In Need of Serious Repair: The U.S. Mortgage Finance System

By Martin Hutchinson

In much of the discussion about the collapse of the U.S. housing market, commentators have assumed that the massive run-up in property prices that preceded the subprime-mortgage meltdown was simply the result of a speculative frenzy that became a full-fledged market bubble.

But that’s not the case at all.

The bubble and subsequent crash were inevitable under the current system of housing finance. Fundamental changes must be made.

Standard and Poor’s recently projected the likely future loss rate on the $650 billion of subprime-mortgage-backed securities that are still out in the marketplace. From that we can estimate the losses S&P is projecting on the actual mortgages themselves.

According to S&P, senior AAA-rated bonds will pay out about 60% of principal, junior AAA-rated bonds about 35%, AA-rated bonds about 5% and lower-rated bonds nothing at all. Since about 75% of subprime mortgage-backed securities were AAA rated, we can calculate that S&P thinks subprime mortgages will eventually return about 40% on the original principal amount.

That’s a startling number.

Losses Still to Come

If you had a portfolio consisting entirely of 100% loan-to-value mortgages, on which the appraisals were accurate but a large percentage of the borrowers had poor credit, and house prices were destined to drop between 20% and 25% over the next few years, you’d expect to lose 25% - or perhaps 30% - of principal, but still manage to keep 70% to 75% of your money.

When you had a foreclosure, there would be costs involved that increased your loss. On the other hand, some of the borrowers would be able to make their mortgage payments, leaving you with no loss at all. Thus, if subprime mortgages are expected to return only 40%, almost half of them must have had some fraud involved, either by the borrower, the mortgage broker or the appraiser.

Let’s now turn to actual housing prices. The S&P/Case-Shiller Home Price Indices of home prices in the Top 20 urban markets dropped a bigger-than-anticipated 12.7% in the 12 months that ended in February - the worst showing since the index debuted in 1991. What’s even more alarming, however, is that the decline is accelerating. In February alone, prices dropped 2.7% - the equivalent of a 28% decline if this rate persisted for the entire year.

That should have alarmed both homeowners with large mortgages and mortgage market participants - if prices were to drop 30% to 40%, instead of the generally expected 15% to 20%, even prime home mortgages would get in trouble and the losses would be appalling - in the range of multiple trillions of dollars.

Since the first-quarter vacancy rate in U.S. housing - owner-occupied and rental - increased to 2.9%, the highest level in 50 years, we may indeed be approaching such a bearish scenario.

However, when you look at factors like the ratio of house prices to incomes, it becomes obvious that the problem is not the current drop, but the previous rise. Since World War II, the average house price was 3.2 times the average income. By 2006, however, the average house price had jumped to 4.5 times the average income. With house prices outrunning incomes in that way, mortgage financing was bound to become more and more risky, and a substantial drop was eventually inevitable - to take prices from 4.5 times income to 3.2 times would require housing prices to plunge 29%. And that doesn’t even consider the possibility that prices might overshoot on the downside.

The principal reason for the excessive rise in house prices and the high level of fraud was the housing finance system. In the modern system, the originator of a home mortgage loan is paid a fee on the origination, and never has to worry again about the credit risk on that loan, which is passed off to investors through a process known as "securitization."

Because securitization separates the mortgage originator and the actual investor, the investors - often foreigners - have no idea of the actual underlying quality of the loans that they’re purchasing.

The mortgage broker’s incentive is to maximize loan volume - pretty much regardless of whether or not the borrower can afford the loan. Falsification of documents, suborning of appraisers, and other similarly reprehensible machinations becomes a normal course of action in such a situation, as does turbo-charging the housing market to valuation and sales levels it cannot sustain. A system in which prices are forced up to unsustainable levels and fraud is rampant is broken, and needs to be replaced with something better.

It Was (Once) a Wonderful Life

Years ago, the United States had a superior home-financing system; it was extolled in the 1946 Jimmy Stewart movie, "It’s a Wonderful Life." Home-mortgage loans were made by local institutions to borrowers whom they knew personally. The system had some inefficiencies. For example, if the housing needs in a particular area expanded rapidly, there might be a shortage of funds, so that mortgages would be unavailable. However, banking is mostly national today, so local funds shortages would be less important, although there would probably be a corresponding decline in personal knowledge of the borrowers.

It’s not true that the Jimmy Stewart system of financing home mortgages was less efficient than today’s: That’s a myth put out by Wall Street, which has been one of the chief beneficiaries of the recent shenanigans. (Riddle me this: Do you think that "George Bailey" - Jimmy Stewart - ever got a million-dollar bonus?).

If you look at the U.S. Federal Reserve statistics on U.S. interest rates (which started recording home mortgage rates in 1972), you will discover that in 1972-78 - when the Jimmy Stewart home financing system was still mostly in place - 20-year Treasury bonds yielded an average of 7.41%, while 30-year fixed rate home mortgages yielded 8.49%, a differential of 1.08%. In 2000-06, an equivalent period that predates the recent worries about credit risk, 20-year Treasuries yielded an average of 5.28%, while home mortgages yielded 6.50% - a differential of 1.22%.

Thus, the "spread" of home mortgage interest costs over Treasury bond yields, the most appropriate measure of home mortgage costs, has widened by 0.14%. That may not sound like much until you realize that it’s an effective cost increase of 13%. Where did that increase go?

While some lawyers made money, too - what did you expect - it’s largely Wall Street that would rather you didn’t think about that question.

Two Key Changes

We can move back a long way toward the Jimmy Stewart system, but to do so two things must be changed:

• First, we need to close down Fannie Mae (FNM) and Freddie Mac (FRE), the government-sponsored enterprises that guarantee most home mortgages. By putting a quasi-government guarantee on the mortgages - they’re not quite government-guaranteed, but close (another worry for the taxpayers of America) - you take away the local credit risk and make them easy to pass around the money pits of Wall Street. Most countries don’t have the government-guarantee home mortgages; it’s entirely unnecessary as good home mortgages are fine credit risks on their own.

• Second, you need to enact some kind of small transfer tax on paper shuffling that makes securitization of mortgages expensive. The British have a 0.5% stamp duty on share dealing; even a 0.1% duty per transfer would probably be enough, here. It would make packaging the mortgages and turning them into mortgage bonds just a little less competitive, compared to the other alternative of having local banks or bank branches lend directly.

Once the financial incentives had been tilted against securitization, and the foolish government guarantees had been removed from the mortgage market, home-mortgage lending could revert to the Jimmy Stewart model. (You might want to leave a small loophole for low-income housing, on which mortgages - otherwise non-creditworthy - still could be guaranteed by Ginnie Mae, part of the U.S. Department of Housing and Urban Development; it seems voters want the government to subsidize housing for the poor and help them get mortgages).

Overall, under the new model, home mortgages would be a little cheaper, you would go to a proper bank - and not a salesman - to get them, and housing prices would remain reasonable.

Of course, thousands of rich Wall Streeters would be thrown out of work. There’s a pity.

Comments

[MSmailbox]

Whenever, I see people who are scrambling to jump into an "easy-money" situation, I get suspicious. I saw this, two or three years ago, when people having no background in mortgage "sales" were being recruited to do the selling (appraising, etc.). Excited folks who were working as musicians, bouncers and bartenders, only months before, were working long hours and recruiting their friends to enlist. Why? Front-end commissions.

Why not pay someone, who has a serious desire to remain in the industry, a reasonable salary and then, give them annual bonuses, which are based on the performing loans, which they've handled in the past? If there's a default on a loan they've done, then the "royalties" on that particular loan, cease. Wouldn't that be more professional? Having a feedback-loop would cancel out fly-by-night apparaisers and their companies, leaving the real experienced and committed people, handing the loans. Up front pay, never seeing the results of your mistakes and then, improving your performance, and hiring people for just a few months of intense work, only to see them "retire," or return to bartending, is stupid. Long-term, fair and conservative approaches are essential elements to quality business.

[MSmailbox]

One more thought... I'd like to see a "Win-Win" scenario, rather than a "Win-Disaster" scenario, anytime. "Win-Win" is good for America.

