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Art Cashin On Fraudclosure Reminds Everyone That "Things Could Turn Very Ugly"

Tyler Durden's picture




 

A very troubling anecdote by Art Cashin today on the possible future developments in fraudclosure.

An Amazing Assertion – Last week one of the FoF regulars brought a friend to one of the plenary sessions. The gentleman, in addition to being quite personable, was a lawyer who had a lot of experience in asset backed securities. Naturally, I tried to pick his brain on the real status of the foreclosure fiasco.

In the middle of the discussion, I avowed that I had become very concerned when several large servicers suspended mortgage foreclosures. It smacked of wholesale legal protections to avoid exposure to court reversals and possible sanctions for undecipherable records of true ownership. I remarked to our guest that it was with a large sigh of relief I greeted the announcement that foreclosures would resume – not in a scrooge-like manner, but only because resumption suggested the records might be in order.

That’s when our guest blew me away. He asserted that they had only “announced” foreclosures would resume and, in fact, were still in stand-by mode. He claimed that the announcement of suspensions had prompted many mortgage payers to consider defaulting since there would be no punishment. The guest said that, sensing that suspending foreclosures could lead to a tsunami of new defaults among “current” mortgagors, they simply announced resumption as a warning. He claimed that foreclosures were not resuming because the records remain murky and would promote challenges and, perhaps, legal penalties.

We certainly hope he was wrong since things could turn very ugly. We’ve begun checking around to see if we can get some hard data on the status of the foreclosure process. Stay tuned.

Also, Cashin chimes in on the gold and dollar going up together for the first time:

Dollar Firms; Stocks Slips; But Gold Gains – Worries about Ireland and Portugal put a bid under the dollar, frustrating the Fed and more than a few traders.

Credit spreads in Europe widened, reigniting alarms about a possible sovereign crisis on the continent. While the debate, and even furor, over QE2 dominated global headlines, the markets turned their attention elsewhere.

Traders felt that the key risk to the stock market could be the fact that the Fed sponsored rally is based on a weaker dollar. If there were to be one or more sovereign defaults, the resultant flight to safety into the dollar could pull the rug out from under stocks.

Even more worrisome would be some geo-political surprise. An Israel/Iran dust up could send the dollar soaring in a nano-second. That could send stocks into a trapdoor selloff that could look a lot like the “flash crash”.

Flights to safety became a topic yesterday as gold shrugged off a firmer dollar to rally to a record high. Traders wondered if gold was morphing from “commodity” status to “safe haven” status. They’ll be watching the dollar/gold relationship over the next week or so to test that thesis.

Away from the debate about the apparent dollar/gold anomaly, there wasn’t much doing in stocks.

Based upon the previously noted sovereign worries, and the resultant strength in the dollar, stocks opened lower and continued to slip until around 10:00. They circled the wagons at what would turn out to be the day’s lows. The circling seemed to be a response to the dollar’s rally flattening.

About 45 minutes later, the dollar firmed again sending stocks back toward the lows. The dollar stalled at 11:00, reigning in the stock market weakness just above the 10:00 lows.

For the balance of the day, stocks cut their losses in small choppy moves responding to each tic in the greenback.

By the close, Nasdaq had inched into plus territory. The Dow and S&P just missed. Let’s call it a mixed Monday in light volume.

Next, Cashin observes a topic we have discussed long ago: namely the dollar FX-adjusted loss that China is suffering on its UST holdings:

China And QE2 – Inflation in China is beginning to flare up and some officials are blaming it on the recent weakness in the U.S. dollar since Bernanke began talking up QE2. Chinese officials are taking steps to raise rates and force banks to hold more foreign reserves to prevent “leakage” into the Chinese domestic market. There is even talk of instituting capital controls to battle what China sees as QE2’s purposeful weakening of the dollar.

As the dollar has weakened, the Chinese have sustained a massive “paper loss” on their huge holdings in U.S. Treasuries.

Dick Bove seems to thinks some of China’s concerns are justified. In a recent piece he suggests that with QE2, the Fed may have declared “financial war with China”. Additionally, Bove thinks the plan may also be a Bernanke conceived attempt to create credit outside the banking system.

