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Karl Denninger Explains Foreclosure-Gate On The Ratigan Show

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Thu, 10/07/2010 - 22:03 | 634234 MsCreant
MsCreant's picture

ROCK ON.

You posters, don't be haters. This is great that this is getting out there!

Thu, 10/07/2010 - 22:43 | 634289 Hephasteus
Hephasteus's picture

That was a good news piece!!!

Denninger was great.

Thu, 10/07/2010 - 22:43 | 634292 MsCreant
MsCreant's picture

I agree. 

Fri, 10/08/2010 - 01:25 | 634500 traderjoe
traderjoe's picture

I think this needs a name besides Foreclosure-Gate. There are many different elements to the issue, and the robo-signers are but one of the elements - and arguably the one that gathers the most "kick the deadbeat out" type responses. 

The original sin of this all is that ORIGINAL notes/deeds of trust were not properly transferred. In some not insignificant percentage of cases, these original documents were destroyed, no longer exist, or cannot be found. Additionally, many were not transferred appropriately into RMBS trusts, and cannot be transferred in retroactively. The paperwork for millions of homes is in complete limbo and FUBAR.

That is why they are lying on affidavits, because they have to. The dog ate their homework.

I'd like to get another name started for this -gate. Some really lame ideas below (and PLEASE add, but it's important to focus on the original sin of the banks not to handle their own documents appropriately):

Documentation-gate

Wet Ink-gate 

Where's-the-note-gate?

It's late, I know these are terrible. It's gotta focus on the start of the process. The foreclosure issues are symptoms, not the cause, per se.

Fri, 10/08/2010 - 03:55 | 634562 wisefool
wisefool's picture

Stamp-gate?

 

Incorporates your wet ink concept=rubber stamp.

housing ~ postage stamp sized yard. When viewed from above (or by somebody high and mighty), thats what neighborhoods look like. A patchwork of "small value things" lumped together. CDO/MBS.

Stamps have a monetary value printed on them typically for a specific use. But can be made invalid for that use regularly by act of congress. (changing first class rates/FinReg).  Then you need to scab together a bunch of them to send your letter. which looks pretty sloppy on the envelope. Hints at the inflating away all your problems approach.

Mortgages are not quite money. You can't go into a bank with a stamp and exchange for currency. But at the same time, some stamps are worth far more than their face value to person who values it for some reason.

If the stamp falls off the envelop it gets kicked around for quite a while then either gets returned to sender or lost in the dead letter repository of the postal system. Kinda like the National Treasure/Indiana Jones and the lost arc warehouse. Implies lots of Drama about something that is eventually a futile endeavor.

Counterfeiting stamps is (or was) a common and profitable thing. Carried less risk than counterfeiting actual currency. Because for a while detection/enforcement was pricier than just delivering the letter. If somebody gives you a fake $100 bill you really feel cheated and or a criminal by proxy if/when you try to use it. If you get a letter with a fake stamp on it you are not that upset. The only thing to be upset about is if something important does not get to or from you because of the invalidity of the stamp.

 

 

 

Fri, 10/08/2010 - 10:42 | 635066 zot23
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I vote for "Padlock on the Gate"

That seems to be the most common result of the fraud.

Fri, 10/08/2010 - 07:44 | 634574 bingaling
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Infinite hedge gate - where on a long enough timeline everything was supposed to go to infinity

 

 

 

Fri, 10/08/2010 - 04:55 | 634579 Pondmaster
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"Sign zee papers gate " 

Fri, 10/08/2010 - 07:53 | 634650 JonNadler
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notary bitchez gate

Fri, 10/08/2010 - 09:07 | 634799 MsCreant
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Good morning you fucking prick. Nice to see you round the blog. :-)

I assume this is how you want to be treated or I wouldn't do it, bitch. If you were the real one, I wouldn't do it because I'd know for sure he'd want it. Wouldn't want to make him that happy, to give him the abuse he craves.

JonNadler is your whipping boy, your effigy. He wants your hate.

Fri, 10/08/2010 - 04:53 | 634577 Pondmaster
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I agree too . Denninger has been on this like a duck on a junebug for a long time . Its nice when the cons are shown forth for what they are . CONS!! Prosecute to the fullist of the law ( well... what laws we used to have ) Kudos to Karl

Fri, 10/08/2010 - 06:38 | 634612 Mako
Mako's picture

Hephasteus

Karl has no idea what he is talking about.  He is pretending or has no idea how the process works.  There is no loan, anyone that says the bank lends you money to buy a house which is what he is talking about... doesn't know what they are talking about.

