Finance and Insurance: Powerful Economic Forces Pt 8

Then, I want to move to futures markets and forward markets. A forward contract is a contract made between two parties for execution in the future. Generally, these are called over-the-counter contracts because they’re not arranged through exchanges. We also have standardized contracts that are traded on exchanges and they’re called futures contracts.

The futures contracts were invented in Japan in the 1600s at Osaka and they were developed for the rice market in Japan. They were uniquely Japanese until pretty much the nineteenth century and then they were copied all over the world and are now very important.

I’m going to talk about one futures market that I have been instrumental in developing. I’ve been working with the Chicago Mercantile Exchange to create a futures market for single-family homes, which is sort of my connection to the futures industry. Of course, there are many futures markets that we’ll talk about. They’re very interesting to me and I wonder why the business community isn’t more aware of them. A futures market has a prediction going out years into the future of what every financial variable will be doing, so you can see the future in a sense through the futures prices. It’s not always correct to think of it that way. We have to get into the theory of futures markets. In many cases, that is not the right way to think about futures prices, but there are very important futures markets that – In the next lecture, I want to talk about the various kinds of futures markets that matter.

We have a stock index futures market and notably we have an oil futures market. The oils futures market is very significant because it represents the price of energy on dates into the future. We can now see the price of oil going out years into the future. We’ve just hit $100 barrel price of oil, but what does that mean? Does that mean we’re going to live in a world with $100 oil? Well, not if you look at the futures market, which is in backwardation now and it’s predicting major drops in the price of oil.

Then, I want to talk about options markets. This is getting close to the end of the course. An option is the right to buy something. Typically, we think of it as a stock option. An option is a contract that says you can buy so many shares of a company. The options have been traded for several decades starting with the Chicago Board Options Exchange. But, now there are many options exchanges. We have prices of options that change minute by minute. Now, what do these changes and these prices mean? The options are a very useful technology for managing risks and I think that we’ll see a rapid over the next few decades, we’ll see rapid expansion in the scope of options contracts traded on the exchanges.

Finally, for the last lecture for this semester, I want to pull this together and talk about one of the themes that, is summarized in terms of a theme of this course, which is the democratization of finance. Finance used to be a very esoteric field that only a few people in London and Paris and other world centers understood – Amsterdam and other places where financial technology emerged, but it’s becoming democratized. With each year that goes by, the concepts of finance are being applied more broadly and involving more and more people. With electronic technology, it’s becoming more economical to offer sophisticated financial services to everyone. This is something that we’re seeing. I think the subprime crisis that is the current financial crisis highlights this very well. What does subprime mean? Well, I think it stands for the general population. The subprime mortgage market was bringing people into the mortgage market who in prior decades would not have been involved, would not have had any mortgage.

The problem, of course, with the democratization of finance is that if you raise the participation in financial markets, then you bring in people who are less and less knowledgeable, less and less understanding of concepts of finance and less capable and more vulnerable to exploitation. So, the democratization of finance is, I think, the ultimate mission that I find central to this course, but it brings with it dangerous and hazards and we have to think very carefully about how we do it.

Finance and Insurance: Powerful Economic Forces Pt 8

Interview of CBO Mortgage Whistleblower Pt. 5

But the Congressional Inquiry declined to release the letter, saying that it was a year old.  Despite this announcement by the New York Attorney General, followed within a few days by the Department of Justice and 49 Attorneys General’s announcement of a national settlement on the foreclosure issue.

HOST

Let me ask you this Dr. Pham because you mentioned the Wall Street Journal article.  I want to show our audience some of the things that have been written about your stories.  So we had Huffington Post saying your story was the most important of the day.  It was from Janet Tabaculi after she wrote it in Zero Hedge on the blog which is the only place that story appeared in its entirely.  You mentioned the Wall Street Journal did a story and ABC did a story, but you have some concerns about the way those stories were done.  How was the mainstream media’s coverage of the story?  Why do you think they didn’t address the issues that you talking about, with MERS, with what you are calling foreclosure fraud and some of these other issues?

DR. PHAM

I sense is that I think there is a fear of the systemic ramifications of MERS and there are over 7 billion mortgages that are in some process of delinquency or foreclosure and there are cases before the state Supreme Court that will decided whether or not MERS will have the legal standing to foreclose.  These issues have not been resolved because just a month ago, there was an amicus brief filed with the Florida State Supreme Court, expressing concerns about the finality of foreclosure sales because a buyer of a foreclosed property may not be the legal owner of that property as was decided in the case with the Massachusetts Supreme Court and so these issues still exists.  They are still problematic, but that the media has had great difficulty in speaking about MERS, even calling a foreclosure fraud.  There is such a difficulty in calling, presenting to the courts forged documents or defective documents.  I find that curious and also ABC News had great difficulty or actually, I should say that they excel in distortion, as much as, what we have talked about was unrecognizable by the time ABC News put up their story and depending on the day that you read the story, the version changes.