We’ll carefully monitor Chinese comments as the G-20 meeting approaches. Keep your side-arms handy.

Lastly, the good old history trivia is always present:

On this day in 1855, a New York census taker probably mumbled something about immigrants as he turned up Oliver Street to continue his work. At the time, the state felt compelled to do more frequent counts of the citizenry than the Federals, since immigration swelled the city's population daily - if not hourly.

So this poor civil servant climbed yet one more set of stairs and knocked on yet one more door. Slowly, maybe cautiously, the wife opened the door. Mr. Census identified himself and began to record the data. Family name: "Smith" (probably Americanized from something else). Husband: "Manny...er...Emanuel" she probably corrected, realizing this was a government official. His age: 42; living in New York for 30 years; came as a boy from Genoa, Italy, where he was born; occupation: sailor. The wife, Magdalena, then probably asked their fifteen year-old son, Alfred to help finish the answers needed.

Finally, the census taker packed up his goods and moved to the next set of stairs and the next door. His thorough records would be reviewed by the state, updated every few years and filed away in the public archives. The government thought it was just counting its goods and its citizens. What it was also doing was cataloging the growth of a nation.

Take our little example here. The census taker thought he was just logging an Italian-American family in the 4th Ward, 3rd Assembly District. But he was doing much more. In this case, young Alfred, the son, would have a son of his own. And that son would be named Alfred Emanuel Smith - he would go on to be the Governor of NY and a candidate for President of the United States. He was a political reformer beyond his time. In fact, he was so "90's"; so "non-hyphenated" that he never flaunted his Italian-American heritage - a tradition the family has honored to this day.

To mark the day, fill out a questionnaire - corporate, governmental or junk mail - but remember what you say may just be for the ages - kabish?

The markets raised more questions than they answered yesterday. Asset correlation became less correlated and traders wondered if it was one day wonder.

h/t London Dude Trader

 

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Tue, 11/09/2010 - 12:50 | 712036 animalspirit
animalspirit's picture

Please, Art ... calm down.  You are scaring the children [and me!].

Tue, 11/09/2010 - 12:50 | 712039 Horatio Beanblower
Horatio Beanblower's picture

Fight, fight, fight...

 


"Let me start this post off by saying that I own GLD - but I don't care in the slightest if you choose not to.  This is NOT a post trying to convince you to buy GLD instead of its competing instruments, or to tout the merits of gold investments.  It's simply a clarification of a horrendous misunderstanding by another very popular blog about how GLD works.

I sent out a tweet last night accusing the very popular ZeroHedge of demonstrating a thorough lack of understanding of the mechanics of the GLD exchange traded fund.  A few of my followers asked me to write a rebuttal and clarify, so here we go."

Read more: http://www.businessinsider.com/no-the-gld-etf-is-not-overdue-to-buy-200-tons-of-gold-2010-11#ixzz14nxYN7No

Tue, 11/09/2010 - 12:58 | 712077 TradingJoe
TradingJoe's picture

Whoa! At least One Sane Brain here! Now ya' all go buy more GLD and wait for the goo man to buy more gold bars! You all are Paulson's and Soros' suckers, keep buying folks, yeah!!!

Tue, 11/09/2010 - 14:39 | 712549 wolfsonite
wolfsonite's picture

I don't get it - neither your comment nor the original post. Please elaborate ... If the only source of price increase for a share of GLD comes from an an increase above NAV, then your gains are simply a speculative with nothing to back it up except another sucker's willingness to pay for it.

Tue, 11/09/2010 - 12:52 | 712042 Cognitive Dissonance
Cognitive Dissonance's picture

Art Cashin On Fraudclosure Reminds Everyone That "Things Could Turn Very Ugly"

 

Thus providing the lame duck Congress the excuse it needs to apply a “political solution”. I know this thought isn’t very popular here on ZH, but we would be seriously naïve if we though the tiger was going to change its stripes this late in the game. 

Tue, 11/09/2010 - 13:15 | 712125 Logans_Run
Logans_Run's picture

Agreed! Who knows what is inside the vindictive head of Nancy Pelosi and all the ousted Con-gress critters at this point.