[tcornelison]

You are insane. You assume that everyone paid on commission is inclined to criminal activity and does not care about their customers. Default rates and losses on sub-prime debts are not at 60% nor will they ever be. The next phase of adjustments for subprime Alt A and other debt instruments are likely to be write ups to account for the over zealous write downs that have already occurred. If you eliminate the GSE's the consumer will have a very difficult task in finding a mortgage. There would no longer be two central enitities setting guidelines for mortgages. Local banks and lenders would have to create their own set of rules which would limit the availabililty of financing since no one would want to buy loans which were created to unknown guidelines (somewhat like what happened with subprime). This is without a doubt the biggest load of crap I have ever read on Seeking Alpha. As for MSmailbox's comments, your suggestion about royalties demonstrates that you have no idea how the mortgage industry works. It is impossible. In the news today MBS are beginning to sell again. It is amazing that you guys do not understand that a free market works. Lenders made serious errors in their risk evaluation and underwriting of loans in markets where speculative purchases were driving prices. If you take these few speculative markets out of the picture you have a normal cyclical Real Estate correction taking place. My suggestion is that you go comment on something you understand.

[Malkiel]

Wow, it's just amazing how regressive the thinking can be in the backwaters of financial journalism. Where were you during the '90's when your free-market libertarian brethren in Congress allowed national banks to dismantle the local banking system? And Fannie and Freddie exist in large part to overcome the deliberate redlining of minority and poor neighborhoods built into the Jimmy Stewart world, a not inconsequential social problem. As for inevitability, under your reasoning bond ratings must all be inflated because bond rating agencies have the same reasons to cheat as mortgage originators, don't they?

Securitization and Fannie and Freddie are the things that were working right in the mortgage market, not the babies to be thrown out with the bathwater. Fraud and lack of managerial controls by securitizers should result in punishments, regulation, and control of those aspects of the market. Deliberately damaging the liquidity securitization brings to the market and the level playing field Fannie and Freddie offer is some kind of financial Stalinism that comes from the sadistic imagination of a moralist posing as a journalist...

[moonscope]

Banks, Congress Wall-street and Politicians Today havn't got a clue. Foreclosures have been snowballing downhill for say about 20 Years, the first area Foreclosure created another, then two more, now everyone's hit, fix the problem from the bottom-up, one ISF or missed payment becomes a cash-cow of fee's. Banks need to help people early, fix that problem in-time fixes Airlines and all, Future marketed Loan's, became Fuel marketing that became rice and corn, next is water and War.
Banks need to manage troubled financed borrowers = Line of Credit, Direct Deposit and Automatic Bill Payment, Eliminate the bottom-feeders and their Jobs. Tell People Sell Boat, Horse or Cut-out Cable Tv and force existing rules of Law for needy by Lender support. 911 made Airlines broke, what is fixed better? Every President wants Line-item Veto and Congress porkbarrels! Our Miles, Inches, Foot, Dozens and Quarts don't Jive Internationally, think BTU Gas can't be Scaled otherwise same thing with Barrel of oil, move Troups out of Bagdad Palaces and sell New Embassy, Tent-City and Patrol, building Airport Base by/for oilfield, rented to Troups was way to fight from the get-go, no more green zone. Now my Problem that impacts in Fourteen Hours.


Born 09/17 Constitution Day, “We Hold These Truths to Be Self Evident!” Justice Denied because Damage, simply relates, International Commerce’s permission that Payments, Deserve Credit, Affronted Authority Squanders Laws Subservient by emboldening forsakenly.

Standard 6.5% 180 Month Fixed 5/01 Loan $77,000.00 No Second, $60,000.00 Available Credit Card Credit “0” Due, all 2001 Coupon on-time Payments then Lender Transferred, 1/02 2/02 3/02 Timely Payments then 4/2002 to 4/2003 Escrow Shortage $103.34, equivalently 60 Month Deprived Life-time earned Accountability.

Ignored DEED Preemption Clause Precedent Complicated Loan Transfer, “Proof of Payment” Investigation Team’s attempt at Principal Misapplication reversal Deducted Escrow to avoid Contractual Damage, but misapplied all Funds Erroneously, that became evident a week later when Escrow lacked Funds for County Tax Payment, assuming Faults Blame elsewhere Team was simply Forced to Claim Escrow reductions Funds 1098 Taxable. Concealment became Anti-Trust {Tying} by omitting 29 Day’s from the after Transfer available Loan History {Lender admitted “Principal Curtailment” and erroneously Misapplied Escrow} 48 Months Concealment of both equates “Escrow Curtailment.”

Escrow Reduction Applied November, 2001 Paid by both Lender’s and December, 2001 on all Loan History’s was absent of Payment itemization, then and now.

In 2002 In-House Forth Credit Report Agency {Named in Testimony} held Loan Hostage by omitting 12/2001 Payment History accreditation {Void/Blank = Shaded Box} blocking outside Refinance Forcing Bankruptcy and Bankruptcy Trustee Paid in Full to Close account Years Ago, Reopened Three Times only to refund Amounts.

Demanding Credit for Payments at Bankruptcy Conformation Hearing, Judge Ordered’ Attorney File “Proof of Claim” {Judge Demanded Signature} Staying Conformation for 60 Day’s, Allowing Time to expire resulted in DEED Preemption Clause Sequestering to safe Harbor Possible Lead Plaintiff’ Class Action’ effect on Market Stability, Attorney was Forced to relocate Case-Load outside Houston.

New Attorney Payment History R.E.S.P.A. Request was Ignored, then Better Business Bureau expelled Lender for Ignoring My R.E.S.P.A. Request that intentionally allowed release of Bankruptcy Stay’s Advancement, “But” Lender Archive’ Department, Unlocked by E-Mailing 48 Month Coveted Loan History on same Day Showing, November, 2001 Escrow Reduction & “Principal Curtailment.”

Lender Formal Statement of Accountability was forced for both of the Misapplications in 2001, then Core Adversary’s Hearing. Judgment Ignored Admittance Statement accepting instead “Common Practice” Defense of Breach of DEED Contract and Escrow Anti-Trust, then Revised DEED Precedent Clause by Cropping Top half off Plagiarizing relative Paragraph, Awarding meager Damage for Ignored RESPA Request.

October, 2005 Trial’s 02/23/2006 favor Judgment Award, hired Appellate Attorney Day after Case Denial with Referral by Co-Council, from Bar Association recommended Office Appointment, {10 Day Appeal Time-frame was Coveted by Judge} “on Time by RULE # 2005” Appeal Denied for Time expired {15th Day of 11 Day Home Mailbox Served, -5 Day RULE = 6 Day Allowed – Sunday’s?} Excusable Neglect Appeal Denied by ENRON Judge, Fifth Circuit Denied overruling same, Appellate Attorney failed to explore Merits or Post Case to Printer for U.S. Supreme Court Cert. Petition, then December, 2007 Lender Returns $7,515.25 Loan Payments, Mooting Judgment, Self Selecting Damages, Threatening Foreclosure 05/06/2008 to “Case Law” Theft “Common Practice,” Blanketing Breach of DEED Commitment and Escrow Anti-trust Defendable for Corporate Megalomania.

1. Sued Washington Mutual for Damage, after forcing Formal Admittance Statement that through Loan Transfer Principal and Escrow were reduced. Equating {2001 “Principal Curtailment” Breach of DEED 180 Month Term Commitment $778.34} and {2001 “Escrow Curtailment” Anti-trust $637.22} Loan Manager Coveted the Pertaining Loan History, holding Loan Hostage for Lender Arrear Error of Twelve Escrow Shortage Payments amounting $103.34 that Started April, 2002 Ten Months Old Loan, all Payments Current Paid-up on-time before April, 2002 Credit Report Damage Blocked outside Refinance September, 2002.