HOST

Dr. Pham, let me get in here because we are up against and close to the end of the show and I really want to get to this point, you posted in your story that you wrote, who is the CBO serving?  Who is Congress serving?  Who gets its analysis from the CBO?  What do you thing is the answer to that and why do you think that is an important question to be asking?

DR. PHAM

I have a sense of what that answer is, but those are questions that I put to the public.  It is for the public to hear my story and to ask questions about the Congressional Budget Office because the Congressional Budget Office is a very powerful agency that can determine the course of the nation’s policy with the way that it does analysis and its scoring of the bills and it stands on robo-signing, suggesting that CBO take the lead in diminishing the issue of robo-signing to not add to the media hype.  This is the question that I put to the public, for them to ask that the Congress and CBO, who is it that they serve?

HOST

Dr. Pham, we appreciate you being on the show and talking to us.  We are out of time but I do want to tell our viewers, I asked you earlier, why now?  It has been two years since you worked for the CBO?  You said, “because these issues are still so important and there is so much that needs to be looked at.“ So I really appreciate you being on this show to do just that.  Dr. Pham, former principal analyst and financial economist at the CBO.

DR. PHAM

Thank you.

HOST

Now, that’s our show for today. Thank you so much for watching.  Make sure to come back tomorrow.  In the meantime, you can follow me on Twitter at Lauren Lyster and give us feedback on the show.  Catch any that you missed at YouTube.com/capital account.  Also check out Hulu.  Thanks so much for watching, have a great night.

Capital Account TV Exclusive Interview of CBO Mortgage Whistleblower Pt. 5
mortgage expert witness

Interview of CBO Mortgage Whistleblower Pt. 4

The problems in the mortgage market continue to plague us.  She actually says that she was fired; she’s telling us about the issues that she was finding that did play out, which very much play a role today.  One of them is something you may never have heard of, MERS.  It is this database that basically made all these information that used to be filed with the county about mortgages private and this opened the door to mortgage-back securities.  There is a huge trillion dollar market in them.   So let’s bring Dr. Pham right back in to talk about how MERS played a role in all of these so everybody does know the work she was doing.

Dr. Pham, we were talking about MERS and how this brings up issues in the title of these mortgages and the chain of title and it appears almost after reading what you written, that robo-signing wasn’t just advantageous for banks but it was necessary in order to foreclose because the required documents were non-existent or missing.  Do I have that right?  Can you explain?

DR. PHAM

Yes.  As I said before, in the fall of 2010, as the robo-signing foreclosure-fraught problems emerged and this emerged nationwide.  This is not just an isolated incident.  There were legal challenges to MERS.

HOST

But as far as the missing documents, was that a result of MERS and did that lead banks to forge them to foreclose on people?

DR. PHAM

Yes, because MERS can no longer be used to initiate foreclosures in these banks and in the banks’ names and so they have to emerge to foreclose under their own name and if they have the proper documents, they would have presented that to the court and we would not have an issue.

I believe that because of the break in the chain of title and the missing documents especially the mortgage documents and the promissory notes that were not available, that the banks and the servicers had to resort to creating or fabricating or using defective or forged documents to foreclose.

HOST

How did MERS create potentially over $7 trillion in unbacked so-called mortgage-backed securities?

DR. PHAM

The securitization of the mortgages relies on the investors’ ability to liquidate the collateral or access the collateral, which are the homes that backed these mortgage-backed securities.  These mortgages were registered inside MERS, whose legal standing has been eroded by the courts.  So if they are not able to access the collateral, then what is it that backs these mortgage-backed securities?

It is not just an issue of MERS, as well, because the way that MERS was set up, it raises the possibilities that what is it that backs these MBSs.  Some court cases have shown that these banks cannot even show which MBS holds the mortgages that they were trying to foreclose.  So not only does it raises questions about whether these investors are holding secured assets.  As we have seen in the case recently where a large pension fund is suing the trustee, the Bank of New York Mellon for overseeing $30 billion in these mortgage-backed securities that has suffered about $9 billion in losses and delinquencies.  One of the charges in that case is that the promissory notes and the mortgage documents were not delivered to the trust.