Tue, 11/09/2010 - 13:21 | 712141 Fearless Rick
Fearless Rick's picture

Tea Party = Game Change.

Newly-elected Senator Mike Lee of Utah said unequivocally that he would vote against raising the debt ceiling. Rand Paul wants to cut all federal employee pay by 10%. Lee also said he will introduce a constitutional balanced budget amendment.

Bernanke's QE2 being attacked from all sides, including from inside the Fed.

Anecdotally, my personal fraudclosure is now at a 7-month (since filed) standstill. Since the moratorium by BofA (I'm in NY), I've received two mailings - one from the lawyers informing me of the possibility of a "cash for keys" deed in lieu deal, and another from the servicer trying to scare me with mentions of all the various fees associated with not paying my (inherited, I'm executor) mortgage.

Let's see: Offer for cash in exchange for house? No deal. Scaring me with charges? Laughable. My question, if you have the right to foreclose, why not move for summary judgement instead of the offers and fright letters? Simple answer: They don't. I have proof and they know it. MERS as nominee on mortgage, robosigned assignment doc, complete with three different dates, 1 1/2 years apart, sued by BAC, AKA Countrywide. They're Fu--ED from here to Sunday and I haven't even had to invoke my rights of recision, violations of TILA and/or RESPA, faulty (and, to this date, non-existent), inflated appraisal.

Fraudclosure is far from over and there will be no political fix. The banks are fighting tooth and nail and will opt to take the whole economy down rather than reduce principal or admit wrongdoing.

Please try and keep up. 

Tue, 11/09/2010 - 13:35 | 712201 Cognitive Dissonance
Cognitive Dissonance's picture

Fraudclosure is far from over and there will be no political fix.

I sincerely hope you're correct. But if there is one lesson to learn from the August of 08 to April of 09 time period, it is that they WILL try to save the banks.....again and again and again.

Please try to keep up.

Tue, 11/09/2010 - 13:49 | 712261 Fearless Rick
Fearless Rick's picture

The "they" you speak of are caught in a power shift. If you can note the level of discontent over QE2, you will begin to understand that another attempt at a bank bailout will be met with more than just severe criticism. Conditions in this country are not improving for most of the middle class and with that comes the anger that pushed the Tea Party candidates front and center.

Again, I ask, Where in the world is Eric Holder? What a POS he is. He needs and is justly deserving of impeachment, short of public hanging.

Liberalism - for whatever it's worth - is being crushed by pragmatism. BTW: mimicking me, is that a conditioned or non-conditioned response?

Tue, 11/09/2010 - 15:05 | 712742 Fraud-Esq
Fraud-Esq's picture

True, CD. How much is the "fix" worth to the banks? The last fix bill flew through Congress only not to be signed after press outted the bill. I think Obama was going to sign it but-for that.

The ASK just went up and lots of Congresspeople are getting better jobs.

The ASK is Obama's. What's he want? Money or tampering revolt on his left?

Tue, 11/09/2010 - 21:53 | 714624 kayl
kayl's picture

Fearless,

Great that you are standing on principle. But you haven't discharged the debt yet.

Now, write them your contract! First, detail the fraud they committed against you referencing to TILA Usury and General claims and RESPA (but do all your research).

They did not disclose the material facts, terms, and condition of your loan.

You thought they were lending you their money.

They funded the loan with your signature on the loan application.

They received your credit from the Federal reserve.

They withheld your credit.

They brought you into another contract with the promissory note.

They sold the note before you even signed it. (Verify that the verbiage says on the note: "For a loan or money given..." At signing you actually hadn't received anything.

They pumped and dumped the market for ten years.

Then the bank made money in the insurance, Tarp funds, and the foreclosure turned into a security.

They committed fraud in the foreclosure and can't show the note.

Tell them you want to discharge the debt on the foreclosure. You have a duty to zero out the account.

Tell them to send you the final statement, and you'll discharge the debt under the UCC section 3-501. You better go read it at Cornell Law UCC.

Make sure to notarize and record your letter, which is in the form of an Affidavit. Better go read up on the preparation of Affidavits.