1A. Refinance Block’ forced Bankruptcy, Loan History was Coveted from Attorneys until released Stay {$1,415.56 missing for 48 Month’s, now Located without Credit!}
By release of Stay, Loan Closed, Loan Histories Transferred to Archive’ Department and Teller unlocked by E-Mailing, revealing both the Coveted Bank One “Principal Curtailment” Abandonment of December, 2001 and Homeside Lending Erroneous attempt at “Curtailment” reversal that Admitted Erroneous Misapplication of Escrow, in November, 2001, The “Escrow Curtailment!”
All Proof Relates Both Lenders Credited November 2001 and Abandoned December 2001 to create the Twelve $103.34 Escrow Shortage Demand. Bank One and Homeside Lending Refused Bank One Loan History, and Loan Manager’s Protection of Loan History was accomplished by Lender receiving Loan on 11/01/2001, Dating All Loan History’s after “Escrow Curtailment” Reduction.

1B. Bank One N.A. or Homeside Lending F.A. needed to Write-off and Pay Back the Escrow’s $778.34 “Principal Curtailment” or Originate Principal Term Commitment financed. Problem was Failure to Communicate, reversing the 2001 Damage. Instead Loan Manager sent $336.00 Check from Escrow already in Shortage, Credited Wrong Month, Coveted the first 29 Days of Loan History to Protect both “Curtailments,” reported Escrow Reduction on Form 1098 Taxable and Falsified Credit Report by Shading Box Void/Blank. Fearing Credit Reporting exposure, Loan History was protected until release of Stay Day, when Archive responded by E-Mail supplying Loan History, their Fault Admittance Statement followed. The Audacity was Damage Admitted and shortly later Disputed on Court.
The Extreme Audacity is Damage amounted to Theft Concealed, with all Dispute’s Dispelled, Judge picked O-well’ to Plagiarize Damage Commitment!

1C. Foremost’ Credit Report must Notate Bankruptcy’s “Faults Blame” on Loan’s Credit Report to equate Real Damage reversals Fair Non-monetary Justified repair.

1D. ({“Point Counter Point”}) Loan History Abandoned December of all Credit and November “Escrow Curtailment” needed Additional $131.12 if it was intended to Reverse “Principal Curtailment” Damage, Lender Statement, Detailed “Erroneous” Escrow “Misapplication.” Escrow Shortage Increased Payment Demand for Twelve Months by $103.34, but Lender Attorney Claims 11/10/2001 Escrow Reduction was accomplished on 11/28/2001 to Pay December, Loan Histories started 11/29/2001?

1E. Curtailment Accountability by Lender! Loan Forced Insolvency by Escrow Curtailments = Bank One “Principal Curtailment” $813.48 Payment $-34.14 P.M.I. = Damage $-779.34
Bank One Transferred Escrow on 11/01/2001 $1,289.85, Lender Paid 12/10/01 County Tax $1,168.26, Escrow $336.23 Returned 12/12/2001 {Interest 11/28/2001 Paid $383.88, Principal 11/28/2001 Paid $253.34} = $-851.86
Bank One Damage $-779.34 + 4 Escrow Payouts $-851.86 = $-1,631.20
Loan Escrow Balance acquired in 2002 before 4/2002 accounted by Subtracting from the 2/22/2002 Statement’s, Escrow Shortage Demand.
1/2002, 2/2002, 3/2002, Escrow Payment’s of $175.27 x3 Months is $525.81, 1/2002 & 2/2002 P.M.I. is $-68.28. Escrow Paid 02/22/2002 $525.81 $-68.28 = $457.53.
TOTAL ESCROW SHORTAGE $1,189.35 + $457.53 = $1,646.88.
Escrow Balance from Damages and Pay-outs on 12/12/2001 $1,631.20
Escrow Shortage Demand and Adjustment related to 2002 Demand = $1.646.88
$15.68 Unaccounted but that’s Quoting Step (2) Escrow Analysis Statement “$1,189.35 divided by 12 Month’s = $99.11.”
Step (3) Actual Demand is $1,240.08 divided by 12 Month’s = $103.34 Accounting $1,240.08 + $457.53 = $1,697.61 - $1,631.20 = $66.41 expecting P.M.I Pay 3/2002 $-34.14 = $32.27 Unaccounted.
The above 17 Lines details every Lender Action’s Activity, every 2001 Payment was Prompt on-time and every 2002 Payment related above was Prompt on-time, Loan was 10 Months old on 01/04/2002, December 2001 is absent of History, and the Direct Source of the 12 x $103.34 Escrow Shortage Demand that Forced Insolvency by Curtailments and Attempted Curtailment.
Brief General review not Actual; trade Tax Payment for Transferred Escrow = 0
Bank One “Principal Curtailment” Damage $-779.34 Damage!
Escrow Reduction Paid November, 2001 $383.88 + 253.34 = $637.22 Damage!
Escrow Return $336.23 Damage! $779.34 + $637.22 +$336.23 = $1,752.79
Damage’s $1,752.79 Divide by 12 Month’s = Shortage of $146.06 not the $103.34. Both 2002 Loan Histories Received, Loan Statements Received, and Credit Report would have Itemized December 2001 Action, Loan was Coveted 48 Month’s.
General Review; skip $637.22 Escrows! $779.34 + $336.23 = $1,115.57 = $92.96 not $103.34 “Curtailment” is Damage, Overall Principal needed Pay-back = $779.34.

1F. Day Rate damages was Substance of Lawsuit, now over 2,345 Day’s Deficiency {Asked to Testify sought after Damage’s reply was Unqualified allowing Self-Prejudice equating $1,000.00 Day-Rate without happenstances President understanding or Doubling’s Practicality} $1,000.00 Award was Appealed.
Bankruptcy Attorney received expense Judgment, December, 2007 Washington Mutual used the Courts to return $7,515.98 Loan Payment, Muting Judgment with Fault Admittance, skirting Commitment Damages keeping Curtailments, picking Damage with willingness, forfeiting Accountability and Address.
Then in 2008 Served Trial Damage Award, belated 24 Months, without requested % Interest, Lender Intends to Foreclosure 05/06/2008 seeking Out of Hand Dismissal, if Federal Anti-Trust Statue of Limitations carries Four Year’s, early 2012 allowed to Include First Attorney if/or Defended Trustee’ Charge.

1G. Demanding Credit for Payments made at Bankruptcy Conformation Hearing, Judge Ordered Attorney to File “Proof of Claim” on the recorded record. Judge Required and Accepted My’ Signature to Conform Bankruptcy but held Paperwork for 60 Days to Stay Conformation, Ignoring Judge’s 60 Day’s Attorney Quit all Houston Caseload recommending, Bar Association Attorney Hired to Defend.

1H. Meager $1,000.00 Award for ignored R.E.S.P.A. request was Timely Appealed, because Attorney’s Proof of Claim” was ignored, Attorney R.E.S.P.A. request was ignored {ruled inadmissible} and ignoring My Lay-person R.E.S.P.A. request that included ignoring the Better Business Bureau {Washington Mutual Chair expelled} Release of Stay was achieved, Archive’ Department halted Progression, 28 Months of Homestead Squatting. Insolvency’s Destitute.
Denied funds lost, damage award and costs, Appeal was to Fund’ Preparation for related Substance seeking Constitutional Justice of and including, First Attorney’s Systematic Drain of Both Bankruptcy Trustee Account Charges and Rav4 Bankruptcy Account Charges that began by advancement of Principal Term Commitment with New Coupon Book that Drained Rav4 San Antonio Credit Union Auto Loan Account, including Second Attorney protecting First to Vengeance.

2. Defendant was colluded from Washington Mutual to former entity Homeside Lending under Seal’ later reversed for Damage Award Payment.
Attorney’s Loan History request was Ignored, Certified Mail, R.E.S.P.A. “qualified written request” was Inadmissible.
Attorney’s Filing of Core Adversary allowed first release of Stay Action.
At Pretrial Hearing unknown Surrogate Attorney appeared to Defend stating Case was just dropped in Lap without Time for review, or Proper Court paperwork. Judge threatened Dismissal, Ordering Attorney’s Appearance to Defend Three Day Core Adversary Hearing.
Washington Mutual Halfheartedly offered Arbitration if Costs were split, before Second Pretrial Hearing, wanting preferred Arbitrator, not being a College consideration passed.