HOST

It made possible by this black box where mortgages are sliced, diced, hypothecated you said was the case possibly.  Now all of these you have been investigating, but when you were at the CBO, you were fired.  After that, you wrote a letter to US Senator Grassley about your story because he’s known as an advocate of whistleblowers.

What happened with the letter and the reported inquiry that followed because we contacted his office and he said that it is at a standstill.  We have this letter that he sent to the CBO asking for some information on you, personnel records, email, etc.  CBO tells us that they have no comment.  So what’s the status of all these?

DR. PHAM

The story was not made public until a few months ago thru an article that was put up by the Wall Street Journal in February, but there have been an ongoing inquiry for the past year.  Now, with the way that the Wall Street Journal wrote the article, they found with what came out is they have great difficulty in talking about MERS or mortgage fraud, foreclosure fraud, mortgage, securitization.  None of that came out in the article despite the fact that they had extensive access to the Congressional inquiry.  The day after the Wall Street Journal article came out, it happened that the New York Attorney General announced a lawsuit against MERS.  That would have validated all of the issues that I had written to Senator Grassley a year before.

Capital Account TV Exclusive Interview of CBO Mortgage Whistleblower Pt. 4
mortgage expert witness

Interview of CBO Mortgage Whistleblower Pt. 3

HOST

That blip that they believed would go away has resulted now, a few years later, at a $25 billion mortgage settlement about those very practices related to robo-signing.  Do you see that settlement as a testament to the fact that what you were raising was the right issue to be raising?

DR.  PHAM

It was not just that I was raising it.  These are issues that the Supreme Courts are being confronted with.  Currently, actually just recently, the Washington State Supreme Court, the Oregon State Supreme Court heard arguments on the validity of MERS to foreclose and also it was an issue that required an act of Congress when the issue emerged where Congress quickly passed the HR 3808 Bill that would have made it more difficult for homeowners to challenge illegal or foreclosures that were improperly done with the forged documents, defective documents that were presented to the courts.  So, the settlement, I’m not quite sure what it settled, I think that what it did not say spoke volumes about the issue rather than what was presented to the public with the settlement.

HOST

I want to get more into that settlement as far as forward looking.  But first, I want to back up because what you are essentially saying that you were fired because the CBO didn’t like your pessimistic points of view.  I also should mention that in your personal story that you’ve written, you were told to include research, include analysis from Morgan Stanley, from Goldman Sachs, the big Wall Street banks that were advising the CBO.  At the heart of your criticism was something that you just mentioned, something that I went over my introduction called MERS which stands for the Mortgage Electronic Registry System.

We gave a brief overview of this at the beginning of the show, but could you just expand upon why it is so important in your view to the subsequent crisis we saw in the mortgage market and the larger financial crisis, and I’m talking about MERS.

DR. PHAM

MERS, another word for that is a Title Database that purports to have legal standing on over 65 million, I think it is 70 million mortgages.  As the robo-signing issues emerged in the following 2010, there were also increasing legal challenges in the use of MERS in the banks and Fanny Mae and Freddy Mac’s use of MERS to foreclose because until then or over the time that they founded MERS, all of these mortgages are recorded with MERS’ name and so they relied on the system in order to initiate foreclosures.  At least half a dozen states have invalidated the use or the legal standing of MERS to foreclose.

So we are looking at a loophole system that is not relatively unknown, that holds the title to over 65 million to 70 million mortgages and the ramifications of the lack of legal standing for MERS has serious consequences for investors, for Fanny Mae and Freddy Mac, which are now backstopped by taxpayers.  The exposures that the banks are exposed to in the mortgage-backed securities that they issued, especially for investors as well, because if there is a break in the chain of title, because MERS now has lacked legal standing in several states; that what they may end up with in the $6.5 trillion – $7 trillion in mortgage-backed securities that are out there is that just perhaps these mortgage-backed securities may be unsecuritized or unsecured.

HOST

Dr. Pham, a lot of implications here.  MERS basically opened the door to the securitization of these trillions of dollars of mortgage-backed securities that wreck such havoc in the economy and into the financial system.  When we get back, we are going to talk more about that.  Well have more with Dr. Lan T. Pham, former principal analyst and financial economist at the CBO.  We will be back in just one minute, stay right there.  Also, still ahead, we’ll have more with our whistleblower, Dr. Pham, about how the mainstream media responded to her firing and her story about her job at the CBO.  But first, your closing market numbers.