Fri, 10/08/2010 - 08:25 | 634692 Hephasteus
Hephasteus's picture

That still doesn't mean he hasn't done a great job on these pieces or in the interview. There's no such thing as a teacher. All teaching requires learning and all learning requires teaching. He's teaching what he sees and how he sees it. Of course he's blocking some of the learning pathway that could help him understand things better by being a nazi know it all. But I think that will come.

He's honest and I can assure you he's had the fuck beat out of him for it. But I don't think they've bent him so much he can't expand beyond it and encapsulate the fuck out of the big picture.

Fri, 10/08/2010 - 09:29 | 634771 Bringin It
Bringin It's picture

Hephasteus - here's what I wonder about Karl.  Are you familiar with the Volkswagon/Cadilac theory of line blocking?  What it means is that if some enormous defensive end is going to crush your QB, you can't take him on head-on, instead you hit him in the side and drive him off course, like a VolksWagon to a Cadilac.  Like a more sophisticated Beck or Palin.  Amy Goodman, Noam, others, line up on the left flank.

Anyone who won't talk about the role of the Fed is not for real.

Edit: Or had the shit beat out of him which is a pretty sad thing to have to say.

Fri, 10/08/2010 - 10:50 | 635091 Hephasteus
Hephasteus's picture

Ya. It's in the comfort zone. When he's comfortable and secure he's fucking dangerous to them. So they probably had to beat the shit out of him and constantly attack to keep him in way out in the scared zone or way out in the cocky zone.

Fri, 10/08/2010 - 09:15 | 634818 MsCreant
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You are quirky as shit Heph, but that's some strong, compassionate, stuff you wrote up there. All of us are at where we are at. Love the heart of the warrior who craves integrity. We all see some stuff better than others, we all have blind spots. 

Really nice post. 

Thu, 10/07/2010 - 22:46 | 634299 Mako
Mako's picture

No, the real fun begins when the average American realizes the truth.  What is the truth, you were never given a loan and the banks can't show a loss or damage from the non-existent loan. 

You guys have only scratched the surface.

Thu, 10/07/2010 - 22:51 | 634311 pan-the-ist
pan-the-ist's picture

<Sarcasm> Only 233 Trillion? I thought they were talking real money. </sarcasm> The numbers are already ridiculous to attempt to comprehend.

Thu, 10/07/2010 - 23:04 | 634329 pan-the-ist
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Do you round 233 trillion up to 235 trillion or down to 230 trillion?  In once case it's 3 trillion, on the other it's only 2 trillion.  Is it really 233 trillion or is it 232 trillion 800 billion-- give or take a few hundred billion?

Fri, 10/08/2010 - 00:52 | 634478 molecool
molecool's picture

Yeah, but it's just Dollars...

Thu, 10/07/2010 - 23:09 | 634318 Mako
Mako's picture

You can't simply turn an obligation to pay X amount over equal periods of time to equal damages when the party fails to complete their obligation. 

"If you lend money to My people, to the poor among you, you are not to act as a creditor to him; you shall not charge him interest” Exodus 22:25

You guys really don't want the Truth. 

The banks receive your mortgage note without risking one cent.

Modern Money Mechanics by the Federal Reserve and spells it out clear what is going on and what people refuse to want to know.  And for good reason, you world will be turned upside down.

“In the federal courts, it is well established that a national bank has not power to lend its credit to another by becoming surety, indorser, or guarantor for him.”' Farmers and Miners Bank v. Bluefield Nat 'l Bank, 11 F 2d 83, 271 U.S. 669

"It has been settled beyond controversy that a national bank, under federal Law being limited in its powers and capacity, cannot lend its credit by guaranteeing the debts of another. All such contracts entered into by its officers are ultra vires . . ." Howard & Foster Co. v. Citizens Nat'l Bank of Union, 133 SC 202, 130 SE 759(1926).

"It is not within those statutory powers for a national bank, even though solvent, to lend its credit to another in any of the various ways in which that might be done." Federal Intermediate Credit Bank v. L 'Herrison, 33 F 2d 841, 842 (1929).

"There is no doubt but what the law is that a national bank cannot lend its credit or become an accommodation endorser." National Bank of Commerce v. Atkinson, 55 E 471.

“A bank is not the holder in due course upon merely crediting the depositors account.” Bankers Trust v. Nagler, 229 NYS 2d 142, 143.