Tell the bank you want them to respond within 3 days to you and your Notary. Be sure the Notary's address in on all letters. Read up on the procedure of a Notarial Protest. The Notary can back up that the bank didn't respond to any requests for info and such.

Follow up on the Notarial Protest, write them these letters:

1. Affidavit on Fraud or Letter of Rescission.

2. Notice of fault with opportunity to cure

3. Notice of default

4. Send them three demands for payment-- presentments for damages (all the money you've paid over the years for the mortgage, which was a fraudulent contract.)

5. Write the Notarial Protest letter indicating all the steps and documents you've sent and the responses you've gotten. It should be a big nada, because they never answer.

You've just created for yourself a set of chattel paper, which documents that they don't have any right to demand payment.

If they send you the final payoff, send them back three pieces of paper: the presentment accepted for value, the transfer instrument like a three party check with the amount owed (you, Timothy Geithner, and the bank), which must be in the form of an international money order, and the promise to pay. (This can be a 1040V voucher). Fill out form Standard Form SF5510 from the GSA.gov forms library. Write that this is a non-cash discharge in the type of transaction box. Make 3 copies of all docs. Send originals to the US Treasury first. Then a week later, send the copies to the bank.

You've legally discharged your debt under color of law.

But in the end, we will all have to bring a Quiet Title suit to gain title.

 

Tue, 11/09/2010 - 13:02 | 712056 HarryWanger
HarryWanger's picture

We certainly hope he was wrong since things could turn very ugly. We’ve begun checking around to see if we can get some hard data on the status of the foreclosure process. Stay tuned.

Ok, Art, we'll stay tuned. There's always a "stay tuned" and it always amounts to nothing more about said story we were "staying tuned" for. 

We’ll carefully monitor Chinese comments as the G-20 meeting approaches. Keep your side-arms handy.

Chinese rhetoric - oh my! Zzzzzzzzzzz.....You all know what will come from the G-20 meeting. Same old bullshit about everyone agreeing that they'll keep their currencies steady. Some poking at Fed but nothing more. Why bother?

Tue, 11/09/2010 - 12:55 | 712059 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Cashin chimes in on the gold and dollar going up together for the first time

Gold has shown more strength vs a strong dollar than a weak dollar for some time now.  The trend started when the Euro rallied on April 21st.  Gold hitched a ride on that trade.

Tue, 11/09/2010 - 13:02 | 712066 jus_lite_reading
jus_lite_reading's picture

This will get ugly fast. A Chinese ratings agency has downgraded US debt and says the outlook is negative. The time has come!

A run to the dollar will occur when Greece/Ireland default, or when China says enough! The EU is done for. Disintegration of the EU is a very real threat if Germany decides to keep pumping endless money into Greece/Ireland/Spain/Portugal/Italy/Austria. The SHTF in a few days time, IMO

Tue, 11/09/2010 - 12:57 | 712074 ydderf1950
ydderf1950's picture

october was the first month in a year mortgage defaults increased per bloomberg

Tue, 11/09/2010 - 13:00 | 712081 Hidetora
Hidetora's picture

Wee! Wee! Wee! All the way to the bottom!

Tue, 11/09/2010 - 13:01 | 712084 doomandbloom
doomandbloom's picture

hey....what happened to Hindenberg Omen?

Tue, 11/09/2010 - 13:08 | 712101 Rogerwilco
Rogerwilco's picture

@dooman

It's nearing the mooring tower. A few dark clouds nearby, but nothing to worry about.

Tue, 11/09/2010 - 13:10 | 712105 LoneStarHog
LoneStarHog's picture

It is still *on the clock*.  Once confirmed, it is valid for three months.  It has until sometime in December.

Tue, 11/09/2010 - 14:23 | 712455 godfader
godfader's picture

Hindenbrug Omen = double dip = flash crash

It's all a bunch of bearish mumbo jumbo that serves as an excuse not to trade this market. The truth is markets have always been chaotic, erratic and irrational. This is nothing new, just like any other period in financial market history.

Tue, 11/09/2010 - 14:37 | 712537 citationneeded
citationneeded's picture

Valid for up to 4 months my friend.

