INVESTORS
INVESTORS SHOULD SEEK HELP FROM BORROWERS
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GOLDMAN SACHS WINS DISMISSAL OF INVESTOR CASE
EDITOR’S COMMENT: Here Goldman Sachs wins a case it surely should have lost. And the reason is the same thing that the borrowers are encountering. The middlemen (investment bankers and all their affiliates) are keeping vital information from the investors that would allow them to plead and prove their case. By keeping the borrowers and investors apart, the investment banks are succeeding at obscuring the truth and getting away with outright theft. The prejudice against the lowly borrower is keeping the investors from entertaining that their interests may be similar and virtually identical on many issues.
By combining forces investors and borrowers could effect a pincer action in which the investment banks had no where to hide. And this is the place for them to come together to do it. Just by comparing notes from both sides, they would each gain additional knowledge and proof of the reality behind the securitization scam. Like, for example, the fact that part of the money they advanced for mortgage bonds was never used for mortgage funding and was instead taken as fees and profits.
And for those high-priced lawyers who have missed the point, here it is: only the investor and the borrower can come into court with the WHOLE transaction and the documents to prove it. The investor received a bond and the borrower signed a note. Unless you connect those two different documents (each being “evidence” of the obligation), you don’t have a case against anyone. And without the homeowners there to affirm the transaction, all you have is some vague equitable right for restitution against people who defrauded you or people who could help you but are not being invited to the party.
It’s so obvious that it makes my head spin. If the real parties in interest — both ends of the spectrum that were defrauded — were to combine forces, the real facts would come out, and real solutions would emerge. Most homeowners would be glad to achieve a settlement or modification in which the investors recovered part of their money. Many channels would come into the market on those homes that are permanently abandoned if they knew that they were not in danger of losing title. And investors would (a) be able to account for the loss in actual dollars and cents (and sense) and (b) recover part of their loss from the homeowner sector and the rest from the the investment banks who are responsible for this mess.
How can investors not see that all the foreclosures are an exercise in defrauding investors? The property is being taken, for the most part lock stock and barrel by intermediaries who have no investment in the loan. This is happening because the investors have abandoned their claims for restitution and are seeking it solely from investment banks. granted, the investment banks should pay the lion’s share of the loss. But investors beware! You are not going to get past the goal line without homeowner help!
With the real parties in interest in the same courtroom, the servicers and the investment banks can be eliminated from the equation since they are using their powers (mostly fictional) to bar settlements that would be far more beneficial to investors than foreclosure. The train is pulling out of the station without you, investors, and at the end of the day someone is going to get a free house at YOUR expense — either borrowers, when the evidence starts being applied, or the servicers and other pretender lenders who serve in that capacity courtesy of your inaction!
Sept. 28 (Bloomberg) — Goldman Sachs Group Inc. won dismissal of a lawsuit brought by Landesbank Baden-Wuerttemberg over losses on $ 37 million in collateralized debt obligations.
U.S. District Judge William Pauley III in Manhattan ruled today that the bank didn’t sufficiently back up its claims against Goldman Sachs, which underwrote Davis Square, a CDO collateralized by residential mortgage-backed securities in 2006, and against Los Angeles-based TCW Asset Management Co., which manages collateral for asset-backed securities.
Goldman Sachs, based in New York, and TCW sold the Davis Square securities to institutional investors, marketing it as a $ 2 billion “High Grade Structured Product CDO” backed by investment-grade mortgage-backed securities, Pauley said in his opinion today. LBBW bought two notes totaling $ 37 million.
Pauley said about 79 percent of the mortgages underlying Davis Square were below prime and at an increased risk of default. He ruled that LBBW failed to allege specific facts to support its claims for fraud and unjust enrichment. He also said the bank was a sophisticated investor that accepted the risks of its investment.
LBBW, based in Stuttgart, Germany, sued in October 2010. The bank claimed that Goldman knew many of the mortgages didn’t conform to the requirements for inclusion in the CDO and that they were riskier than indicated in the Davis Square offering circular. The bank claimed Goldman Sachs also concealed the true risk of the mortgages from rating agencies, which gave Davis Square a triple-A rating.
A voice-mail message seeking comment on the ruling from LBBW’s press services department wasn’t immediately returned after regular business hours in Germany.
The case is Landesbank Baden-Wuerttemberg v. Goldman Sachs, 10-7549, U.S. District Court, Southern District of New York (Manhattan.)
–With assistance from Edvard Pettersson in Los Angeles and Patricia Hurtado in New York. Editors: Peter Blumberg, Michael Hytha
To contact the reporter on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net.
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.
Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, Goldman Sachs, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND 
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WHY MODIFICATIONS ARE NOT WORKING: INVESTORS KEPT IN THE DARK
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INVESTORS ARE KEPT OUT OF THE LOOP
There is an underlying theme in the main stream media as to why modifications are not working. They cite the fact that so many of the modifications end up in defaults anyway, as though it was the borrowers’ fault that the modifications didn’t work. The opinion, unexpressed, is why bother — they are going to default again later and most of them don’t qualify. ALL OF THAT IS WRONG, WRONG, WRONG. It’s not the borrower that is bad, it is the deal. This is the same thing as when they originated these absurd mortgages in the first place. They couldn’t work. And they didn’t. Somehow, the pundits think that if you offer the same deal again it will somehow work now with the economy in the tank? Hello?
- The main reasons that most loans don’t get modified is that the modifications are processed through servicers whose incentive is strictly in foreclosure. If there was any real incentive for them you can bet they wouldn’t lose the paperwork 15 times. Servicers have no interest in modifications and they are under intense pressure from the mega banks NOT to modify because that would reduce the value of the mortgage bonds, which in turn would reduce the assets on the balance sheets of the mega banks. Make no mistake about it. The servicers are working for the banks and not the borrowers, nor do they pay any attention to government policies intended to shore up the modification programs.
- The main reason modifications are turned down is that servicers are ignoring the math for the above reasons. In actual calculations by experts running algorithms developed by the U.S. Treasury department, 80% of the loan modifications would benefit the investors far more than foreclosure. But the servicers would make less — far less, because they end up eating up the entire equity in the property with their ridiculous fees.
- The main reason that loan modifications can’t work in today’s climate is that the investors are being kept out of the loop. In order to really work, there must be an incentive for homeowners to stay in the home and pay the debt that is being offered to them. There must also be an incentive for investors — to see that they will recover more of their money with a principal correction than if they foreclose.
- Loan modifications are currently a farce. The values used on the appraisals when the loans were originated were far too high to be sustained in any real market conditions. With foreclosures still piling up and the inventory of homes to be dumped on the market without any real limit, prices are continuing to drop to historically low levels with no end in site. Foreclosing is therefore the problem, not the solution. The reality is that the homes are worth perhaps half, at best, of what was used as value when the loan was originated. Pretending that the debt is worth the old false value used to originate the loan is not going to make it true.
- If you really want to save the day for homeowners and investors, then you need to some REAL transparent calculations that the investors are allowed to see, where the comparison is made between foreclosure proceeds and the proceeds of modifying the loan with a principal correction to reflect current value. Why would any homeowner agree AGAIN to use a figure that is so high that he knows that he will not repay it in his lifetime and the value of the home will not reach those meteoric heights in his lifetime?
- If investors were allowed to see the modification proposals and apply their own calculations to the deal, there would an enormous jump in the number of successful modifications. That won’t happen unless the investors demand it.
Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, modifications, quiet title, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND 
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