 

Thu, 10/07/2010 - 23:09 | 634339 Dr. No
Dr. No's picture

Welcome back Mako.  I havent seen a post from you in a while, but I was happy to see your input on this thread.  Your posts get me thinking more than most.

Thu, 10/07/2010 - 23:23 | 634353 Mako
Mako's picture

People tend to believe fiction.  If you were born to parents that believe the Moon is made out of cheese, well, chances are you will believe the moon is made out of cheese.

Modern Money Mechanics by the Federal Reserve spells out the process step by step, states it plainly how the Demand Deposit Account moves the promissory note.

Everyone is playing pretend. What is the Truth?

THERE IS NO MORTGAGE.

You created currency by simply signing the mortgage note.

Read The Law of Fraudulent Transactions, by Peter A. Alces, ISBN 0-7913-0310-1

  •  

      “However that may be, a plaintiff cannot convert a claim of damages for breach of contract into an equitable claim by the facile trick of asking that the defendant be enjoined from refusing to honor its obligation to pay the plaintiff what the plaintiff is owed under the contract and appending to that request a request for payment of the amount owed. A claim for money due and owing under a contract is "quintessentially an action at law."  HYPERLINK "http://web2.westlaw.com/Find/Default.wl?DB=602&SerialNum=1996142036&Find..." \t "_top" Hudson View II Associates v. Gooden, 222 A.D.2d 163, 644 N.Y.S.2d 512, 516 (1996); see also  HYPERLINK "http://web2.westlaw.com/Find/Default.wl?DB=708&SerialNum=1977118754&Find..." \t "_top" Atlas Roofing Co. v. Occupational Safety & Health Review Comm'n, 430 U.S. 442, 459, 97 S.Ct. 1261, 51 L.Ed.2d 464 (1977).”

      Wal-Mart Stores, Inc. Associates' Health and Welfare Plan v. Wells 213 F 3d 398, 401

Thu, 10/07/2010 - 23:27 | 634368 FEDbuster
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Welcome back, I too enjoy your posts.  The information you post is very interesting, thanks.

Thu, 10/07/2010 - 23:29 | 634373 Mako
Mako's picture

Once you realize there is no mortgage, you start to see how foolish this whole song and dance show is.  People are worried about false signatures, well, how in the world is the bank foreclosing on an agreement when no loan was given but only an exchange. 

Fri, 10/08/2010 - 06:12 | 634600 Mako
Mako's picture

Love that movie.  Unfortunately Karl is once again believing there is a spoon.  You will never find the spoon.  

Karl is mistaken, what Karl is talking about is paper (a loan) which never existed.  He is playing make pretend.  The bank is precluded from lending it's own credit.  He has no idea what he is talking about once again.

 

Fri, 10/08/2010 - 01:35 | 634507 Glass Steagall
Glass Steagall's picture
Yep. 'Man speaks the truth. This is an entirely voluntary system.
Thu, 10/07/2010 - 23:22 | 634361 pan-the-ist
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I think we're aware that Banks are just the originators of the mortgages, they rarely keep the mortgages.  However, as originators, don't they have responsibilty to have the paperwork strait and can't they be sued for damages if they made mistakes?  How do you punish a bank?  You can't sue them for damages because they would have to pay with money from their deposits (it isn't their money.)

Nationalize them?

Thu, 10/07/2010 - 23:28 | 634366 Mako
Mako's picture

The fiction with mortgages is that there is no mortgage.  They originate a mortgage that never existed, then they pawn that which does not exist to a 3rd party. 

Oh, you don't want to even know how far the rabbit hole goes.

They can't sue for damages they didn't possible have nor could have, well of course they can trick the stupid homeowner into believing that and leaving the keys in the door.

 

Thu, 10/07/2010 - 23:36 | 634386 Dr. No
Dr. No's picture

Dwelling on this for a second, is this how it goes?: A bank decides they want to give a "mortgage" to a borrower. They create a debit for the amount of the mortgage on their ledger (out of thin air).  They then sell the debit to Fannie Mae for the amount of the mortgage.  Fannie mae cuts the bank a check for amount to the mortgage.  The borrower then pays Fannie mae for the duration of the mortgage and the bank sits there and counts their checks.  If this is right, legally, how are they able to open that debit in the first place?  Do they buy CDS's and count the as a credit?  How did Fannie get the money to buy the mortgage? Sell bonds?  This is interesting.