HOST

Welcome back.  Today we have a very special guest.  We are talking to Dr. Lan T. Pham.  She’s a former principal analyst and financial economist at the CBO, the Congressional Budget Office, supposed to be objective, supposed to be nonpartisan. According to Dr. Pham, she was fired when they didn’t like her analysis because it wasn’t as rosy as they would like it to be.  They don’t want her to talk about problems in the mortgage market, the housing market, problems with robo-signing, with the banking sector and of course, robo-signing.  We know how that turned out.  There was a settlement.

Capital Account TV Exclusive Interview of CBO Mortgage Whistleblower Pt. 3
mortgage expert witness

Interview of CBO Mortgage Whistleblower Pt. 2

So fast forward, in the mid-90s, MERS was founded, by 2007, it registered some 2/3 of all the home loans in the US.  That’s according to Harper’s and it was around this time that the financial system began to experience the credit convulsions that went on to become known as the Financial Crisis.  This led not only to a bailout of firms holding these toxic products, but it also lead to a $180 billion plus bailout of AIG, the largest insurer of insurance protecting against the very products that were being pumped out like sausages on an assembly line and the federal takeover of Fanny Mae and Freddy Mac which is still being footed by the taxpayer in the US.

These are issues that Dr. Lan T.  Pham, former financial analyst and financial economist at the Congressional Budget Office, was beginning to explore in her work there.  That was back in 2010, but as soon as she started writing about things that the CBO didn’t really like, she was fired, that’s according to here.  Now she’s here to tell us her story and what these issues are that are still so important to housing, the mortgage market, to taxpayers, homeowners and pretty much anybody that is watching this show.

So first of all, welcome to the show Dr. Pham.  We are very happy to have you on.

DR. PHAM

Thank you for having me on.

HOST

First, let’s back up.  For those of our viewers and our audience who are not familiar with your story, let’s first start out with who you are and how you came to work for the Congressional Budget Office, in the first place.

DR. PHAM

Prior to coming to the Congressional Budget Office, I was an adjunct professor at the university for a brief time, teaching graduate students in a graduate program the use of economics to examine policy, but I was still very interested in working on real world issues as about a dozen years ago, I had worked in a firm where I was exposed to different aspects of housing finance issues, from the regulatory side to the policy side of banking; all these issues which have evolved to be at the center of the financial crisis in 2008.  So following my teaching, I found myself at the Congressional Budget Office.  At the Congressional Budget Office, I would be what they call a senior staffer or a principal analyst, financial economist in the CBO’s the Financial Analyst Division.

HOST

Okay.  As a congressional senior staffer and financial economist there, your initial responsibilities, as I understand them, were to write a brief to Congress on the state of the foreclosure crisis and the alternative policy options in that crisis, as well as, cover banking and housing.

Now, when you presented this opinion to your supervisors, specifically the CBO Chief Economist and Assistant Director Dr. Deborah Lucas, what was her response?

DR. PHAM

At the time I was writing the foreclosure brief to Congress and also internal memos on the banking and mortgage sectors that would help provide input into the macroeconomic forecast for the country, at the time, the robo-signing of foreclosure fraud issues emerged.  I wrote about that and Dr. Lucas, the Chief Economist, told me that it was an issue of media sensationalism and discouraged me from writing about it.  In response to what I wrote in the memo, she said that foreclosure fraud or robo-signing was an issue that we should take the lead on; that we should not be adding or that we should be adding skepticism to the issue rather than add to the media hype.  That was the response from my writing of that foreclosure fraud and also a reason that was cited in the termination, where the CBO felt that I had poor judgment in writing up of the issues related to robo-signing and what it meant for chain of title issues in mortgage securitization.

HOST

As you said, this wasn’t just a dispute with your boss.  You didn’t just disagree on the core issues, you were fired.  Why do you believe you were fired?

DR. PHAM

I believe I was fired because it was not only an issue of the robo-signing, but I also covered, I wrote about the banking sector and the mortgage markets and all of these issues are inextricably linked and at the heart of the financial crisis in 2008.  There were other concerns raised about the banking sectors. There were issues about the potential liquidity problems, on top of the solvency issues that came out of the financial crisis in 2008 where she dismissed those concerns and reversed.  Actually she went through and changed my memos to reflect the views of the CBO that the banking sector was fine, the robo-signing was just a blip that would go away and that we should not be concerned about it.