3. Washington Mutual Trial Arguments related to Line-item Challenge of Washington Mutual Fault Admittance Statement that was evidenced, countering self by newfound Date Augmentation, excusing Accountable reasoning with Assorted Derelict Avoidances of Law.

3A. Credit Report received, detailed Itemization 12 Months back only, the December, 2001 was generalized by combining all the past. Exact penny for December, 2001 Dollar Proof was missing, as was Loan History Attorney’s requested, Twelve $103.34 Escrow Payment’s Increase Demanded 04/01/2002 was the Damage’s result, if December, 2001 was Paid Action would be recorded with Attribute, not Concealed from Attorney’s or retrospect implied, 11/10/2001 Statement was Itemized Curtailment, not Curtailment anticipation for 11/28/2001, all Homeside Lending History Concealed from 11/01/2001 to 11/28/2001 starting 11/29/2001, Anti-Trust Merit was explored by Loan Manager every History request.

3B. Judgment accepted Lender Defense of “Principal Curtailment” claiming “Common Practice” relating to Breach of DEED Commitments, highlighted damage, Precedent, Ironically, Separate the Lender’s Damage of “Principal Curtailment” “No Contest I Win” then Washington Mutual Pay’s Ten-fold for “Escrow Curtailment” or the like of C.E.O. Stock Option Award Pay, but Fighting both, at the same Time’ the 14 Day Loan Damage, Confounds Justice.

3C. Judgment accepted Lender Defense of Erroneous Escrow reduction claiming “Common Practice” Argued Funds reduced in November for December Payment, Argued Taxes increased Loan Payments, Argued “Principal Curtailment” reduced Loans overall Interest despite reduction of 180 Term Commitment, Argued {48 Month} “Concealed Prepayment” was not a “Curtailment” but was a Prepayment, Argued Escrow was reduced on 11/28 not 11/10, Argued April ISF Check corrected in May, Paid, April {belittlement} In Attorney Cross Lender Admitted “Curtailments” created the Escrow Shortage Demand that started in April, Admitted Large May Payment made Loan with “Curtailments” 100% Current including Late Fee’s, before 06/01/2002 {a Day or Two} and Admitted before April 2002 all Payments were respectfully Paid before Due.

3D. Judgment accepted Lender Testimony that Escrow Surplus return from Escrow already in arrears was unexplainable, root stem relates to Choice of intentional Damage Doubling, relative to Loan Payment Investigation Teams requirement of Canceled Check Front and Back sent in November, 2001, Damage’s Stemmed from Closed Faulty Investigation Report that resulted in week later, unknown Tax Payment responsibility Escrow Damage, Teams final Conclusion Dated Escrow reduction of 11/10 suspended to 11/28 but missed the Fact that it was Erroneous.
Simply forcing Escrow reduction to be reported on 1098 Tax Form as received Funds, and forcing December 2001 Payment History’s Shading/Blank Void report to Credit Agency, Second Time Simple Penny for Penny Swap opportunity missed.

4. Judgment ignored Core of Core Adversary Hearing Primary responsibility of Damage Awarding the DEED Stipulation Paragraph Verbatim and then Assessing Day-rate Damages for forced Bankruptcy and somehow skewed to ignore Published Guilt Admittance evidenced.
Precedent Clause clearly defines Prepayments requirement of Signed Authorization, forbidding Concealment that intentionally, Contractually Itemizes abuse Damage Award Amount to Protect Paperwork of DEED, separating Escrow Damage’s independently is the best Road to Travel.
Importance of Paragraph Commanded notation on Judgment, but Judgment edited Substance Plagiarizing Importance, without Authority Cropped-Off Top-Half of Paragraph, in effort to revise intended meaning, by omitting forward Substance, “Quoting” only bottom half of Paragraph their Collusion Supported Curtailments, Defendant was changed under Seal, amounting Special Prosecutor.

4A. Just Eleven of the Coveted Ten Day Timeframe allowance was actually Served, to review, itemize, find, hire and Convince Appellate Attorney Versed in “Bankruptcy Appeals!” *1. Attorney that wanted Case, Questioning, own Personal Expertise, Denied Case Days before Appeal was filed. *2. Bar Association recommended Appellate Attorney’s often Co-Counsel, Case Denial Office meetings Referral, resulted in next Day Appeal. *3. Appeal Arguments were E-Mailed / Spammed to numerous {over 50} Appellate Bar Attorneys. *4. Trial concluded 100 Day’s later Home Mailbox Served Delivery, if Box received Inspection on that Day, that’s Eleven Day’s from Served to Appeal minus the 5 Day RULE, Trial Attorney called many Days Later without Interest.

4B. Fifteen Day after Judge Signed, Attorney Appealed but foolishly, Persistently, Ignored Merit’s arguing only Excusable Neglect in every Appeal.
Draft for Supreme Court Petitioned attempted to Argue, that Judge Denied the actual meager Award {counterproductively suggesting compliance.} Judgment accused Predisposed to Bankruptcy aspirating Peasant’ or Premonition or Intent. Judge ignored Federal Bankruptcy RULE #2005 Precedent extension of 5 Day Appeal Timeframe Law without excuse or reasoning.

4C. Core Adversary used for DEED Precedent, and Escrow Anti-Trust review, outranged allowed Importance extended, whereas simple U.S. SUPREME COURT DEED Paragraph Deciphering is needed to allow Case Law, Foreclosure reform, until/forcing only DEED found Borrower Protection, achieves Lender revision, without Creative Control effort, Industry’s destined to Flounder.
Coveted 10 Day’s Appeal Allowance was misunderstood beforehand by Trusting Attorney assurance that 30 Day’s and not 90 Day’s was the allotted Appeal Timeframe. Conveyed in Confidence, waiting for the minute Courtroom doors opened Pretrial.

4D. Trial ended October, 2005 Memorandum Judgment 2/23/2006, 2/25/2006 BNC Mailing, 2/27/2006 Appeal Served U.S. Mail Standard Mail-box Delivery if Mailbox was inspected on that Day, Appeal to extend Filed 3/10/2006, 15 Day count, 11 Day Served Count, Federal Appeal RULE #2005 regulates 5 extra Days, allowing Count 6 Day Received to Appeal and Sunday’s might Not Count, Rush to Dismiss failed Arithmetic Prudence or Constitutionality, Imagination offers Collusion to Covet Attorney Theft Protection or Justice’s Blind Permanence, for same, or Protecting Wall Street assumption.

4E. Bankruptcy Judge Chaired from Conformation to Award Appeal is famed for Worlds largest Historic Billions of Dollars Bankruptcy Case Dismissal, Schlumberger oilfield Russia claimed 10 day appeal time-frame expired, without exposing Time-frames exactness beforehand, Clerk of Court recorded holding Judgment Two Days before Posting, Mail Delivery took Two Days, Attorney called Two Days after Home Mail-Box Delivery stating not willing to pursue further.
Appeal being Denied, Mimicked Trial Merits Ignored. Lender Mooted Judge then Judgment, only Arguing to Moot Guilt Admittance Lender Statement.

4F. Justice Circumvented the Federal Bankruptcy Court “RULE” that extends all Judge Appeal Timeframe for Five Additional Days RULE #2005. Famed Houston ENRON Judge received, and Denied Second Appeal, Appeal waited for ENRON Trials Conclusion. Fifth Circuit refused to overrule ENRON Judge, Printer never received Desired U.S. SUPREME COURT Appeal and Time expired, Merits were never exacted or explored.

4G. Thousands of Bankruptcy’s relate and Hundreds of Bankruptcy’s have resulted since, because Proved Damages were Denied, Lender Accountability Reforming Day-rate Damages was Award sought, if 05/06/2008 Foreclosure receive Action, Theft becomes allowed, Case Law results that Lender Defense of DEED restricted Curtailments, Errant Escrow Reductions and Misapplications are “Common Practice” Defendable, opening the floodgate of Attorney exploitation, Theft Defended as “Common Practice” allowable, Loan Abuse put NOTE ahead of DEED {even NOTE Preemption Clause front Page allowance for the Courts to respect Lender Loan Accountability or Discipline the lack-of, by enforcing Verbatim respectfully} and the Anti-Trust was simple Escrow abuse by Date Manipulation.