Wed, 11/10/2010 - 01:18 | 714991 Squid-puppets a...
Squid-puppets a-go-go's picture

its been extended to 99 weeks maximum.

Tue, 11/09/2010 - 13:17 | 712129 Silverhog
Silverhog's picture

hey....what happened to Hindenburg Omen?

 

I think it's on hold until they finish pumping more hydrogen into the market.

Tue, 11/09/2010 - 13:25 | 712160 kaiserhoff
kaiserhoff's picture

Once again, the dollar is the least ugly chick at closing time.

Tue, 11/09/2010 - 13:43 | 712235 max2205
max2205's picture

go ugly early

Tue, 11/09/2010 - 14:03 | 712342 ZeroPoint
ZeroPoint's picture

Things aren't ugly enough now?

Tue, 11/09/2010 - 14:20 | 712436 taraxias
taraxias's picture

Art misses something. THERE IS NO MORE RUNNING TO THE USD FOR SAFETY. That play is dead. The NEW safety is GOLD, and only GOLD.

Tue, 11/09/2010 - 16:48 | 713302 Oracle of Kypseli
Oracle of Kypseli's picture

Good point. Those who have the means to move money internationaly will also shun the dollar. The dollar may get a lift, but gold and silver will get afterburners.

Cheers mates 

Tue, 11/09/2010 - 18:06 | 713788 LowProfile
LowProfile's picture

Almost, but not quite yet.

Still some levered players in gold, and JPMHSBC got 'em some big shorts to cover yet.

Watch for $1264.00.  That will be the last chance to get on at 'reasonable' prices.

Tue, 11/09/2010 - 14:39 | 712545 wolfsonite
wolfsonite's picture

...

Tue, 11/09/2010 - 16:30 | 713168 Fraud-Esq
Fraud-Esq's picture

How is there flight to US dollar safety when it's has artificially low rates and is arguably being depreciated while the Fed admits trying to generate inflation?

Blowing up Europe and China would be the first order of business.

When all assets lose safety, people will discussing local investments and businesses as being the only thing safe. That's a re-set to me.  

Tue, 11/09/2010 - 16:39 | 713233 jkruffin
jkruffin's picture

Anyone who thinks fraudclosure is going anywhere is off their rocker.  Does anyone here actually think that any judge is going to rule in favor of the people here?  Our judges are bought off too, wake the F up.  If they rule in favor of the people,  everyone in this country will stop paying their mortgage,  which is what they should have been doing anyway, and TPTB are not going to allow that to happen. There will be a mysterious way they start producing documents that appear legal, fully signed and sealed.  Everytime we have something going on like this, they give the bankers months to get ready.  We can prosecute and hold a complete trial within 2 days for a celebrity or sports clown,  but these bankers take their sweet time entering the court.  Fraudclosure will be shut down very soon and never heard of again, and more people tossed out of their homes.

Tue, 11/09/2010 - 17:45 | 713650 Fearless Rick
Fearless Rick's picture

You get junked for ignorance. There are already many instances of people winning in courts against the banks and the tide continues to turn in favor of the homeowner. The banks cannot just change county clerk records on their own dime and judges will be held accountable. There are already some who have achieved "rock star" status, like Judge Schack in NY. Do some research before you shoot your mouth off. Oh, I forgot, you are on ZH, and don't have to support your claims.

Tue, 11/09/2010 - 18:30 | 713897 LowProfile
LowProfile's picture

Many judges are elected to their positions.  All others are appointed to their terms by elected politicians, and TTBOMK only the SCOTUS are appointed for life.  So believe it or not, their jobs are answerable to the people.

And as hard as it is to believe (especially lately), most judges actually care about adjudicating the law fairly and honestly.

And then there's always that 'popular revolt' thingy if they fail to do the right thing...  But we don't like to talk about that much.

Tue, 11/09/2010 - 20:28 | 714355 Tarheel
Tarheel's picture

"He was a political reformer beyond his time. In fact, he was so "90's"; so "non-hyphenated" that he never flaunted his Italian-American heritage - a tradition the family has honored to this day."

Sounds like he was smart enough to remember the damn Oath. You know, the part that says you are to never EVER hyphenate the word American upon completing that oath.

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