Capital Account TV Exclusive Interview of CBO Mortgage Whistleblower Pt. 2
mortgage expert witnesses

Interview of CBO Mortgage Whistleblower Pt. 1

Capital Account with Lauren Lyster

Good afternoon and welcome to Capital Account.  I’m Lauren Lyster here in Washington, DC.  There are your headlines for Wednesday, May 30, 2012.

Right now at the World Bank here in Washington, there is reportedly a global housing finance conference going on.   The theme is the importance of it.  Now, it is focused on emerging markets but how about a lesson in how housing finance can go terribly awry as we’ve seen in the United States.   We have the story that you probably have not heard behind robo-signing and mortgage-backed securities from a US government whistleblower that you haven’t seen on TV.  That whistleblower was fired from the US Congressional Budget Office which is purported to be nonpartisan and objective, remember.  Now, she believes it may have been because she gave an honest assessment of the issues facing the US economy that was at odds with what the CBO and perhaps its panel of economic advisers, including Morgan Stanley and Goldman Sachs, wanted to put out to the public.

So who are the CBO and Congress really serving?  She’s here to tell us why we should all be asking that question.  Remember that $25 billion mortgage settlement that was supposed to help struggling homeowners or victims of foreclosure abuse?  Well, homeowners are suing in one state so the money doesn’t go to filling state coffers instead of going to homeowners.  We’ll talk about it.  Let’s go to today’s Capital Account.

Today we have a story you probably haven’t heard. It’s behind the mortgage mess and foreclosure fraud in the United States.  Let me give you some background before we get to our guest.   In the past century, real estate law and transactions in the US have been subject to state regulations with mortgage documents recorded at the county level.  Now, this works relatively well in a traditional mortgage market like we had for most of American history.  The bank that issues the mortgage keeps the loan on its books until maturity.  However, this makes difficult, if not impossible, the type of financial engine nearing of mortgages we have seen in past years.  I’m referring to, of course, the slicing and dicing, the repackaging and reselling of homes in mortgage-backed securities and collateralized debt obligations, for example, that we saw during the refinancing credit boom of the 2000s.

Now, one glaring reason for this is that every time a financial product containing mortgages is sold, various state laws would require that the sale of the mortgage be recorded in the local county office.  This result in additional costs, of course, paperwork and perhaps most importantly, chain of title trails.  Now, eager to work around these barriers, the financial industry, with all of its innovation, created an alternative system for recording the issuance, the sale and the redistribution of mortgages.  That system is known as MERS.  You probably have never heard of it, at least I hadn’t.  It’s the Mortgage Electronic Registration Systems and it was founded in the mid-90s with the help of the big banks you see here, these are shareholders along with Fanny Mae and Freddy Mac. Now, MERS was created, this is straight from their website, by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper.  According to MERS, this would also help reduce fraud and less fraud means lower cost for all borrowers.

Now, it may actually have accomplished the exact opposite of its stated objective.  So let’s back up.  What this did was effectively replaced the recording and the tracking of mortgage ownership and the paperwork at the county level with a privately-controlled system for tens of millions of mortgages.  Once MERS was instituted, this is what happened.  Lenders were still required to file initial paperwork at the county, but with two key distinctions from how things were done in the past.  First, the paperwork did not need to be filed with the name of the lender.  Instead of Bank of America or JP Morgan or whatever, it said MERS.

That was substituted in place of the mortgage issuers.  Second and perhaps more importantly, any subsequent modification in terms or change in ownership of that mortgage, so what used to be paper at the county and everything was filed through the county; that instead would only be recorded now through MERS, through this database.  Making it effectively a black box for the securitization industry and for the trillions of dollars in mortgages that was subsequently be rolled up, cut up, and sold in complex financial products to pension funds and other investors.

Trillions of dollars in credit protection, let me remind you, was written on these very mortgages to adding another layer of exposure to a financial system run amok.

Capital Account TV Exclusive Interview of CBO Mortgage Whistleblower Pt. 1
mortgage expert witness

The Biggest Mortgage Fraud in History Exposed Pt. 5

DAVE

The notes are basically on Wall Street, are being taken in and spun over anywhere from 9-30 times, maybe more.  We don’t know because they’re hidden in the MERS system.  The MERS Electronic Database keeps track of all the transfers, but none of these are recorded in the Land Records and this is what’s causing the problems with the title.

HOST

And they come take houses, as in some cases, not just when you are behind and then they fraudulently do it.  They just take houses that they never had anything to.

