Florida Judge just changed billions in secured loans into unsecured loans

US Housing foreclosures, the continuing drama. There are so many legal implications in this one news story (in groovygirl’s humble opinion):

Click here.

In reaction to a Florida’s judge declaring certain foreclosures (by JP Morgan in Florida) not only are not legal, but fraudulent, GMAC has sent a letter to all its law firms/foreclosure departments to halt all foreclosures until further notice.

Why?

(However, in a public statement, GMAC is denying this, but the letter is available on zerohedge for your review.)

The Florida judge declared those foreclosures illegal and fraudulent because the bank does not hold the original note (it is not in their name), only the mortgage servicer paperwork. The note is probably in the name of the original issuer of the mortgage, but it is not needed to bundle mortgages into securities to sell to Wall Street. However, the holder of the note is what determines who can foreclose in at least half of these United States.

It is a mess.

This FL judge just upped the stakes, claiming the lawyers representing JP Morgan, who were trying to foreclosure without proper legal authority, were commenting fraud.

That means that the homeowners’ can sue the lawyers and JP Morgan for fraud. (And probably GMAC, too, it sounds like this is why they halted all foreclosures in judicial states.) Lawyers don’t like the word fraud coming from a judge’s month directed toward them. That’s disbarment language.

This has all the makings of a class action lawsuit comprised of every homeowner who has been issued a foreclosure notice in all 29 judicial states.

There are several pieces of paper associated with a mortgage on a house, the note and the mortgage. Usually, those are in the name of the same company or bank. And then there is the servicer of the mortgage, this is where the bundling of mortgages to sell on Wall Street gets involved. However, when companies like Countrywide started getting a large amount of mortgages from American citizens, and sold them to Wall Street to be bundled in Real Estate Mortgage securities, and they forgot, or were just lazy, or didn’t care about transferring the name on the note.

Wall Street really didn’t care about that note paperwork, because in order to get the interest payments (cash flow) to the security for their investors, they just needed to be the servicer of the mortgage. Now they have a legal problem when they try to foreclose because the note gives them the right get the actual property in lieu of payment, and they don’t have the note.

Do you know what this means? Legally, the banks that are just servicers and not holders of the note, really only have billions and billions of dollars worth of unsecured debt, not secured debt. At the moment, they have no legal right to the underlying, tangible asset of the house/real estate. It is now an unsecured loan. They, of course, can sue for payment and put a lien on the house, just as a credit card company can, but not foreclose in court. Credit card debt is considered unsecured debt for this very reason. Unsecured debt is riskier and is priced that way in the market place.

This leads into the other big potential problem, investors claiming fraud (or another reason of many to claim fraud)….investors in the banks themselves and investors in the securities they sold.  (Oh, and the brokers that sold them.) They sold these securities to investors as secured debt, when they really were and are (at the moment) unsecured debt. And this debt is represented on their balance sheets as an investment based on secured debt. That’s true fraud, aside from any market-to-myth accounting they might be doing.

As I said, this is a mess. And that’s why GMAC has halted all foreclosures and are getting their paperwork straight….to avoid being sued by delinquent homeowners and angry investors.

This paperwork challenge will also effect banks trying to sell foreclosed properties to new buyers. I wonder if any short sales have run into deed transfer trouble when the note is held by a company not even involved in the transaction. Or did the servicer just forge the signature? Click here. It would be nice if Big Media did some actually reporting on these problems.

The housing market is frozen and this is just the latest reason. Martin Armstrong’s outrageous prediction that real estate is in a 26-year decline (that began in 2007) is looking more plausible with each legal mess that comes to light.

Groovygirl thinks this is a short set back, just need to get some minor paperwork changed in all the under-manned, overworked, three-day-a-week county deed offices in 29 states. Listen, what’s that?…..the low roar of panic in every title company across these great United States.

Karma’s a bitch.

Side musing: make sure you take your lawyer to any housing transaction in the foreseeable future…buying, selling, or foreclosure. Protect yourself.

Our advice to any party caught in a foreclosure process is to immediately go to http://www.fnma.com and use the Lookup Tool to see if Fannie is still mortgage owner of record, if a foreclosure suit has been brought up by a plaintiff other than the GSE.

Update: gold reached a new high over night of $1296.10. And check out Matt Taibbi’s newest article on BP, out later this month in Rolling Stone.

Jim Willie interview

CB tipped groovygirl about the great interview with Jim Willie on Max Keiser’s most recent show. It doesn’t get any better than this, guys. Intrigue, theft, vigilantes…

Click here for a must-listen interview.

Jim Willie has always had very enlightened perspectives. The one thing that groovygirl got out of this interview……we will never know about a breakdown at LBMA or any big bank until after the fact.

