownership in America will simply become a method of ACCEPTED BANK FRAUD and this once great nation will FAIL based upon the GREED of a few slimy ass banksters who are in powerful positions, which we the people have NOT appointed them and have NO control of their fraudulent manipulation of our laws and lives.

Adam, this amount of settlement doesn't appear to deal with the hundreds of thousands, if not millions of homes that have already been illegally foreclosed by the banks with forged paperwork.

For example, if we assume an average loan value of $200K, and multiply that by only 500,000 foreclosures (both low estimates), that alone equals $100B. I suspect this number may actually be more than double my conservative example.

I realize that the settlements supposedly require the banks to hire a consultant to evaluate potential wrongful foreclosures over the past year or two. Then they're supposed to compensate some unknown number of borrowers for some unknown amount, who have lost their homes in wrongful foreclosure (not holding my breath!). But what documents are they going to be reviewing? Bank docs?? And exactly how independent is a bank-hired consultant going to be, anyway?

Now that the public is aware of how badly they have been scammed by the banks, I sincerely doubt that principal reduction by the banks is a solution to the mortgage crisis. The reduction offered probably would not be enough to help a homeowner anyway plus why would a savvy homeowner pay anything on their mortgage ? Most of the banks do not own the loans that they have served Lis Pendens on and fraud upon the court has probably been committed through fake documents and fake robo signers. It is economic crime. I think people will be looking for triple damages and QUIET TITLE to their homes. Most of these banks cannot foreclose because of standing. Why would anyone sign a new mortgage with these banks that obligates them to pay when they have absolutely no valid mortgage to pay now? I don't think the public is as dumb as the banks think. I also don't think that Joe homeowner will take 10k-20k to forget and move out like Bair proposed. The public is shearing the wool that has been pulled over their eyes because they don't want to go to slaughter on the steps of these crooked banks.

I haven't seen any principal reduction... and it's not anti-bank rhetoric it's anti-Mortgage Servicer rhetoric. Servicers were never set up to be mortgage makers which is what they are under HAMP. They were set up to take money; get paid for it and make money on the side via. BPO's, Inspection fees, late fees and half a hundred other different ways. The two other sides are the ones who get robbed. The Investor and the Debtor.

Forced Mortgage Mod's in Bankruptcy.. Stop this incentive based nonsense that obviously doesn't work. Servicers make too much money via fees to be worth it for them. At this rate the only way to hit them in the pocket book is for there to be no more mortgages to service (being all foreclosed on).

I’m probably being hopelessly naive, but instead of principal reductions, would banks/servicers/investors consider modifying loans by reducing the interest rate to zero for a period of time, say 3 or 5 years? This would accomplish pretty much the same thing as a principal reduction since borrowers could pay down principal quickly. For example, assume a homeowner is 100k underwater. If the homeowner paid 3k per month with no interest for 3 years, the loan balance would be reduced by 108k. If the property value remained the same after 3 years, the homeowner would no longer be underwater and the loan could be reset at a market interest rate. The amount of the monthly payment could be arbitrary - just pick a number the homeowner can afford to pay.

This would keep the homeowner in his or her home and provide an incentive against strategic default, with homeowners having a realistic chance to get into a positive equity situation. There would be no debt cancellation, which could otherwise result in the homeowner getting whacked with a big tax bill, as might happen with a principal reduction for a homeowner who did not qualify for an exception. Although the banks/investors would lose the time value of their money, they would not lose any capital if the homeowner made payments. It would also take away the banks’ argument that principal reductions create a moral hazard - homeowners would be given a chance to pay down principal instead of a principal reduction.

I understand that there could be complications with temporarily reducing interest rates to zero (tranche warfare among the investors?). But other than that, it looks like a win-win situation to me.

Great post, Adam, and I appreciate the citation to the NC Appellate case. Blog posts like this are a great way for practitioners to keep updated on trends in other states.

I disagree that Elizabeth Warren would take any major steps with the CFPB against the banks. This administration, progressive though it may be in other ways, is bought and paid for. Any Obama appointee will be told where the bread is buttered. The word to describe this is "corporatism." Substantive change will have to wait for a different administration, sad but true.

I am looking to state and local governments, as well as the judicial system, to start curbing the abuses.

One of my larger overall issues with the settlement is that AG Miller has known of Mortgage Servicing Fraud since at LEAST 2002 if not earlier. I have copies of constituents complaints filed with his office. To the best of my knowledge, his office took no real action to stop MSF previously in his own state. Why would anyone expect him to take any significant action on a NATIONAL level?

if it could really be settled by the summer, Obama's in for sure!!! People need security in their lives again.

According to Huffpost a Qui Tam investigation has been referred to DOJ. Back in March 09' the Daily Deal suggested that TARP money could be a bear trap. Trebling each and every violation could be huge (Substantially more than even simply trebling $24B). If there are legitimate FCA claims $100B is probably the minimum. Links to the Daily Deal and Huff Post stories are included below for your convenience.

http://www.thedeal.com/newsweekly/community/tarp-trap.php

http://www.huffingtonpost.com/2011/05/16/foreclosure-fraud-audit-false-claims-act_n_862686.html

Everyone, and I mean everyone, knows the real fight has been and still is about principal reduction -- that is the only way to right the wrong and keep people in their homes. But I doubt that it will ever happen in any more than a microscopic amount of cases.