5. Priority became Credit Card over Home Loan seeking outside Refinance of $100,000.00 for 25 Years to install Rental Home on Lot was Goal, Original Planned Goal of Home Reconstruction inside Work was achieved 9/02 ready to extend Longer Terms by Refinancing for Rental Trailer house and Outside Reconstruction Goal remained. Numerous Refinance attempts achieved sudden Quick Denial, November, 2002 after Home Inspection Citi-Bank Reported Incomplete Loan Payment History before April 2002 needed addressed, Forced into Bankruptcy with $8,000.00 at hand, Work on-call Oilfield Casing/Pipe unlimited Hours/Day’s, States/Land/Offshore, Paid-off many Credit Cards but included 2 Auto Loan Payments, expecting resolve with Attorney Assistance, needing only Loan History.

5A. On April 2002 Loan Damages created insurmountable Escrow Shortage Arrears increasing the next Twelve Monthly Payment Demand from $813.49 / $812.28 to $915.83 effecting accountability, $8,000.00 new Credit Card Home Improvement Balance reached around 30% Interest exactly and instantly relating.

5B. Credit Report Damage of December, 2001 Shaded Box Void/Blank entry Blocked outside Refinance to force Bankruptcy, then Bankruptcy Attorney was denied “Proof of Claim” {Judge ordered at Conformation Hearing, Staying Conformation 60 Day’s} included Bankruptcy Attorney’s R.E.S.P.A. “qualified written request” that was also being ignored, again Payments were halted for Court appearance to Demand Credit for Check Payments, Judge and Attorney missed Attending Release of Stay Hearing 09/02or04/2004.

5C. 9/02or04/04 Bankruptcy Trustee was Chairing / Ruling all Proceedings and Release’s of Stay for absent Judge that Busy Day {related need for Core Adversary option} Trustee Delayed Home’s Release of Stay for 30 Days Ordering Attorney’s Presence on 10/02or04/2004.

5D. Trustee on 10/02or04/2004 Conversed or Ordered, Attorney File Core Adversary Hearing, at that same timeframe, My Lay-person R.E.S.P.A. “Qualified Written Request” crafted was being ignored. The Better Business Bureau assisted and Expelled Washington Mutual’s Chief Arbitrator Chair, including Three Year Suspension for being ignored.
R.E.S.P.A. “qualified written request” is simply a request to open Loan Discovery by itemization of Questions. Constructing request follows a formula, Lender’s Time-line required to first admit receiving, second form reply and Third reach resolve.

5E. Attorney Formally Back-dated R.E.S.P.A. Request to expire the Time-line allowance when Posting and it Predated our first meeting, understanding’, relates to Judge’s refusal to allow into evidence, confusion relates to Attorney Award and Justice denied, compounded Damage is, Justice Denied harbors Protecting Attorney Malpractice’s of the First Attorney’s Theft that Second Attorney was Protecting.
Yes; Attorney Deserves Pay for Work, Independently of Malpractice Goal against Attorney’s Insurance/Bonds that assuredly relates Out-of Court Settlement Awards and License’s, but Judge’s Judgment and Appeal refusal Stands restrictive of Jurisprudence, Prejudices sometimes avoid defined Identifiable reasoning’s.

6. Trustee at Hearing on 10/02or04/2004 Conversed or Ordered Attorney to File Core Adversary, and later Attorney repeatedly related, Intent to File Core Adversary Hearing was Progressing up to the 12/15/2004 Release of Stay.
Lender Executive Response Center Letter 11/01/2004 Promised Response.
Core Adversary received no Action before 12/17/2004. Payment Arrears were not sent awaiting Judicator notice of filing, expecting Loan History exam, Discovery, Proof of Forced Bankruptcy exposure.

6A. Homeside Lending Loan Manager became’ Washington Mutual Loan Manager.
Loan Manager protected Loan History until the release of Stay 12/15/2004.

6B. Loan Manager’s 48 Months of Loan History Protection was Unlocked to Washington Mutual Archive’ Department after Released Stay, on a whim and Prayer Archive’ was called.
Washington Mutual Loan Archive’ Department E-Mailed History on 12/15/2004.
Washington Mutual was Informed to explain, discrepancies on 12/16/2004.
Bank One “Principal Curtailment” and Loan Manager’s Escrow reduction became Evidence.

6C. Washington Mutual claimed My Ignored R.E.S.P.A. request was on File.
Washington Mutual claimed to have Never received Attorney R.E.S.P.A. Request, Faxed Attorney R.E.S.P.A. Request to Washington Mutual Archive’ 12/16/2004.

6D. Attorney Office Meeting after 12/17/2004 for Legal Process, Core Adversary intent with Court unfiled, Loan History was reviewed with Attorney Lender Telephone Communications.
Washington Mutual Admitted Both Lenders Damaged Loan, with Formal Written Document of Lender Damage Itemization.

6E. Received in Mail Court’s Core Adversary notice of Filing, Dated Filed on 12/15/2004.

7. 48 Months of Loan History Protection forced Loan Manager to rush release of Stay on 12/15/2004 to avoid “Suspended” Core Adversary Hearings Filing, but on the same Day, Washington Mutual Archive’ Department E-mailed Coveted Loan History that Self Evidenced Missing Payment direction Detail, inherently revealing Escrow and Loan Damage.

7A. Washington Mutual was forced into written admittance, Loan Damage Assessment Statement that exacted, Bank One Misapplied Payment calling it “Principal Curtailment” {Curtailment = Lop-off liken-to Horse’s Tail!} Revealing Lender Despising Lender that Compromise’s All Accountability’s, explaining the Spite My Words “Escrow Curtailment” Draw’s.

7B. Washington Mutual written admittance exacted Loan Manager Errantly Misapplied Escrow attempting to reverse “Principal Curtailment” then Argued in Court opposition claiming November, 2001 Escrow reduction was Intended anticipating needed December, 2001 Payment, all Payment Date Augmentation and Conflicts in History were Dispelled’ with Evidenced Proof, Lender was restricted to Defend “Principal Curtailment” and “Escrow Misapplication” offering only “Common Practice’s” and a don’t know why, Escrow Surplus Check sent.

7C. Coveting was preformed to protect Lender from Contractual Damage expenses of $10,286.25 in trade falsified Credit Report to force Bankruptcy, ignorant of simple Penny for Penny exchange in 2001 to reverse Damage.

8. 80 Month’s Ago’ Loan Transferred 11/01/2001, Lender Denied Payment Credit of $778.34 for “Principal Curtailment” and Lender Denied Payment Credit of $637.22 for “Escrow Curtailment” recorded on First real-time Payment Breakdown Statement of 11/10/2001 {Lender Investigation Team required Canceled Check Front/Back Proof of Payment early 11/2001 and incorrectly reported resolve around 11/28/2001} equaling Loan Payments of $1,415.56 missing Credit to Date.

8A. Loan History that was Coveted to Protect Breach of DEED Contractual Damage expenses of $10.286.25, was followed by Errant Escrow reduction, that forced False Credit Report to Protect Lender from Both “Curtailments” forcing Voluntary Bankruptcy, now 80 Months without Payment Credit. 11/28 to 12/12 = Damage Time-frame!

8B. Bank One N.A. Breach of DEED for $10,286.25 Damage became contractually Transferred on 11/01/2001 to Homeside Lending, with the $1,289.85 Escrow Funds.
On 11/10/2001 Lender Statement detailed Escrow reduction, Lender Investigation.
On 11/28/2001 Loan Manager erroneously reduced Escrow, attempting Damage reversal.
On 12/10/2001 County Tax Payment $1,168.26 created Escrow Shortage, amounting to $-515.63, Second simple Penny for Penny exchange reversal opportunity missed.
On 12/12/2001 Escrow Surplus of $336.23 increased Shortage amounting to $-851.86.
Escrow Reduction of 11/28/2001 was Reported received funds on 1098 Tax Form.
On or after 01/01/2002 Homeside Lending received first, after Transfer Loan Payment.