After the fact means you are screwed. You must prepare now, you will have no warning, only rumors. Buy physical (or exchange in your paper) gold and silver now, not later.

A couple of other points that caught groovygirl’s eye:

Jim Willie lives in Costa Rica. He has already got out of dodge. It gives him a more global perspective and access to different media outlets than we get in the States. It is easier for him to think outside of the box, when he is actually outside the box.

Jim’s date of late July for the “run on the gold bank”, falls straight inline with the change in trend in the gold market.

These gold investors are withdrawing physical gold from London because they believe that their allocated physical gold account is being raided by the LBMA. Since the LBMA had to shut down or “went dark” when they made their move, they are probably right.

Is it a coincidence that B of A and London/Comex had trouble all at the same time? Jim doesn’t think so, it is all connected….by derivatives? Who knows. This just reinforces that when this breaks, the Fed will not be able to keep up with the  dominoes falling.

Jim’s contact says that this was an attack from Asia and Saudi gold holders. They started the assault just before vacation month, however, the attacks and their effectiveness are still working into September, pushing the gold price up. This is not a matter of taking advantage of low volume, this is an assault by private investors who want their physical gold…now.

This is a systemic attack to show the West that the East will not be toyed with. They seem to just be attacking with private money at the moment.

This take down of the London Gold market is happening now and it is big, even though it is in the shadows.

Big Banks, like Bank of America, can not hide their sins forever. It is just a matter of time.

Missing gold and silver and well-timed fires, oh my.

The gold banks have defective accounting, just like the regular banks do. Accounting trickery doesn’t solve debt problems. It just hides the timing of the implosion so investors can not protect themselves.

I am not glad about a collapse of the gold market or the Big Banks. But unfortunately, this must happen before we can have real growth again. The crooks must be brought to light before we can have real reform. It is sad that the government couldn’t have curbed greed to prevent this situation. Now, we have to do it the hard way and many people will be wiped out that are not prepared.

Side-note: in part 3, Jim Willie sites several breakdowns and bailouts in the financial industry in the past 10-13 years. This just shows you that the Winter Cycle has been in existence since at least 2001, if not before. The public is only now just realizing something has happened because it is actually effecting them, when the writing on the wall has been there since the Long Term Capital bailout in 97.

Update: gold reached another all-time high of $1292 and silver went up to $21.10 after Mr. B’s statement today. $1300 by December doesn’t seem that far-fetched, what about $1650 by January? We shall see.

Debasing the currency

Another great post by USAwatchdog, Greg Hunter, click here.

A quote from his article:

By and large, working people are pushed into 401k’s.  In the right business cycle with the right demographics (as in lots of baby boomers investing in stocks at the same time, such as the 80’s and 90’s, when business and inflation were relatively stable), the 401k is a not a bad deal, especially when you consider that companies often match or contribute funds to make the investment plan advantageous to participants.  But in the wrong part of the business cycle (aging baby boomer population and big government bailouts), the 401k can provide some gut wrenching lessons about “investing.”  People are painfully finding out that these plans have not been such a good “long term”  deal.  The S&P 500 has gone nowhere in more than a decade. Today, it’s back to 1998 levels.  (Click here to check out a chart of the S&P 500, and see for yourself.)

Side musing: Harvey Organ’s latest post on gold and silver inventories. Click here.

Side-side musing: as always, excellent interviews over at kingworldnews.com

Side-side-side musing: Europe saved Ireland’s bank. Click here. When banks are in real trouble or they are going to collapse or be rescued, we will never know until after the fact. That’s why you must protect yourself now and be prepared. At some point, the Big Banks will fail and the Fed/ European Banks will not be able to rescue them.

Update: gold at $1281 and silver at $21.90. This is what we are looking for, higher-highs and higher-lows in precious metals. That’s called an upward trend, not a “bubble”, as some try to claim. (They claimed gold was overvalued at $500, too, oops.) Right on schedule.

Groovygirl will not even consider gold over-valued until we reach the inflation-adjusted high from the early 1980′s or around $2500. It is entirely possible that by the time we get to $2500, the Fed will have created another $2 trillion in debt and the inflation-adjusted price is then $5000. The gold price always goes up to meet the debased currency, so gold’s ultimate price will always depend on how much the US debases its money.

Automatic Earth

Great interview over at Max Keiser’s website with Automatic Earth.

Click here. Interview starts in the middle.

Automatic Earth focuses on peak energy on her blog, but acknowledges that a financial collapse or debt deflation will impact energy cost and availability before we move into the phase where peak energy itself impacts availability.