Thu, 10/07/2010 - 23:46 | 634394 Mako
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The money came from you when you signed, your signature created that which they claimed they loaned you.  They never once loaned you anything.   Your so called mortgage note goes into a checking account, they then withdraw to pay for the house they claimed they loaned you. 

They just got equity in your house without one dollar.

 

Thu, 10/07/2010 - 23:50 | 634402 Dr. No
Dr. No's picture

Ahhh. Like a diamond....Like a diamond bullet right through my forehead (kurtz).... The credit was created on the spot at the closing.  The banker "wired" the money after I created it by signing the mortgage contract.  No money existed prior to me signing.  My signature created a credit (a debt to me) with the bank for the amount of the mortgage. They then wired this "money" to the seller.  My debt contract was then sold down the chain.  If this is right, Bernanke would be proud.

Thu, 10/07/2010 - 23:59 | 634410 Mako
Mako's picture

Basically it.  Modern Money Mechanics covers most of it.  It's all fiction, people are pretending they got a mortgage and the bank loves the idea that people believe they are getting mortgage or a car loan or a credit card credit. 

People are starting to get it unfortunately at the end of all this... will be chaos.

 

Fri, 10/08/2010 - 00:29 | 634454 Dr. No
Dr. No's picture

Jesus.  I think I grasped it.  Jesus.  I sign a promise to pay.  The bank then puts a lien on an asset. From the asset they created a credit.  They then pay the seller.  I pay the bank and they hold a lein on a new asset.  They didnt use any of their money.  Infact they charged an origination fee for it.

Fri, 10/08/2010 - 00:32 | 634459 Mako
Mako's picture

Exactly.

The problem is, well unless you are the person that has parents that believe the moon is made out of cheese... there is no way for the bank to convert a failure to pay on an obligation into damages... the bank must show damages, but unless they actually made a loan which they did not do they can't show damages. 

They can't lend their own credit and they can't show damages because no loan existed. 

Of course, it will take the sheeple a few more years to figure this out, either way the system is coming to an end.

 

 

Fri, 10/08/2010 - 00:50 | 634465 Dr. No
Dr. No's picture

In a world with a cheese moon, a good borrower would pay of the mortgage over 30 years at 5% interest.  They bank makes 5% per year over 30 years for being a paper pusher.  They risked no capital.

Edit: and it all worked if only prices went up.  With prices down, people start to ask if the moon really is made of cheese.

Fri, 10/08/2010 - 07:59 | 634646 Mako
Mako's picture

Correct. 

Once the system starts to implode everyone is then faced with cold hard facts.  People have been living in a lie, the Truth always wins the war.  Humans are running from the Truth, and for good reason at this point.... the unfunded liabilities will have to be liquidated.

 

Fri, 10/08/2010 - 09:18 | 634823 MsCreant
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Humans are running from the Truth, and for good reason at this point.... the unfunded liabilities will have to be liquidated.

Yes.

Fri, 10/08/2010 - 01:31 | 634503 djrichard
djrichard's picture

In the end, we're all naked short sellers - we're counterfeiting the currency ourselves that we're borrowing, hoping that its diluted/cheaper/inflated when we pay it back (with interest LoL!).

Fri, 10/08/2010 - 02:51 | 634533 Hephasteus
Hephasteus's picture

It's the magic money creation portion of banking system that DETERMINES THE RULES OF HOME OWNERSHIP. You can not run this kind of system and have 100 percent home ownership. You even touch the magic numbers of 67 percent home ownership you break the fuck out of the system. You can tweak it with high prison populations which is what the US has done and you can tweak it by making people sick and unable to move away from family support. So bring on the crime and poison.

If you ever do a Iching reading and the change line says....

The king grants you a house.

It means the king is going to kill someone, hurt someone, or put somoene in prison cause there's no other way it works under this system.

Especially if the economy gets highly unrelative to each other. New York and California have to take one for the team.

http://www.census.gov/hhes/www/housing/census/historic/owner.htm

When we reached full employment and congress started whining for more home ownership they had no idea they would completely break this fraudulant system.

Sat, 10/09/2010 - 10:44 | 637730 Diogenes
Diogenes's picture

What if they loan out money that was loaned to them by their depositors? Maybe they can't use their own credit but they can use their depositor's cash.

Then the bank  has a loan to a customer which is an asset, and a loan from a depositor which is a liability. This is known as double entry bookkeeping which has been the basis of banking since the Rennaisance.

Fri, 10/08/2010 - 09:47 | 634899 Rex Crotch
Rex Crotch's picture

How did the bank not use any of their money if they paid the selleer?