9. December 2001 was Void of Payment on all received Loan Histories “Then and Now.”
December 2001 is recorded as Shaded Window {Void/Blank}. Void reported on real-time Loan Statements also was reported to Fourth Independent’ in-House’ Credit Report Agency {Named in Testimony} that Supply’s the Three respected Credit Reporting Agency’s.

9A. Both Bank One and Loan Manager, repeatedly refused Production of Loan Payment History’s, relating to Escrow Shortage in 2001 and Histories received in 2002 hid the Curtailments, Denying Attorney’s the Loan History up to 12/16/2004.
Denying Bank One History accomplished, “Principal Curtailment” Protection.
Denied Homeside Lending Loan History was accomplished by Lender receiving Loan on 11/01/2001, Dating Loan History to start 11/29/2001 absent of the Escrow Reduction.

9B. Bank One’ sent Account Closed Statement related to Loan Transfer, claiming $812.48 Payments were $920.78.
New Lender Posted Escrow Reduction Statement on 11/10/2001.

9C. Homeside Lending early November 2001, Investigated Bank One Payment by Requiring Front/Back Canceled Cheek Proof for their Investigation Team {2001 was “Paid in Full”} 11/28 relate Date Investigation Concluded?

9D. Requested received Payment History early 2002 began Loan History on 11/29/2001 omitting Escrow Misapplication “Escrow Curtailment.”
Requested received Payment History April 15, 2002, began Loan History on 11/29/2001 omitting Escrow Misapplication “Escrow Curtailment.”

9E. Lender Demanded that All Escrow Shortage’s be made Current, before further Account Review or Payment History updating, around April 2002.
Twelve Escrow Shortage Payments of $103.34 increased Payment Demand from $813.49 / $812.48 to $915.83, Started on April 2002 and Check did ISF.

10. Bank One accepts Payment then Mails Statement with one Tear-off Coupon, December Coupon was Paid, Lender Paid $34.14 December PMI, then Breached DEED Commitment Contracted, Applying then Reversing December 2001 Payment to Pay Principal only, before Transferring Loan, called “Principal Curtailment” Homeside Lending received $1,289.85 Escrow with Loan on 11/1/2001. Absent of Loan Commitment Information Requiring Escrow to Pay 2001 County Tax.

10A. Loan Originator “Principal Curtailment” was a Breach of DEED Cover Page Lender Signed, Bold Print requirement of Signed Authorization Clause as it relates to Prepayment specifying instead of Damage Arbitration, all Loan Originator received Funds and earnest Funds returned, separating a Prepayment from Coveted Curtailment to Contractually support the 180 Month Term Commitment DEED Paperwork, $12,291.54 – Outside Costs = $10,286.25 Commitment Damage.
Fourteen Day Damage from 11/28/2001 to 12/12/2001 intentionally Concealed for 48 Months, “Principal Curtailment” Damage of $10,286.25 Justifying Interest Due Today.

10B. Loan Manager’s “Escrow Curtailment” Relates from Day Loan Transferred, forced Bankruptcy and Rushed Release of Stay, Damage Justifies Tenfold Accountability counting Interest and Damages to Allow Attorney Theft Suit, Attorney Malpractice Suit {assure Out of Court Settlement’s} and San Antonio Credit Union Damage is simply New Rav4 Settlement.

11. Attempting to reverse “Principal Curtailment,” Lender inadvertently reduced Escrow from $1,289.85 to $652.63 according to Real-time Loan Statements Itemization on 11/10/2001 not on 11/28/2001 as Argued.

11A. Requested Proof of Canceled Check Payment was sent to Lender early 11/2001, Pretrial Discovery Question relating to that Investigations’ Timeframe, and it’s results both repeated and ignored, Argument that Escrow reduction was on 11/28/2001 Flounders, Argument it Paid December Flounders, and Stands Disputing Washington Mutual Admittance Statement, but that requires Diligent Securitization of Verbatim the avoided Discovery Question’s intended to simplify everyone’s understanding of exact Day Escrow was Reduced and Investigation Ended, nonetheless Escrow reduction is Abuse and Misapplication Damaged .

11B. Washington Mutual’s Loan Damage Acknowledgement Report exacted Bank One Action a “Principal Curtailment” and exacted Homeside Lending Errant Escrow reduction a Misapplication, reducing Escrow is damage, Errant is a wrong, Misapplication is a mistake.

11C. Errant “Principal Curtailment reversal attempt, applied funds to Month Bank One already Credited, allowing 11/2001 to be Credited by Both Lenders, because December is absent of Documented Credit, Repeatedly! Applications Location Discovery required Accountability! Reduced Escrow Concealed’ from Loan History’ for 48 Month’s’, by Definition is “Escrow Curtailment.”

11D. County Tax payment of $1,168.26 on 12/10/2001 created Escrow Shortage, amounting to $-515.63 so Loan Manager Posted Escrow Surplus return 12/12/2001 of $336.23 to increase Escrow arrears, amounting to $-851.86.

12. Homeside Lending Loan Manager’s Coveting of the Bank One 2001 “Principal Curtailment” was complicated by the Erroneous Escrow Reduction that became intent to deceive lasting for 48 Months to protected Contractual Damage expenses of $10,286.25 in trade for forcing My Bankruptcy, now 80 Months without Payment Credit.

12A. Homeside Lending’s failed attempt at Damage reversal’s deduction of Funds from Escrow was admitted by Washington Mutual, Erroneously Misapplied.
Washington Mutual acquired Homeside Lending and the Loan Manager that Testified for Washington Mutual’s Attorney being Sued, Loan Manager was reduced to Arguing’ the ”Bank One N.A. “Principal Curtailment” was “Common Practice” Defendable.

12B. Loan Manager was reduced to Arguing’ the Homeside Lending inadvertent Escrow Reduction was “Common Practice” Defendable, despite ruining Credit Report, Falsifying 1098 Tax Form, Forcing Bankruptcy, Releasing Stay, Arguments were all Moot because Washington Mutual accepted Faults Blame in Written Statement of Bank One “Principal Curtailment” and Homeside Lending Erroneous “Escrow Reduction.”

12C. Loan Manager was reduced to Arguing’ the Escrow Surplus return from Account in Shortage was beyond Testimony Explanation, actuality it was Damage Doubling in Nature.

12D. Bank One did Report 2001 Tax Form 1098! Homeside Lending Reported 2001 Tax Form 1098, claiming Escrow Reduction Funds as Received Funds, following Loan Transfer, First Payment was in 2002, Exampling boundless Dismissing mindset forsaking Bankruptcy.

13. December 2001 was Void of Payment on all received Loan Histories “Then and Now” December 2001 is recorded as Shaded Window {Void/Blank.} Void reported on real-time Loan Statements also were reported to fourth Independent in-House Credit Report Agency {Named in Testimony} that Supplies the Three respected Credit Reporting Agency’s.

13A. Demanding on the Recorded Record, Credit for Payments made, Judge at Bankruptcy Conformation Hearing, Ordered Attorney to File “Proof of Claim” Trustee and Lender were Chaired {Judge Required Paperwork Signed or Foreclosure} Sixty Day “Stay” of Conformation Resulted for Canceled Check Dispute resolution.

13B. Lender Chaired Hearing to expect History request and either refused to reply or Attorney Ignored Judge Order requirement of “Proof of Claim” but Time Expired, Attorney said on Phone that he was/is Quitting, Rav4, Home Loan Payments halted, Months Later Large Credit Union Check Posted to make Account Current, Auto Loan {Rav4} Arrears Paid in Full before New Attorney Hired.
Later Attorney sent New Letter-headed San Antonio Credit Union Payment Coupon Book that had Additional Principal and Coupons, Stating he Quit and Suggested Attorney.

13C. March 15, 2004 “I am Referring all My Clients Letter” from Attorney, Notating enclosed New Payment Coupon Book for Rav4 Auto Loan. New Attorney R.E.S.P.A. Request Date’s 2/12/2004 before our First Meeting. Substitution of Council Order 04/23/2004 R.E.S.P.A. Request Date related Lender Damages for being ignored, from backdating Action, if ever Posted, Attorney Claims sent Certified Mail.