So we are looking at a long steady decline in energy availability.  She is very much on the ball. You will notice that she calls for debt deflation, but also acknowledges that will result in a fall in the purchasing power of the currency (especially oil, valued in USdollars). We have another name for that here at muses…hyperinflationary depression.

A hyperinflationary depression is a deflation in debt and extreme inflation in prices brought about by a collapse, loss of confidence, or sharp decline in the purchasing power of the currency.

From John Williams’s latest commentary:

- August Annual Consumer Inflation: 1.1% (CPI-U), 8.5% (SGS)
- Production Down Except for Boost from Prior-Period Revisions
- Households Face Mounting Financial Stress
- Income Variance at Record High

Real inflation is at 8.5%. Remember, we will head towards gradual inflation and MSM will hail it is good and crisis is over. Then in a flash, inflation turns to hyperinflation. That’s quite a difference between 1.1% and 8.5%. Talk about denial.

Update from LEAP 20/20

Great update from LEAP 20/20. GEAB N°47 is available! The Global systemic crisis – Spring 2011: Welcome to the United States of Austerity / Towards a very serious breakdown of the world economic and financial system.

An excellent read, but here is a very quick summary:

• US Fed is out of bullets and guns, completely powerless, expect a lot of threats and pointing of fingers out of Washington towards the rest of the world. Groovygirl is sure the world is now pretty much over that tactic.
• We start the descent into full fear mode from now until Spring 2011. Louder rumblings from the people.
• Government will start cuts in spending in the spring, talking about the huge debt, rising taxes, etc. (Greenspan is already talking about this.)
• Continued selling of US Treasuries, Fed uses its last options. This will probably set the US up for what John Williams’ predicted just a week ago: Fed will be fully monetizing its own debt in 6-9 months.

Update: six banks down yesterday.

Lira does it again….

Excellent post on the case for hyperinflation. This article is a must read.

Click here.

This is why Bernanke is set up to take a hit from hyperinflation: If and when there is a run on Treasuries, and a subsequent run up of commodities, at least initially, the Federal Reserve under Ben Bernanke will not only do nothing, they will encourage this situation. The Fed and its current leadership will interpret this rise in the CPI number as an indication that “We are on the road to recovery!”

Groovygirl agrees with Lira on a treasury run, but she knows that those nagging, unresolved derivatives will play into this road to hell in some way. Maybe as the trigger? Maybe to quicken the ride? Maybe to spread the risk from one country to the global market? Not sure. But, it won’t be pretty.

Your protection? Physical gold and silver.

Update: gold hit $1284 and silver hit $21 in overnight trading as the dollar sank below .81. It’s the end of the week, expect an attack from the gold banks from 6 am to 1 pm.

Gold concerns

This zerohedge post brought up many good points that groovygirl would like to reiterate.

Click here for the full post.

We will have some warning of confiscation if that should happen. Don’t worry about that now.

Yes, groovygirl agrees that the latest 1099 “add-on” to the health care bill is a set up for a VAT tax. The VAT (value-added tax) is in your future. Every retail and wholesale client I speak to tells me that they are under a tax audit. The states and Feds are setting up the infrastructure for this now. They are getting what tax money they can right now, and they are setting up the streamline process for VAT later. This will not have a positive impact on the economy.

Do not buy “collectible” gold coins, please. Buy straight bullion coins or bars now and hold them long-term, don’t trade them. And when you do decide to sell….shop around for the best price.

However, I think that the end game in physical gold will be different from the 70′s. I don’t think there will be any physical gold around to buy. We are now talking about the whole world clamoring for a non-fiat currency save haven, not just the Western world during the 70′s. China’s (and India and Saudi and middle east) population (that actually understands the power of gold right now) will see to that.

More important, however, is that if you are not going to be a collector, then stay away from anything but U.S. or Canada-minted bullion coins, or bullion bars issued by the widely acknowledged mints such as Johnson Matthey.

Update: new inter day high for gold of $1278! Silver is past $20.50 and currently holding $20.76. Excellent moves.

Flooding

Did the US military cause the flooding in Pakistan? Click here. Groovygirl would like to get another confirmed report of this.

George Washington makes an excellent point. Groovygirl has long held the opinion that the war against terrorism has the potential of imprisoning Americans in their own country. Click here.

Update: excellent post from Monty today at Jim Sinclair’s website. Click here. It should provide some guidance.

Recap on the real news

So much going on….

groovygirl is just posting some really good links, news, interviews from the last 4-5 days:

From kingworldnews.com, a must-listen interview with James Dines on rare earth metals and of course, gold. Click here. Listen twice.