DAVE

Well, it could have been because of the fact that when I was talking to a title guy in Cleveland yesterday, he told me that we see a lot of problems and mistakes that were done because somebody who was preparing the warranty deed, put the wrong legal description on and basically, when they filed the warranty deed, all of the sudden, it looked like that there could be a potential slander of someone else’s title.  And so, when you are looking at a legal description that all of the sudden should say Lot 6, Block 7 but because of the fact that they are having a bad day and looked cross-eyed into the computer and didn’t have enough coffee and hit Lot 7, Block 7, all of the sudden, we have lien on the wrong property.  This is where you see a lot this backlash.

HOST

Yes.  I saw cases, just speaking in California and LA.  They are now having thousands of cases a year of innocent people being arrested because they just clicked your name in a bank robber or a child molester’s area and now your life is ruined.  It so Byzantine that no one can fix it.

DAVE

It’s going to take a least a century to fix this problem if we can stop MERS now.  I do know that there is movement afoot by many legislators who try to cut the MERS equation out of the record dating process…

HOST

Then what does that do to all the derivatives based on it worldwide?

DAVE

The derivatives generally don’t have anything to do with what’s on the Land Records.  They two distinct entities but I mean, you literally could go out if you wanted to and if it was available.  You literally could bet against the weather.  You can say, “You know what?   It’s known that it’s going to rain tomorrow but I’m going to bet against the fact that it’s going to rain.  I bet that it’s going to be sunny.”  So that when it comes to find out that it is not sunny, I’m going to collect on that bet. This is kind of what they did when they structured these loans.

HOST

I know, but I mean, if MERS goes under, they’ll lose more of the cases.  My point is, all these frauds are based on this fraudulent filing system.  From what I have read, the big banks are still doing this.

DAVE

Yes, they are.  This is a thing that we have to – the only thing that I could do because I can’t give you legal advice, I’m a paralegal and not an attorney, but having looked at this from a journalist’s perspective, the only thing that we can do is say no to MERS mortgages.  Just say, “I’m sorry, I’m not going to sign any mortgage paperwork if MERS is involved.”

HOST

So anybody that’s going to buy a house, anybody that is going to sell a house, or reify or already has a house that has a mortgage, you need to get the book, Clouded Titles at inforwarshop.com and read it.  It’s amazing.

Now, continuing here.  First off, here is the toll-free number if you have a horror story, if you have question that he can generally speak to.  We have lawyers on and they’re not going to speak on your case because they don’t know the particulars, so we can’t give legal advice but just general comments or what you would do if you have horror stories, or stories in your family or questions, comments or success stories, we love to hear from you.  The toll-free number to join us is 800-259-9231.  This is a big deal.  It affects our whole economy.  Clouded Titles, Dave Krieger and the book, 800-259-9231.  We will start taking your calls coming up in the next segment.  We will take about 40 minutes of calls.

Continuing, what are some of the other patriot mythology things?  Because people call me, they hear me for 17 years, they send me some of these big stacks of legalese and if I just announced this and that and filed this and I file, magically, bond money that’s under my Social Security Number will be sent to me.

[http://www.youtube.com/watch?v=bR98D3B9lBE]

The Biggest Mortgage Fraud in History Exposed Pt. 5
mortgage expert witness

The Biggest Mortgage Fraud in History Exposed Pt. 4

But imagine old ladies or people who don’t know what they’re doing.  I am certainly no rocket scientist especially 14 years ago.  I have learned a lot since then.  But if you have seen the cases on the news, I mean, we played this here for like CNN where they took in Florida a $1.2 million house that has been paid for a decade plus before with cash, never had a securitized note that it had been sold out in the market.  Explain this to people and let’s get in, as you were, to the Patriot mythology.  Some of the stuff were, “Declare yourself as sovereign of the realm of the Lord and file it”, and they will come and arrest you.  Because that was no different than what the bankers are doing.  If they’re engaged in fraud, you don’t go file something else.  You need to get this book, folks, because this has got a bunch of the cases that actually have succeeded and there are different types of fraud going on.  Please continue, Dave.

DAVE

Sometimes it gets very ugly.  We see cases like the one in Stanislaus County, California where the woman is trying to protect her parents’ house.  It’s in the final stages of foreclosure and you know, these well-meaning souls out there, I call them “patriot paralegals” type up these documents thinking that they can use the UCC common law and basically, they move outside the system’s tools to attempt to enforce their way on the system.

HOST

And the system immediately recognizes that it’s not within “kosher” systems.

