Just as Oppenheim anticipated, this year we’ve seen how big this foreclosure mess really is. There were numerous investigations, and a self-imposed moratorium on foreclosures during parts of 2011, resulting in a massive backlog of cases.

It was ludicrous, as Bank of America officials first said, that they would only need 60 days to review their inventory of files.

“It took them virtually a year to figure out that they were doing were just not kosher and had to stop,” Oppenheim explained.

There were several huge financial settlements offered to the banks over their illegitimate foreclosure practices, but the majority just did not stick.  Judges told them the settlements were unacceptable and did not go far enough. With various attorneys general and the IRS among the agencies getting involved, these cases are nowhere close to settled.

“The banks literally got their hand not just caught in the cookie jar, but the lid was slammed on it, and everyone got to see the hand just hanging there,” said Oppenheim.

2011 is leaving us with a still unstable market, so people are looking for tangible investments, Oppenheim continued, and with the dollar still weak, Florida real estate is not a bad deal. When you add the fact that there is an excess of distressed properties, prices are not expected to rise anytime soon. he said.

Now every year there is an X-Factor, and this year it was Occupy Wall Street. It was a movement no one really saw coming, and despite some right-wingers attempts to limit Occupy as a fringe movement, Oppenheim said, there is no question the message of Occupy has resonated with middle America.

Why?

It brought to the forefront two huge truths. One being that there is a huge economic inequality between the so called ‘1%’ and the rest of us.

The 2nd is that the veil has been lifted on how intertwined the government, the big banks and the Federal Reserve have become.

“The banks have grown so big and so large that the government itself is afraid to really, truly regulate it, because you really can’t tell where the government starts, where the federal reserve ends, its a really ugly sight.”

Anyone looking for an example need look no further that the 7.7 trillion dollars the Fed loaned to the largest banks — at essentially 0 percent! And what did the banks do with those assets?

Well its not only what they did, Oppenheim said, but what they DIDN’T do.

“They didn’t lend it to mainstream America, which would have seemed like they were going to do to help reverse this deflationary cycle.”

Instead it only led to more profits,which “came off the backs of you and me” to pay themselves bonuses and to help elect officials that were sympathetic to the banks, and not the average Joe.

Some politicians have floated the notion that corporations are people, but then, Oppenheim asks, how do you arrest a corporation and hold them accountable?

He concedes that it’s possible that individuals within these companies may not have committed a crime, but it’s clear that some companies as a whole did.

“I don’t buy into the notion that a crime wasn’t committed,” Oppenheim said, “We have not advanced our legal system sufficiently to deal with these very complex financial crimes.”

While foreclosures may have slowed down in 2011 he expects them to pick up in the new year.

“There’s this new wave, It’s not going to be as large, but it’s going to be a continuous stream coming through.”

Then there is what he calls zombie foreclosures,  which had been dismissed, but not permanently. Oppenheim would not be surprised to see them spring up in 2012.

“So far we haven’t seen them come back, but the banks have the right to bring them again,” he said.

If that happens, he fears the system would once again become bogged down with an overload of foreclosure paperwork, that will go through at a much slower pace.

The truth is, if banks brought all foreclosures to market right now it would crash the market, Oppenheim said, and the banks would become insolvent.

So what does Oppenheim predict for the real estate market in 2012? While he knows he can’t predict the future, Oppenheim says to expect the unexpected.

“I see that they’ll be something that we completely don’t anticipate,” Oppenheim said, “I’m not sure what it’s going to be.”

Coming up in our next blog, we’’ll review our top 10 stories for 2011.  Happy Holidays!

Wall Street corruption blurs the lines between good guys and bad guys as this week’s headlines bubble to the top.

Government's Long Enforcement Slumber is Over, says Roy Oppenheim

Unbelievably guilty in the court of public opinion. Now ultimately guilty in a court of law.

The conviction of Galleon hedge fund billionaire Raj Rajaratnam on all 14 counts of conspiracy and securities fraud is a prime example of rampant Wall Street greed and conspiracy.

It’s become clear that bankers took advantage of us all through the tricks and frauds of petty crooks.  Ironically, these crooks bankers are now being brought down by the same investigatory wiretap techniques once used only in drug and mob cases. Perhaps “Bankster” is now the appropriate moniker.

Rajaratnam, formerly viewed as a skilled investor and stock market genius, should have stuck to “counting cards.”  It’s one thing to make informed, intelligent investments by counting cards through legitimate research and public knowledge.  It’s another matter entirely to “mark the cards” through insider secrets, privileged tips and paid informants.

Now, after a mosaic of insider trading and deception has been uncovered, the billionaire Rajaratnam is exposed as a card marker. Consequently, he faces the prospect of spending the rest of his life in federal prison.

Not surprisingly, this card marking culture is closely tied to the banks and mortgage-baked securities (MBS) industry that brought down the American real estate market.  Banks simply were playing a game they new they couldn’t lose.

Our banks executed their own card marking by spiking investment portfolios with mortgages they knew would never be paid and then betting against those portfolios through the insurance markets.  Rolling Stone magazine analogized the process to selling a car without breaks and then betting on it to crash.

Just as justice is being served on Rajaratnam, it appears banks are not in the clear of their spectacular malfeasance.  Signals continue to point to the fact that MBS litigation against the banks is just beginning.

