Hat Trick Letter – listopad 2009

Banky a jejich aktiva – Banks and their assets

BANKS ARE INTENTIONALLY NOT LENDING. THEY ARE MAKING RULES HARD TO SATISFY SINCE THEY DO NOT WISH TO LEND AT ALL. HERE IS AN ANECDOTE. $$$ Banks choose not complete loans, and steer within their own system lending to create rules that obstruct loan approval. Here is a message from BobO in Kansas. He wrote, „I finally got through to my banker on Monday. He said company management generated all new tightened lending rules for the bank’s consumer & business loans. According to him, they want to make it almost impossible for the borrower to qualify. They do NOT want to make loans. They want to conserve cash! This bank is a Fed member, and the last time I checked them on BankRate, they had the highest rating. However, that was before Commercial Real Estate started to go sour. The Wichita area has been mostly spared the effects of the crisis, so far. Housing prices have not been affected that much, and unemployment is still relati vely low. It means they expect the economy to get much worse, and they anticipate having to cover a lot of defaults.“ This story might be typical across many parts of the country.

US banks must prepay $45 billion in premiums to replenish the insurance fund in yet another revised plan for the Federal Deposit Insurance Corp. The FDIC fund stands in the red, in deep deficit. Depositor accounts are guaranteed up to $250k per account by the FDIC. The new prepaid fees come atop a special emergency fee that took effect at midyear, estimated to have brought in about $5.6 billion. So $50.6 billion drained from the banking system will hinder greatly the entire lending process. These are painful bank levies! With seeming dictatorial power, the FDIC Board voted to mandate the early payments of premiums in advance for years 2010 through 2012. It is the first time the agency has required prepaid insurance fees.

THE OPTION ARM MORTGAGES ARE A TIMEBOMB THAT HAVE BEGUN TO GO OFF. THEIR ACCOUNTING CAN PERMIT AN ESTIMATE OF THE TIMING. IT IS IN PROGRESS, WITH A PEAK TO OCCUR NEXT YEAR AND 2011.

CREDIT CARD DELINQUENCIES RISE UNABATED, SURE TO RESULT IN DEFAULTS DOWN THE ROAD.

Wilbur Ross foresees a ‚huge‘ Commercial Real Estate (CRE) crash in his words, a consequence of the near complete negative alignment visible now. Billionaire investor Wilbur Ross Jr is a savvy soft-spoken, no nonsense fellow. He is one of nine managers participating in a USGovt program to deal with toxic assets on bank balance sheets. He believes fervently that the United States is in the beginning of a „huge crash in commercial real estate. All of the components of real estate are going in the wrong direction simultaneously. Occupancy rates are going down. Rent rates are going down and the capitalization rate, the return that investors are demanding to buy a property, is going up.“ Banks held about $1.7 trillion in commercial real estate loans as of September 30th, according to USFed data, amounting to about 15% of their total assets. Actual business property sales are forecast to fall to the lowest level in almost two decades as the industry endures its worst slump since the 1990. Stability has not remotely been achieved yet.

The Moodys/REAL Commercial Property Price Indices have already fallen almost 41% since October 2007. Ross said that he would exercise ‚extreme caution‘ before committing investment funds into commercial real estate. He pointed to office space as the highest current risk, since properties are losing tenants. US office vacancies hit a five-year high of almost 17% in 3Q2009, while shopping center vacancies climbed to their highest since 1992, according to the property research firm Reis Inc. Ross believes a few years are required before the commercial sector can work itself out of the mess. Curiously as of October 15th, Ross admits he had spent less than $100 million of the $1.5 billion available to him under the Public Private Investment Program (PPIP), an investment pool of private and USGovt money for purchasing distressed assets from financial institutions. To date, he has devoted funds to purchase residential mortgage backed securities. The bond securities have been whacked severely on the household side, but not yet on the commercial side.

Mají banky právo na zastavené domy? Could banks seize homes?

THE MORTGAGE COURT BATTLE CONTINUES TO RAGE. IT HAS FINALLY GONE FEDERAL. STATES LIKE OHIO AND KANSAS HAVE RAISED THE CONFLICT TO THE COURTS. A NATIONAL MOVEMENT FOR HOMEOWNER RIGHTS AGAINST FRAUDULENT MORTGAGE BONDS AND TITLE MANAGEMENT HAS BEGUN, NOT TO MENTION PREDATORY HOME LOANS. BANKERS MUST BE VERY WORRIED AT THE POPULIST MOVEMENT AND COURT REINFORCEMENT.

If the official lender cannot find the mortgage and prove possession of clear registered title for the property, the homeowner cannot be displaced. In fact, the homeowner becomes a default owner!! Another court ruling has come that is favorable to embattled homeowners. THIS TIME THE DECISION COMES FROM A FEDERAL JUDGE. Precedent is being established for all states to follow. The USDept Treasury has sided with the big banks naturally, but hides under the ‚Interested Party‘ role in dubious fashion. A representative of the US Trustee, a division of the USDept Justice charged with monitoring bankruptcy courts, attended the hearings. On October 9th in federal bankruptcy court in the Southern District of New York, Judge Robert Drain ruled that lender PHH Mortgage failed to prove its claim to the home of a delinquent borrower. The judge canceled the entire $461,263 mortgage debt on the property. The case is an alert to lenders that dubious proof-of-ownership tactics may no longer be accepted practice. Such practices by financial firms are on the edge of being viewed as fraud by the court. What an incredible backfire after bank bond fraud!!