13D. Attorney Quit, including sending bulk of Houston Bankruptcy Case-load to Board Certified Attorney I hired, Charged an additional $1,200.00 to My Bankruptcy Trustee as a Wanton Disregarding parting Gift.

14. Instantly New Attorney sent Homeside Lending Certified mail R.E.S.P.A. “qualified written request” with Guidance Attorney’s Legal Secretary Helped with Rav4 Credit Union Communication about New Term Commitment additional Principal, Payment Coupon Book former Attorney Devised.

14A. San Antonio Credit Union Denied to Attorney’s Legal Secretary the Adjusting of Terms Principal or sending New Coupon Book with Three acquired Additional Month’s, Despite Coupon Books at Hand, unresolved from Credit Union Denying books Existence, Loan Payoff Schedule was requested and received.
Two Additional Months were Added to the Attorneys’ Three Months creating Loans Demand of Principal without Accounting Interest, that was Larger than Original Loan’s Principal Financed, again resolve was Denied, Current on Rav4 Loan, Fighting Home Loan, anticipating R.E.S.P.A. Response, told Credit Union to expect No more Payments, will properly clean before Repossession Day, awaiting R.E.S.P.A. Response lasted past Rav4 Repossession, Attorney was being indifferent about Rav4 and Ignored R.E.S.P.A.

14B. After Repossession Trustee reported itemized Deficiency Amendment of $2,526.87 to Rav4 without Accountability, Charged by First or Second Attorney before Repossessed and of course again After Repossession about $2,500.00 Amendment Charged. Trustee Clerk, Stated all Amendment Charges Paid without Question, again “Common Practice.”

14C. Seven Months later with Loan History Denied {E-Mailed to Federal Regulators & Assumed Regulators that Lender fails to respond to Attorneys R.E.S.P.A. Request, fair assumption’s Review was Forced and Privileged ignored by Lender} Payments were Suspended for Audience with Bankruptcy Court resolution, 09/02or04/2004 Attorney and Judge failed to attend release of Stay hearing, Bankruptcy Trustee was Ruling Release of Stays for Judge, Release of Stay was Suspended, Trustee required Attorney attendance 30 days later 10/02or04/2004.

14D. Briefly First Attorney failed Judge “Proof of Claim” Order and overcharged Trustee’s Bankruptcy Fee’s, Raided Rav4 Bankruptcy Account and Raided Rav4 Credit Union Account before Attorney or Credit Union Raided Rav4 Account.
Second Attorney Protected to Malpractice R.E.S.P.A. Failed to Attend Hearing, Claimed intent to file Core Adversary, but allowed release of Stay, sent Substitute replacement Attorney to Pre-Trial Hearing and Misdirected Appellate Attorney with Confusion.

14E. Ignored Attorney R.E.S.P.A. request was used to format “My layperson” R.E.S.P.A. “Qualified Written Request” Posted Certified Mail using California address supplied by Security Exchange Commission relating to Washington Mutual, it was Ignored, request Sent Certified Mail to Bank One, Bankruptcy Trustee and Washington Mutual, was also Posted regular Mail to Homeside Lending, Attorney, former Attorney D.O.J., C.C., O.T.S. and Better Business Bureau and more including California Attorney General that Promised Active Silent Case Review, but Lender moved to Nevada, not Seattle, Request was E-Mailed to R.E.S.P.A, H.U.D, U.S.A.G. Bush and Blair were at Ranch, Sent to Blair, Tony Snow and more.

15. Better Business Bureau was being Ignored and reported no response from Washington Mutual, I challenged their Existence, then Chief Arbitrator Chair with Membership was removed from Washington Mutual for Three Years, understand Loan History was supplied on release of Stay Day 12/15/2004 Pretrial, itemizing the Curtailments, Washington Mutual Admittance of Fault called for Court Action.

16. Sued Washington Mutual Core Adversary under Seal Judge changed Defendant to Homeside Lending allowing Washington Mutual Attorney to call Homeside Lending Loan Manager to Testify, at Pretrial Judge claimed Defendant changed for Simplicity? Reversed for Judgment Award Payment, but Board Certified Attorney Certified Mail R.E.S.P.A. “qualified written request” {sent to Homeside Lending ignored by Washington Mutual} became Inadmissible in Court!

16A. Week before Three Day Core Adversary Hearing was Pretrial Hearing, unknown Surrogate Attorney arrived to Defend stating Case Dropped in Lap without review or required Documentation filed, Judge Stayed Pretrial hearing for 30 Days, Threatening to Dismiss unless Attorney attended to Defend, fear of voicing any Objection Resulted.

16B. Judge Allowed My ignored R.E.S.P.A. request to received the only damage Judgment $1,000.00 {thanks to the B.B.B. support} substance matters related in R.E.S.P.A. request that Judge took under advisement at Trial pertaining, was absent from Judgment and ignored to date, Also recorded in Testimony Ignored {Blank} Discovery Questions.

16C. Houston Bankruptcy Judge Chaired from Conformation to Award Appeal, famed for Worlds largest Historic Bankruptcy, Schlumberger oilfield Russia claimed 10 day appeal time-frame expired, without exposing Time-frames exactness beforehand, Clerk of Court recorded holding Judgment Two Days before Posting in Mail that took Two Days, Attorney called Two Days after Home Mail-Box Delivery stating not willing to pursue further, Ten Days received to Appeal after Judge Signed, Award was Served in Mailbox {Day Ten, Co-Council Denied and Referred} Eleven Days from Served to Appeal and Appeal to extend was filed, and Denied.

16D. “RULE” Rule of Law Circumvented RULE #2005 exacts Bankruptcy Court Appeal Mandate allocation of Five Day extension for Time to Appeal, Judge sets whatever Appeal Timeframe and RULE extends by Five Days to eliminate Weekend, Holiday Working Day Confusions, Deadline was met for Merit Appeal Trumps rush to Dismiss by Judge and Attorney.

17. Both Bankruptcy Attorney’s Reviewed Loan and Payment History Request then New hired Appellate Attorney directed Excusable Neglect Defense, extensive Office hours relating to Line-item Case History reviewed, shared in Office, spent on Phone and E-Mailed, Trial Bankruptcy Attorney Name on Appeal remained.

17A. Real Malpractice Balance awaiting Loan resolve. Trial ended 100 Days later Judgment Signed, despite evidence Clerk delay Posting for Postal Delivery {6 Day received, 4 Day from Attorney} Appeal Denied for expired days.
Second Appeal was Judge famed for ENRON, refused Excusable Neglect Appeal, docketed first following Enron Trial conclusion, Houston we have a Problem reasoning or D.O.J. Broke Problem reasoning!
Fifth Circuit Appeal was asked to Rule over ENRON Judge’s refusal of exploring Excusable Neglect, Imagine that!

17B. Appellate Attorney failed to Post Excusable Neglect Case to Printer for Cert. Petition U.S. Supreme Court, Merits were neglected and contrary then time expired.

17C. Foreclosure offers Different Protections from Justice relating Financial Accountability to the Following; Homeside Lending is/or/and Washington Mutual, First Bankruptcy Attorney, Second Bankruptcy Attorney Protecting first, Bankruptcy Trustee and San Antonio Credit Union all Misdirected Funds, Dismissing Accountability.

17D. Foreclosure Relates to the Following; Bank One Transferred Account with intentional Damage, Judge allowed Theft “Common Practice” Defended, Enron Judge Protected Both Houston Courthouse and D.O.J. Systematic, Fifth Circuit Protected D.O.J. Appellate Attorney ignored Merit of Assured Supreme Court Victory that Promised Numerous Damage Awards, by seeking and Crediting Skewed Trial Attorney Misinformation.