DAVE

Exactly and these is what causes the problems and as a result of her filing these documents in Stanislaus County, the District Attorney had her prosecuted.  We’ve have instances, numerous instances that I’ve run across in the state of Texas where somebody has gone in and had written and filed affidavits after the trustees deemed the property was foreclosed.  It was sold.  The trustees’ deed was filed and so instead of fighting it at a detainer hearing which would be the next thing, gets kicked out of your house and so we have to do a forcible detainer hearing.  What ends up happening is this particular person files a whole series of documents starting with an affidavit, rescinding everything that has already been foreclosed on.  Well, it’s a little late for that.  When she went to the county clerk to record it, there was somebody who didn’t even worked at the Clerk’s office that looked at the documentation and said, “I don’t think I’d file that step if I were you.”  She went ahead and did it anyway.  When I got to look at it, I was just like scratching my head going, this is paralleling the case in Stanislaus County.  A judge literally…

HOST

There are a bunch of scammers.  I know a bunch of patriot paralegals who are winning in court and who are having success.  But they’re following cases that have won. They’re following systems that are there.  There is success there as well, but there are a bunch of lawyers – I’ve seen countless cases now that are having victories.  The point is you want to go with real instruments that point out the fraud that the bankers are engaged in.  Don’t counter their fraud with your own made out garbage.

DAVE

Well, look at the Country Land Records as a sacred vault of documents that basically represents a person’s chain of title, from the time they took possession of it and were given a warranty deed all the way up to the current state and condition of title.  Through this chain of title assessment seminars and stuff that I do, I teach people to go in and analyze step by step from the warranty deed forward, to see how many times the chain of titles had been affected.  One of the things that we are seeing is, the more you go out and borrow, reify, reify, get a heel lock and reify; the worse condition the chain of title becomes, because you have more outside third parties interfering in the chain and filing documents that appear to be legitimate when they are anything but.

HOST

Let me ask you this, how bad does it get?  Because there are different economists, experts and lawyers and some of the lawyers that have won in court that you mentioned in your book.  They talk about how many times in derivatives the securitized loans are being sold and the fraud that these groups are holding.  How many times are they selling these titles on average?

The Biggest Mortgage Fraud in History Exposed Pt. 4
mortgage expert witness

The Biggest Mortgage Fraud in History Exposed Pt. 3

MERS, actually only is a computer database that, for all intents and purposes, tracks the sales of these repetitively as they occur on Wall Street between the parties.

The unfortunate thing about MERS, which it admits by the way, is that is not a substitute for the Land Records.  All it is, is an electronic database that is used by its membership subscribers which is kind of like the credit bureaus, if you ever wonder who inputs the data on the Credit Reports, well these are all these members subscribers of the credit bureaus that have access to this information.  The credit bureau is entrusted through the Fair Credit Reporting Act to basically keep track and make sure that everything that is being reported is accurate, which is why we have the dispute process.

You know, just to look just at the opposite, MERS does not have this kind of government regulation as due the banks.

HOST

So it is not a real deed registration. They created it so they could run these scams and sell the deeds over and over again.

DAVE

Well, they sell the mortgage notes over and over again.

HOST

Exactly.  How many times exactly?  But it is the same thing in the final equation?  Wouldn’t it?

DAVE

Well, actually no.  Your mortgage note, it was really sad to hear that…

HOST

I know they’re two different things but they come back to court and try to take your house with it?

DAVE

Exactly, but they try to come with part of the equation, not all of it.  This is one of the things that the attorneys who are studying these stuff and sharing this information with me, they’re telling me that they’re trying to get the entire equation put together and do it in such a way that the judge will believe it because right now…

HOST

So they are engaged in perjury, fraud and constructive fraud, but the issue here is that for years now, they’re getting clocks cleaning courts all over the place and that’s what you break down on your book.

DAVE

A lot of them have been.  We have a few significant cases where the homeowners have won.  We just had a Rico-style action happen down in the Gulf Coast of Florida.  We have an appellant attorney down there in Englewood that actually won a case.  It is Elizabeth Coursen and you know, it has been circulating around the Internet.  I’m sure that if you type in Coursen, you’ll see that case.  We actually defeated a motion to dismiss there on the appellant level, basically we’ve reversed it.

We are having a few victories and then of course, we have some of the sad consequences of what happens to people when they go on and try to fight this thing on their own and they file documents in the Land Records that are not appropriate.  As I was sharing with you before we went on the air Alex, this woman in California filed a document in the Land Records in an attempt to stop a foreclosure of her parents’ home.  Now, she was convicted of two felony counts and sentenced to a year in jail.