Lots of internet buzz about Lira’s articles on hyperinflation and the old deflation vs. hyperinflation debate. Groovygirl thinks hyperinflation, but really, guys, if it’s death by fire or ice, it’s still death. Can’t we focus on that? The system is broken, that’s the real issue. Groovygirl likes gold in hyperinflation or deflation.

Click here for another excellent interview with Lira. Read the comments on zerohedge, only ONE commenter got it right…inflation and hyperinflation are two completely different things because during inflation, people still believe in the currency, in hyperinflation no one believes in the currency.

Hyperinflation is extreme inflation in prices and deflation in debt brought about by a complete loss of faith in the fiat currency.

The USDollar will be severely devalued (either controlled by the US Gov or crashed by a run on Treasuries) because every one who has the dollar (and that includes US Treasuries) will sell them for anything other than dollars.

It is a loss in confidence in the paper. It is not a matter of the Treasury raising interest rates until they have a buyer, the event that will happen is there is no buyer at all. They will not have a buyer at any interest rate for several offerings. They can’t buy their own debt forever, they can do that once or twice in a row to get by, but not forever. When they have several offerings with no other buyer but themselves, it is over.

As a side note, groovygirl was shocked that the commentators really think that the US is still the king of the global financial industry and the whole world really wants to play ball with us. They really think that the nations of the world will line up to continue to be enslaved by our fiat reserve currency. Amazing.

First of all, if the financial wizards of NY would get their heads out of the…..sand and look around, they would see that the financial industry has already moved East and that over 75% of new IPOs are issued OUTSIDE of the US stock market exchanges. The big boys that can take their ball and go home, have already done so. (The 9-11 foreign capital rules and taxes took care of that a few years ago.) As soon as there is another global game going (i.e. China), everyone will play there. Greed has completely blinded the US financial industry (and apparently gov, too) to what is happening right before their eyes. They are still drinking the kool-aid, when half the people around them are not breathing.

Insiders are selling, but who is buying? Click here. Read the comments.

Fed buys more of its own slowly-becoming-toxic paper. Click here.

Update on the expanding balance sheet of the Federal Reserve, if it is an accurate sheet. Click here. Transferring toxic debt from everyone else to the Fed, doesn’t solve the debt problem. It only sets up the Fed for the exact scenario that Lira outlines in his recent papers on hyperinflation.

Harvey Organ had some interesting comments on physical gold and silver. Click here.

Regarding silver:

Not only that  but a huge 381,412 oz of silver was removed from the customer vaults.

Something is frightening them. ( Probably the 45,701 oz and the 117,561 make up most of the silver removed from the customer vaults.  In other

words as soon as the silver was returned and settled, the owners decided it was in their best interests to remove that silver from a registered comex vault.)

Warren Buffet says that there will be no double-dip and the economy is recovering. Click here. Thank goodness, groovygirl is so glad that is settled. And be sure to stop by your local Well Fargo Bank, according to Buffet, they are begging people to take out a loan. This article is a complete joke. Buffet is either being paid off or utterly senile.

And those that still think China has to sell its dollar holdings (thus tanking their own investment) to sink the US, think again. Click here. It is financial warfare for the 21th Century and the US is going to lose. The financial games we played with the world the last 50 years are so going to come back to haunt us. That’s karma, baby.

Make sure you are protected from the idiots running this game. It will not end well.

Update: gold hit new high on inter day trading…1272, then just now 1275….NICE! Silver in definite breakout mode, now fighting for 21, at 20.47 for the moment.

Special Report from John Williams at shadowstats.com

Groovygirl is interrupting her normal posting for a special report from John Williams at shadowstats.com. Since his latest commentary is a subscription (well worth the money!), I will not reveal the detail.

However, here is the summary:

- Protracted Economic Downturn Re-Intensifies
- Systemic Stability: “Tap-Dancing on a Land Mine”
- Risks of U.S. Dollar Instability and Systemic-Salvation Efforts Pose Severe Inflation Threat

John’s general outlook remains the same as detailed in this Hyperinflationary Report updated for 2010. Click here. (It is free, please read.)

John does get more detailed on dates in the commentary released today. He sees the Fed completely monetizing their debt in 6-9 months brought on by a flight from the dollar. This will set up the next step-the move to hyperinflation.

Remember that there may be a few more short-lived tricks up the Fed’s sleeve after that 9-month period, like buying gold at a predetermined price (make sure you do not sell your gold then). That move is a warning sign to buy gold if you have not already, not to sell gold. It is a way to devalue the dollar further.

The bottom line is we are still on the road to hyperinflation, with no detours in sight.

Be prepared. Buy and hold physical gold and silver during this period. I am sharing this information, so you know how much time you have to get into position.

More info on John’s latest letter here.