18. Closed Loan with $60,000.00 available on Credit Card, “0” owed, Complete Plumbing Electrical and interior Walls replacement ended September, 2002, Mid 2002 Priority became Credit Card balance over Loan Payment {Loan History omitted to Protect “Curtailments” Escrow Arrears were Demanded when all Payments were Current on-time, Lender Failed Accountability and refused Bank One Loan History, then Credit Report Blocked outside Refinance} $8,000.00 Credit Card % increased from around 5% to 20% to 30% April, May, 2001, Bankrupted! Day Rate damages, was Substance of Lawsuit, $1,000.00 Award was Appealed, Bankruptcy Attorney received expense Judgment.

19. December 2007’ Washington Mutual returned $7,515.98 of Loan Payments, by Trustee Opening and Reclosing Bankruptcy to Transfer Payment, Mooting Judgment with Fault Admittance, skirting Commitment Damages, keeping Curtailments, Foremost Credit Report Notation of Faults Blame notation on Loans Credit Report equates. Theft reaches Tuition by Foreclosure, as does “Common Practice” Case Law Defense.

[scotts]

The author fails to take into account the early 80's when double digit interest rates made local banks leery of lending money. Many articles were written on how we would never see single digit home mortgage rates again. The creation of a mortgage capital market through securitization was a wonder to behold. Unlike people in most parts of the world, Americans were able to get single digit 30 year fixed mortgages... a real speculation on the part of the holder of the paper. That securitization got taken to extremes and fraudlent extremes at that was a result of lack regulation under "free market" Republican administrations.

[Tom Lindmark]

Moonscope-Dude no one wants to read your tirade so quit posting it everywhere.

As far as this article goes, it does seem a little bit extreme. Capital market inovations evolve and are sometimes a bit too successful for their own good. Such would seem to be the case with securtization. A wonderful concept that people took advantage of. The same types of arguments were advanced against junk bonds in the early 90's. Guess what? They stayed around and are now a very important part of finance. Here's a link to an article I wrote comparing subprime and junk bonds- blog.metro-real-estate.com/?p=182 .

[Happy Destiny]

The current credit crisis arises from a simple fact – most homeowners are definitionally insolvent, ie the value of the current and long term assets is exceeded by the value of the current and long term liabilities. Therefore, due to the insolvency of many homeowners (now called “homedebtors”), the creditors are faced with the prospect of calling the collateral which secures the loans. The collective call on the loans that is occurring now is having the obvious and observable effect of rendering the whole communities of homedebtors insolvent. The collective loss of value in real estate, particularly in California, over the past 12 months has proceeded on a scale and order of magnitude that is beyond anything that any sane, non-University of Chicago trained economist could have ever envisioned. However, the fact is real value, in terms of both corporate balance sheets and the economic viability of whole communities, is being lost at a rate never seen in the history of the United States of America.
However, one man’s economic disaster, is another wise man’s economic opportunity. Presently, the collective secured lenders to homeowners have very good long term investments. These loans are secured for the most part by single family homes purchased by individuals who have hopes, dreams, and aspirations of a better life for themselves and their offspring. These individuals still have these dreams, and a wise investor should be able to see the simple manner of capitalizing on the present situation. The simple fact is that on a per square foot basis, many homes in the fastest growing areas of southern California are being sold by foreclosing lenders for the same prices as in 2000 or 2001. Thus, any person with a long view and deep pockets can pick up a few properties, place a tenants in these lovely newer homes, and grow rich slowly.
Why can’t wall- street take the long view. The simplest way to solve the present crisis is for creditors to in effect do a debt for equity swap with any homeowners who have a relatively good prospect for making payments on a going forward basis. A typical loan modification on a debt to equity swap would involve the lender agreeing to accept a payment based on a principal amount of 80% of the present fair market value of the property. This, however, would not be a simple write down of the principal on the note. The homeowner and creditor would agree that if the home were sold at anytime in the future, the creditor would share (50/50) in the appreciation of the property above the discounted loan amount. Thus, if a homeowner pays off the note based on the 80% present day fair market value, then the lender would still have a 50% interest in any appreciation of the property at any time it was sold. Given the historical value of real estate in California, this would probably reap incredible profits to those creditors with a long enough view to negotiate these types of deals. The only issue is that the present creditors would have to lower their short-term return expectations. However, I suspect that most to the players have already made this short term adjustment.
What about so-called piggy back loans? Most piggy back loans were either 80/20 or 90/10 loans, where the first loan was 80% of the appraised value of the home, and the second was 20% of the appraised value. To facilitate the proposed modification, the two lenders would have to agree to take a the same share of the new loan (80% of today’s FMV). Obviously, there will have to be some government intervention to facilitate this proposal, but government intervention structured in the proper manner can force creditors to take the long view for the benefit of whole communities, as opposed to the short-term rapid market correct view, which does not take into account to subsidiary negative effects on communities as a whole.
In short, creditors must either voluntarily recalibrate there holding period of these loans (the typical holding period is 5-7 years), and take a long view of 15 to 20 years, and decide that they too, like America’s homeowners, are investors in the equity of the American Dream.

[johngonole]

Unlike many of the commenters here I wholeheartedly agree with the article. The primary reason for the bubble was indeed the securitization of mortgages and the simultaneous creation of no doc loans. The free market is not to blame. What is to blame is the idea that those who purchased the securitizations are to be bailed out with tax payer monies. This of course is to protect the rich and is not the free market. The free market would be self regulating if greed and mismanagement are punished every now and then by the free market forces. When individual investors get burned they are more careful next time. They will actually expect documentation. Same goes for the banks and purchasers of these securitizations. The problem with Fannie mae and Freddie mac is that they enabled this type of recklessness because the government is acting as an implied guarantee. So its not a free market failure but another failure of Fascism. Until the American public realizes that the failures are usualy from Fascism and Socializm and reject the revisionist history offered by the elites that the free market and lack of regulation is to blame expect more of the same with regard to booms, busts, and bail outs. A system like this encourages people to speculate. The responsible are then forced to pay for the failures. Speculate and you might get rich. Fail and you will get a tax payer bail out. Its regulation and the idea that regulation will be used to bail people out that led the mortgage problem.

The writer is absolutely correct that when those who originated and then sold the mortgages became completely divorced from the ramifications of bad loans that led to the problem of bad loans. Or perhaps is the people who purchased the bad loans because they didn't care if they would fail or not because they thought the government would bail them out that led to the problem. Responsibility should rest with who legally assumed the risk. If its the government then Fascism has failed. If its the purchaser of the bad loans then its thier own fault and they should pay the price. So I see no connection to a free market failure.

The ultimate problem seems to be that people seem to think a free market is one that they are free to make choices but shouldn't be tied to the responsibility of making those choices. You can't have both.

Free markets don't fail on a massive scale because thousands of minor losses regulate the market. When you see one big sudden loss it is because of some kind of government involvement. You never see Jiffy stores fail in mass do you. You never see grocery stores fail in mass nationwide. The more truly free a market is the more frequent losses and gaines are made and thus a sudden cumulation of losses is much less likely to happen. Airlines, Banks, Defense contractors, Assisted living, Medicare payment reliant companies, and other industries where government regulation is and spending are more omnipresent is where you see mass failures as a result of regulated unfree markets.
Politicians and those who seek power team up with those who want to avoid personal responsibility for their own decisions and sell the idea that free markets are to blame. A lack of regulation is to blame. But in truth its the very regulation or the idea that regulation is there as a safety net that is to blame. Everyone knew that loans without 20% down was a bad idea. The government encouraged and even created quasi-government entities to encourage these types of loans. So again its Facism that is to blame.

[Yoski]

I mostly agree with the article. Securitization passes the risk off to somebody else. This creates an environment of excessive risk taking since brokers and lender are largely isolated from the repercussions of their actions.
I live in Miami and are familiar with the local real estate market. In the end probably around 90% of unmodified subprime loans will fail with recovery rates of around 30-40 cents on the dollar. The losses are far from over.
Freddie Mac and Fannie Mae need to be abolished. Other capitalist economies do just fine without government interfering with the credit markets. All they do is to artificially drive up the price due to excessive liquidity. Look what happened to college tution since the inception of Ginnie Mae. Besides creating a default risk for taxpayer it also drives up prices for housing and education.
Looks to me like a bunch of failed specuvestors were commenting on your article earlier. Keep up the good work.