Posts filed under “Really, really bad calls”
Yesterday, I noted that at least one Homeowner had made a “wheresthenote.com” Mortgage Note request, only to see Bank of America report the request as a dispute to the credit agencies, knocking 40 points off his FICO score. If these facts check out, that is a violation of the Fair Credit reporting act, and possibly other state and local laws.
As it turns out Wheresthenote.com has received numerous complaints about this. Their response has been to set up a form to file a complaint to your State Attorney General about illegal bank intimidation.
This may turn out to be a smart tactic. Elected Senators and Congressmen seems to be bought lock stock and barrel by the banking lobby. And the State AGs seem to be harder to buy off. Congress does the bidding of their banking masters, so looking for any positive outcome there is futile. But ion the Fraudclosure issue, the state AGs have been dead on.
Here is the Wheresthenote announcement:
Update: Homeowners are sending us reports of banks responding with threats and intimidation.
It is your legal right to demand to see your original, signed mortgage note.
It is illegal for banks to negatively report to your credit file during the 60 day period after requesting your note simply because you made a request to see it.
If you received a response that you feel is threatening or intimidating in nature, contact your state’s Attorney General and push them to hold the banks accountable under the law.
UPDATE: December 15, 2010 11:05am
Here is a stunning example of this: A state legislator in Arizona was sued for asking Colonial Savings about their Note. Michele Reagan is current on her mortgage, never missed a payment, was never even late.
Her and her husband were sued for even asking. Here is local TV station CBS 5 (KPHO):
“Arizona Rep. Michele Reagan, R-District 8, is better known for fighting for new laws, but now, she is speaking about her fight against a lawsuit.
Reagan is being sued by her mortgage company after she questioned who owned held the note on her home. “It’s really scary,” she said, “I think that this really needs to be brought to light that this is happening to people in Arizona.”
Reagan had wanted to find out she and her husband, David Gulino, could refinance their south Scottsdale home. “In doing research, I began to wonder if the lender even owned the note to my home,” she said. “So I sent them a letter and asked them and asked them several things. I want to know who owns my property. Am I paying the right person?”
Soon after, Colonial Savings filed a lawsuit in U.S. District Court against Reagan and her husband. The company says the couple is trying “to rescind their home loan,” or back out on the loan. “We’re not interested in walking,” Reagan said. “We’re not interested in saying we’re not going to pay. We just need a little help with the interest rate.”
Bank Sues State Lawmaker
KPHO.com 8:55 pm MST March 30, 2010
Here is the latest oddity out of Florida: Homestead-exemption tax break, intended for resident homeowners who actually live in their Florida homes, is instead accruing to the banks that are repossessing homes via foreclosure. The Orlando Sentinel has the details: Local governments across the state are losing revenue because banks are getting the homestead-exemption tax…Read More
Sometimes, the best defense is a good offense. That seems to be the approach that notorious robo-signing firm Nationwide Title Clearing has taken in responding to some of its critics. If you are unfamiliar with their name, you might recall earlier this Fall when depositions of several Nationwide robo-signers employees went viral on YouTube (We…Read More
We were waiting for the end of the world, waiting for the end of the world, waiting for the end of the world. Dear Lord I sincerely hope you’re coming ’cause you really started something. -Elvis Costello, Waiting For The End Of The World > In today’s LA Times, Tom Petruno looks at the Zombie…Read More
by James Bianco Bianco Research November 18, 2010 > The Wall Street Journal – Burton G. Malkiel: ‘Buy and Hold’ Is Still a Winner An investor who used index funds and stayed the course could have earned satisfactory returns even during the first decade of the 21st century. “Many obituaries have been written for the…Read More
The Economist asks: “Fifty years after the dawn of empirical financial economics, is anyone the wiser?” My short answer: “Only the people who understand both the data and its limitations, and not get lost in the illusion of precision.” Markets are driven by myriad factors, most of which are readily quantifiable. But the small number…Read More
GM history in the second half of the 20th century is a story of executive arrogance, missed opportunities, poor decision-making and reckless finance. After WW2, everyone was making money hand-over-fist, and GM became known as “Generous Motors.” Starting in the mid-1950s, rather than risk a strike that could slow production and sales, GM chose to…Read More
For many years, I’ve been a fan of Warren Buffett’s long term approach to value investing. Understanding the value of a company, regardless of its momentary stock price, is a great long term investing strategy. But it pains me whenever I read commentary from Buffett that glosses over reality or is somehow self-serving. His OpEd…Read More
“When will these guys ever learn that maybe, just maybe, these Fed policies aimed at targeting asset prices at levels above their intrinsic values is probably not in the best interests of the nation?”
-Dave Rosenberg, chief economist and strategist at Gluskin, Sheff
It is taken for granted that a rising stock market stimulates the animal spirits, sending consumers off shopping.
The basic premise of the wealth effect is well known: As the value of stock portfolios rise during bull markets, investors enjoy a feeling of euphoria. This psychological state makes them feel more comfortable — about their wealth, about debt, and most of all, about spending and indulgences. The net result, goes the argument, is that consumers spend more, stimulate the economy, thus leading to more jobs and tax revenues. A virtuous cycle is created.
The rule of thumb has been that for every one dollar increase in a household’s net equity wealth, spending increased 2-4 cents. For residential RE, the increase is even greater: Consumer spending increases 9-15 cents (depending upon the study you use) for every dollar of capital gain.
The problem is, the theory is mostly nonsense.
I make this statement for two reasons: 1) the distribution of equities in the United States; and b) the classic causation/correlation issue.
Let’s start with equity ownership. The vast majority of Americans have a rather modest sum of cash tied up in equities. 401ks, IRAs, investment accounts — these are primarily the province of the well off. Ownership of equities is heavily concentrated in the hands of the wealthiest Americans. Start with the top 1%: They own about 38% of the stocks (by value) in the US. The next 19% owns almost 53%. That leaves the remaining 80% of American families with less than 10% stake in the stock market (See Federal Reserve’s Z.1 Flow of Funds report for the most recent info).
How is THAT going to cause a wealth effect? Especially when you consider the median family’s stock portfolio is worth well under $50k. These are the millions of families who are the principle consumers of cars, food, clothing, electronics, energy, health care, etc. To them, a rising stock market is nearly meaningless.
The biggest investment for the typical American household remains their home, with a median value of ~$200k. Put 20% down, and you see a 10 to 1 leverage. The impact of Real Estate on any wealth effect is much greater than the stock market. Unfortunately, homes remain somewhat overvalued — 10-15% by our measures — and are in a downtrend. They are not contributing to improvements in consumer spending in any meaningful way.
Our second factor is quite simple: The causation/correlation problem. In the 1990s, the Fed under Alan Greenspan look backwards, focusing on the stock market gains. But I suggest they would have been better off looking at the myriad factors impacting consumer’s psyches: Plentiful jobs, wage increases, economic expansion, labor mobility, modest inflation, and bountiful credit availability. These are sufficient to explain the behavior of consumers. Its not a secular bull market in stocks that causes the consumer spending — its all the other contemporaneous elements that are the prime drivers. [Update 06.26.12: In other words, the same factors that drive a healthy economy and make consumers feel positive also drives equities higher]
Regardless of your views of QE2 — if the Fed is doing it create a wealth effect, they are wasting their time and money.
The Wall St. Journal, and perhaps other outlets, published an open letter to Ben Bernanke pleading for the immediate discontinuation of QE2: We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The letter…Read More