Please consider endorsing the Unitedinprosperity.org petition that will provide a consistent and similar financial benefit (modification) to every negative equity homeowner as capitalism and the law dictates. The petition doesn't demand principal reductions changing the concept and principles of capitalism for selected or targeted homeowners but is a viable working solution protecting ALL homeowners and investors within capitalism and the law.

I really need everyone's help in forwarding the Unitedinprosperity.org petition via email, Facebook, articles, blogs or by whatever means you can, to stop the illegal and unnecessary foreclosures occurring that is financially harming our economy. I have been sending my proposal to the government for over 2 years with very polite responses that essentially state thank you but they know what they are doing. The only way to change the governments and Wall Street's attitude of "business as usual" to end the Negative Equity Housing and Foreclosure Crisis is with the combined voices of the American public, please join.

Home page of the Unitedinprosperity.org petition:


Did you know that every negative equity homeowner is legally entitled to the same modification? Why because when Wall Street changed a standard mortgage clause found in every mortgage loan pertaining to the standard operating practice of "don' pay, be foreclosed on" to "modifying instead of foreclosing " if modifying would avoid the investors guaranteed financial loss from the difference between the distressed sales price of a potential or possible foreclosed negative equity property and the outstanding mortgage amount due, Wall Street was fully aware that changing a legal clause had to be legally applied across the board to all similarly situated homeowners if the modification avoided the investors guaranteed financial loss within the provisions of existing law.

Instead Wall Street denies that the clause or policy was changed but that they are just following the governments directive to modify mortgages for affordability purposes. Their denial is "hogwash" when the financial industry physically issued almost 3 million modifications that weren't within the governments affordability standards to avoid the investors negative equity financial loss in addition to the 630,000 modifications that were issued for affordability purposes to avoid the investors negative equity financial loss.

Regardless, the legal consequence of issuing 3.5 million modifications set an industry wide precedent reaffirming the equal entitlement of every negative equity homeowner to a consistent similar financial incentive, benefit, compensation, reward, reimbursement, subsidy or advantage to remain a paying negative equity homeowner if the financial benefit avoided the investors negative equity loss.

*Sign the Unitedinprosperity.org petition to stop the bias and misleading "misrepresentation" being portrayed that affordability is why a modification is issued allowing the holdings of the government and Wall Street to violate the principle of "honest and good faith dealings" using "predatory mortgage servicing practices" and "unfair and deceptive business practices" by taking "undue financial advantage" of similarly situated homeowners who are paying or can afford to pay by restricting or denying them the same moral, ethical and legal entitlement of a modification violating numerous consumer, banking, civil, tort and business laws to maintain Wall Street's profits.

*Sign the Unitedinprosperity.org petition to provide every negative equity homeowner a consistent similar financial benefit as outlined in the attached Negative Equity Streamlined Uniform Modification System by demanding that the government lead by example starting with the mortgages of the Government Sponsored Enterprises by enforcing the rules of capitalism, existing laws and the industry wide precedent set creating a six billion dollar monthly taxpayer free stimulus for Wall Street to follow. Let's stop the policy of playing on the homeowners sense of moral obligation to remove themselves from receiving what is legally theirs to receive.

*Sign the Unitedinprosperity.org petition to stop paying for your neighbors mortgage and Wall Streets' unregulated capitalistic actions being paid thru back door deals, subsidies and guarantees. United we have the power for change we can believe in.

I am in a circumstance that if investigated by an attorney general applying the basic tenents applicable to a criminal investigation, would land agents for Chase Bank, California Reconveyance Company (that Chase Bank owns) and two law firms in jail or on criminal probation.

My Case with evidence can be found on Pacer under Ronald Williams and Jann G. Williams vs. JPMorgan Chase Bank, Chase Home Finance, The Cooper Castle Law Firm (and two individuals) USDC Nev. 2:10-cv-00118 (On appeal - USDCA 10-16102) There is much to be stated and was stated by our pleadings in the Case. Cutting through the Chase however, Chase Bank prevailed by establishing standing through the use of a document conjured by a Chase Bank employee. The document was relied on by both the state courts of Nevada and the United States District Court to establish standing for Chase to place us in default on our mortgage. The document contains the unsworn statement by a Chase Bank employee "confirming" Chase Bank to be in possession of our note and trust deed, and the assignment transfer interests from WAMU our original lender and note holder to Chase Bank. The unsworn confirmation was all that was required by the courts from Chase Bank. While we demonstrated evidence of fraud, none of what we demonstrated was considered by either the state or the federal court. We are in pro per. And like other pro pers, we simply were not afforded our day before the courts that we appeared. We have now extended our complaint to the Comptroller's office pursuant to the Consent Order. They have promptly instituted their process to examine our complaint and concerns - including the $14,000 in payments we made to Chase during the period when we thought it was entitled to our mortgage note payments. We are at 702 270-9937. But look up our case on PACER. Particularly our federal complaint, our opening appeal brief and our reply brief.

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