In the above case, the borrower purchased the house in 2001 with a mortgage loan underwritten by Wells Fargo. The loan was later refinanced with Mortgage World Bankers. Hard times followed. The borrower fell behind in payments, and later filed Chapter 13 bankruptcy in an effort to save the home from foreclosure last February. A proof of claim to the debt was filed in March by PHH. The borrower’s attorney, after months of haggling over a potential loan modification, finally demanded proof of PHH standing in the case. A reply letter was sent stating that PHH was the servicer on the loan, but holder of the note was US Bank as trustee of a securitization pool. But US Bank was not a party to the action. The attorney then demanded proof that US Bank was note holder. He was provided an affidavit from Tracy Johnson, who identified herself as a VP at PHH. It restated that PHH was the servicer and US Bank the note holder. A copy of the assignment of the mortgage was then provided, except the document was signed also by Johnson, this time identified as an assistant VP of the Mortgage Electronic Registration System (MERS). This bank owned registry was originally designed to eliminate the need to record changes in property ownership in local land records. The MERS system was featured in the October Crisis Coverage Report. MERS has been legally discredited in certain states as having no lending standing to claim title since not a principal party in either mortgage bond or loan service contract possession. A database is not a principal party with a formal stake, according to court rulings.

Another problem in the above court case was that the stated document showed the note was assigned long past the bankruptcy filing. The lawyer for PHH was put in the uncomfortable position to explain why there was no documentation of an assignment to US Bank. In a September 29 hearing, the PHH lawyer made a startling admission of sloppy procedures. He said, „In the secondary market, there are many cases where assignment of mortgages and notes do not happen at the time they should. It was standard operating procedure for years.“ Judge Drain rejected the argument, saying „The claimant has not shown assignment of a mortgage“ in simple language. In follow-up PHH appealed the ruling. Either PHH will return to court with a clear claim on the property, including all the transfers and sales necessary in the securitization process, or they will not be able to produce documentation at all. If they do produce the paperwork, they must explain why they did not produce it earlier. Wall Street bond fraud is coming to light, and their power to foreclose properties is unraveling. A populist backfire has begun. Henry David Thoreau would be pleased, especially if civil disobedience from mortgage payment refusals becomes a new wave in populist revolt.

Zlato / Gold

GOLD MARKET BREAKDOWN IS WITHIN VIEW. LONDON GOLD IS BEING DRAINED BY THE CHINESE. A DISMANTLE OF THE CRIMINAL APPARATUS IS THEIR GOAL. UPON FULL BREAKDOWN, THE GOLD PRICE WILL BE RELEASED FROM PAPER TENTACLES AND RISE SHARPLY.

Pressures mounted in early October at the London metals exchange as gold contract holders demanded delivery of gold. My source tells me that the parties demanding gold were almost exclusively Chinese. It is mostly private billionaires. Their stated motive was to diversify out of US$-based assets. Their rumored motive was to ruin the exchange, expose the chronic fraud linked to government ministries, and force the USDollar to fight in the open to demonstrate value or lack of value. The source said the next round of gold contract delivery pressure comes in late November, then again in March 2010, and finally in June 2010. He said the gold is gradually being drained in London, and that all demands for gold delivery were met in October, using legal force, the courts, and powerful attorneys. Not a single gold contract was settled for cash with a 25% dividend bribe. He concluded that the financial system will be broken at the gold-USDollar cross beam. He openly stated that he could not conceive of the system holding together past June of next year, and a severe test is likely in March 2010. He said with sly tone, „There is a saying: Watch out or you become shit before your own shovel. That is what is happening to the BOYZ right now. The people in the driver seat of the bulldozer have clear instructions what to do in the gold market.“ When the breakdown comes, it will be next to impossible to trade in USDollars, to settle commerce in USDollars, to finance the USTreasurys, to supply the USEconomy with credit, and to maintain the US banking system. The banks in the United States will then shut down in all likelihood.

THE BIGGEST GOLD CRIME STORY OF THE CENTURY MIGHT BE SOON COMING TO FULL LIGHT. EVIDENCE IS BEING ACCUMULATING THAT THE CLINTON ADMIN WITH RUBIN AT USDEPT TREASURY REPLACED PERHAPS THE ENTIRE CONTENTS OF THE FORT KNOX GOLD WITH TUNGSTEN BARS PLATED BY GOLD. CONSEQUENCES WILL BE FORTHCOMING.

My view is the story is not only credible, evidence mounting, but it is the climax to the US financial collapse.

DBank was in trouble, and temporarily escaped it. My German sources tell that DBank is walking dead from years of working in league with the Americans and British. The pressures are mounting every couple months. The next delivery schedule is the last 8 days of November into very early December. Pressures mount for meeting delivery demands. Next March will be a climax of the breakdown, or else June. A competent source close to the stressful events at the exchanges said he cannot conceive of the game lasting beyond June. An eruption comes in breakdown. Each delivery month event includes more gold removed from the London exchange, more gold demanded from it, and more movement toward a breakdown. He said the gold is gradually being drained from London vaults, and that all demands for gold delivery were met in October, using legal force, the courts, and powerful attorneys. Not a single gold contract was settled for cash with a 25% dividend bribe. So the next events are sure to have even more pressure, with less gold supply and continued relentless demand.