HOST

Stay there.  We are going to come back and break that down because there are people out there on the Internet that will tell you stuff like this.  This is the power of common law.  You are filing and swearing to something.  Let me tell you, it is fraud if it’s not true.  Now, the banks are doing it, but just because they’re engaged in fraud, doesn’t mean we now run to beat them and engage in fraud.

BREAK

Dave Krieger is the guest in our studio.  You have literally hundreds of trillions of dollars worldwide by the Chinese government, Russian government, European governments and pension funds.  This is also done in Europe to some extent, though not as bad as here, but some countries are even worse from what I’ve read to where it’s all just fraudulent. I remember, they make you put money in escrow to pay your property taxes.  On my first house like 14 years ago, I moved into this little-bitty house that I had put my money in.  About a year later, I was told that my mortgage had been sold two or three times  and it’ is finally Bank of America.  Every few months, it’s a new place to — back then, it was send the check in and then they said, “You don’t have $3,000 or whatever it was on escrow.”  I hadn’t checked the escrow.  We did.  They’ve taken the money and then they would let me know that they are starting proceedings to take the house that I have put money down on and have been paying on for a year and half or so.  I had to go get a lawyer and send them a letter and threaten Bank of America.

The Biggest Mortgage Fraud in History Exposed Pt. 3
mortgage expert witness

The Biggest Mortgage Fraud in History Exposed Pt. 2

Yes.   It is $50 trillion they made off derivatives.

HOST

By the way, you don’t add here, you are Vietnam veteran, combat veteran.  What was it like for you to see the country become this corrupt?

DAVE

You know what?  From a Vietnam vet’s point of view, it is sad that we have to see all these stuff that went over there.  I mean, first off, most of the vets in Vietnam didn’t even know why they were there.  In most of the stuff I was involved in was involved with Army security agencies and so I don’t talk about that.  It is just one of these things where as far as combat goes, you know, we didn’t see a lot of that.  We were more behind the scenes.

HOST

You were more of an Air America capacity. (Laughter)

DAVE

You got to love that.  You got away with that one.

HOST

Loving government, huh?

DAVE

I got to love it.  Air America, Black Ops, all of the other good stuff.  We know that there is some amount of that going on but…

HOST

It is a very loving government.

DAVE

The bigger problem we have now is trying to…

HOST

I have some family in Army security and you know what they did in the US?

DAVE

I’m ears.

HOST

I said it before.  I’m not going to get into it.  Anyways, we will be right back ladies and gentlemen, stay with us.

BREAK

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HOST

Here it is.  Deed, who really owns your home?  Over 700,000 or that 70 million?

DAVE

70 million.

HOST

70 million titles.  I can’t read that, it is so big.  The property is clouded.  Is yours one of them?  This book can help you find out and fix it.  I use information similar to this book to make sure with my house that I had that.  It goes on to break it all down, Clouded Titles, new updated edition, with case studies and cites and Dave Krieger is our guest.   It is available at infowarshop.com.

As I was saying, an invaluable book to have.

Okay Dave, this is a short segment, the long segment coming up.  Break down how the scam worked, what happened, what MERS is and let’s get into the usual suspects.  I mean, it seems like everything the Attorney General is involved in it, even back during Clinton, with his law firm.  He was Deputy Attorney General, getting all these change, where this is going and let’s go into the patriot mythology, getting a lot of people in trouble versus real stuff that’s in your book and then let’s take phone calls.

DAVE

Sure.  Well, Alex, the thing started in 1995.  It was a concept of how can we basically control, track and transfer these mortgage notes on Wall Street. So Fannie Mae, Freddie Mac, the Mortgage Bankers Association, American Land Title Association and all the major banks got together and came up with a game plan and they got Covington and Burling law firm in Washington, DC to issue an opinion letter and basically, what it did was it gave what we call Mortgage Electronic Registration Systems or MERS claims to do what it’s doing in America.

What in essence happens is that when you go to the closing table and you sign this piece of paper which represents a mortgage or deed of trust, there is an 18-digit MIN number or MERS Identification Number that is the property of MERSCORP Holding, Inc. that appears near the document title.   The things that we have been trying to do is to get people to recognize this, which is one of the fundamental reasons I wrote the book because if you knew what the consequences were of getting a MERS loan or MERS mortgage.  MERS doesn’t have anything to do with the actual mortgage note itself.

The Biggest Mortgage Fraud in History Exposed Pt. 2
mortgage expert witness