Fri, 10/08/2010 - 10:23 | 635006 Mako
Mako's picture

You signed the note which was then deposited into an account from which they could withdraw the necessary funds.

The bank does not have $250,000 sitting there for you to lend you.  They take your note put into an account then withdraw from YOUR account to pay the seller.

Sat, 10/09/2010 - 00:53 | 637328 Bringin It
Bringin It's picture

Good stuff Mako.  Thanks for all the clearity, which in hindsight seems obvious.

Speaking of obvious hindsight ... Did you ever hear the story of il Duomo, the cathedral in Florence, Italy?  It took 140 years to build.  When they layed out the plan, it included an enormous space covered by a dome.  At the time construction was begun, no one knew how to construct/engineer the enormous dome required.

Eventually, all was finished but the dome, il Duomo in Italian.  So the city fathers decided they would have a competition and whoever won would recieve the right to design and complete the cathedral.  The competition consisted of demonstrating a technique that would allow an egg to stand on end on a flat piece of marble.  Many potential 'geniuses' queued up to demonstrate their abilities.  All failed.  Finally, a guy named Filippo Brunelleschi stepped up and ...

 

...giving one end a blow on the flat piece of marble, made it stand upright...The [other] architects protested that they could have done the same; but Filippo answered, laughing, that they could have made the dome too, if they had seen his design.

 

http://en.wikipedia.org/wiki/Filippo_Brunelleschi

 

 

 

Sat, 10/09/2010 - 10:48 | 637737 Diogenes
Diogenes's picture

They used money they borrowed from their depositors. Then they sold the mortgage and got the money back, then loaned the money out, sold the loan, etc.

The suckers who wound up holding the bag with all the phony loans, were Fanny Mae, Freddie Mac (which used taxpayer's money) pension funds, German banks and other big investors.

Thu, 10/07/2010 - 23:55 | 634406 Mako
Mako's picture

Then the bank moves in to foreclose on your house, which they never put one dollar into to get that equity.   What they are really doing is converting the failure to pay on an obligation into damages and equity relief as specified in the case above. 

There is no damage to the bank, the bank had no skin in the game.

Fri, 10/08/2010 - 01:00 | 634485 MachoMan
MachoMan's picture

Sort of....

The law does not care what "consideration" is given by the parties...  essentially, it is not the court's providence to determine whether a deal is "good".  In other words, practically speaking, if you promise to do something in exchange for another promise, then that's good enough.  Further, even though the bank will be recompensed instantly or close thereto, each entity is independent and an island unto itself, despite seemingly acting in concert.

The big issue is that you're overlooking the fact title is transferred to the debtor.  Some how, somewhere, some way money got created to build the house and transfer the value of that house to the debtor.  If nothing else, you've got an unjust enrichment claim...  I'll tell you that going into court and saying "the bank created that money out of thin air, therefore I should get the house free and clear" is not going to fly with even the most narcoleptic judge.  Someone is the rightful party to foreclose on that home after the debtor defaults...

Now, how did that money get created?  Well, obviously there is a liability higher up the chain.  Now there is where the story actually gets interesting...  and, if enough liabilities pile up, higher up the chain, what happens?  (other than doing everything possible not to be sucked into the abyss).

PS, the common law has largely been thrown to the wind when states set up their own foreclosure statutes...  general policy concepts of centuries of knowledge get usurped with a pen in an instant.

Fri, 10/08/2010 - 01:51 | 634515 I am a Man I am...
I am a Man I am Forty's picture

The money comes from the banks leverage, but the banks immediately sell to fannie and freddie so the money is actually coming from them...err, I mean the taxpayer because there is no mortgage market and fannie and freddie are broke, meaning the banks are unwilling to hold the mortgages on their books.  Once again the taxpayer is getting screwed courtesy of the banks.

Fri, 10/08/2010 - 03:35 | 634565 MachoMan
MachoMan's picture

The banks didn't sell to the GSEs all along...  now, maybe the kids that did their homework knew that the GSEs would eventually be used as a bad bank and they could keep on getting record bonuses...  (or knew the people who they could pay to make the necessary votes to make it happen).  But, technically speaking, the GSEs taking 100% of the mortgage market is more or less a reactionary behavior to what happens when enough money is created out of thin air...

We can't really have it both ways...  either the banks are insolvent or they aren't...  they can't create money out of thin air on the one hand and then also be insolvent on the other...  (if they're insolvent, what is the liability?  And to who?).  The real analysis is vastly more complicated...

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