First, AIG has finally started taking legal action against some of the banks that induced it to insure mortgage products designed to fail.

Second, the U.S. Department of Justice has brought suit against Deutsche Bank and its subsidiary, MortgageIT, for several violations of the federal False Claims Act, common law negligence and gross negligence based upon years of reckless lending for more than $1 billion.  Bloomberg reports that this may just be the beginning of suits by the government against lenders.

“We go where the evidence takes us, and if it takes us to the larger players on Wall Street, so be it,” said Helen Kanovsky, the Housing and Urban Development Department’s general counsel.

Finally, it’s possible that following the Deutsche Bank litigation, criminal charges may follow.  Oppenheim Law wrote about the Matt Taibbi Rolling Stone Magazine article, “Why Isn’t Wall Street in Jail?” in March begging for accountability for this financial scandal. It appears the banks’ day of reckoning could be right around the corner.

Two weeks ago, the Levin report issued by the U.S. Senate, found that Goldman Sachs misled its clients about mortgage derivatives, was formally referred to the Department of Justice and SEC.

Ultimately, Goldman and its executives could face criminal charges for its actions leading up to the mortgage crisis as well as indictments for perjury in connection with executives’ testimony before Congress.

The bottom line is that hedge fund managers, investment bankers and our country’s largest banks grew too smart and too greedy for their own good.  Finally, it seems justice will be served.  The pendulum is swinging back… it always does.

From The Trenches,
Roy Oppenheim

In a typical jaw-dropping article for Rolling Stone Magazine  The Real Housewives of Wall Street, Matt Taibbi reveals the shocking practices of the Federal Reserve during the Great Recession.

With the nation staggering, the Federal Reserve took it upon itself to lend trillions of dollars at nearly zero percent interest. Then, as collateral, the Fed took the securities that were bought with the loans. The arrangement meant that if the securities lost money, the Fed would be stuck with the losses but if the securities made money, then the investors would pay back the loans and keep the higher priced security. Privatizing gains, socializing losses, all in an effort to stimulate the economy. Such loans were not made available to everyday folks; only to the important pillars of our economy: Japanese car companies (while bailing out their competitors), Middle Eastern banks (including one later bought by Muammar Gaddafi), tax dodgers in the Cayman Islands (imagine, subsidizing tax evasion), and the spouses of Wall Street executives. No, that isn’t a typo, the wives of Wall Street executives were offered risk free loans guaranteed by you, the taxpayer.

Taibbi looks at the case of Christy Mack and Susan Karches, the wife and widow respectively of the CEO and the late president of investment banking at Morgan Stanley. While Morgan Stanley itself received over $2 trillion in Federal Reserve risk free, subsidized loans, Christy and Susan also received $220 million for their company, Waterfall TALF Opportunity. With the money, the duo bought student loans and commercial mortgages. If the loans or mortgages ever decrease in value, Waterfall effectively will not have to pay back the Fed and let the Fed keep the devalued securities.

It’s shocking to see that while Washington is debating which social programs to cut and how to get the deficit under control, the Federal Reserve feels it is ok to give nearly a quarter of a billion dollars in risk free loans to two “desperate” housewives who already have more money than they will ever need.

Maybe we all need to marry a Wall Street executive? Let us know your thoughts on this in the comments section.

Dear Wall Street: We’re not in Vegas anymore! The Sin City “players” of Wall Street might be trading in the fancy hotel rooms for prison cells.

The SEC is now following the Federal Reserve and the Senate is chastising Wall Street for effectively causing the economic crisis.  The Securities and Exchange Commission today announced that they too will be joining the bandwagon and fining the major banks on Wall Street for fraudulently causing the worst economic meltdown since the Great Depression. They follow on the heels of the Federal Reserve and the United States Senate in lambasting the “banksters”.

Nearly 2½ years into the economic crisis and not a single individual has yet been held accountable or responsible for their actions. All of a sudden, a rein of terror is coming down on Wall Street.

Well, all I can say is that it’s about time and we told you so. Elliot Spitzer did so as well. Here is an interview he did with Anderson Cooper last night (tip: fast forward to about 11:08).

Spitzer goes over the massive fraud perpetrated by Wall Street and demonstrates how easy it would be to put Wall Street executives in jail. His co-interviewee, Matt Taibbi of Rolling Stone Magazine, made the analogy of a car dealer selling cars he knew were defective and then taking out life insurance policies on the passengers of the cars. This is exactly what Goldman Sachs and the other investment banks were doing; only Mr. Taibbi left out the fact that before selling the cars, the banks took them to mechanics that strip the breaks!

In light of the flood of reports, perhaps a second look needs to be taken at the homeowners of this country. Those homeowners who are not paying their mortgages, whether because they cannot afford them or because they do not see the point of paying a mortgage worth double their home’s value, are sometimes criticized and called deadbeats. I have a new label to apply to them: protesters. How can someone be criticized for not giving these Wall Street criminals money, especially when they are the reason our economy imploded and housing prices collapsed!?!?

Two years ago I suggested that if the allegations against Wall Street were in fact true that a Shay’s Rebellion  2.0 would manifest itself.  Who would have ever thought that the evidence now suggests a scheme and sham much greater and profound than Madoff’s Ponzi scheme?

I used to think that Wall Street had the brightest minds coming out of our top schools and thus they knew how to count cards: a perfectly legal approach to beating the odds in Vegas.

However, who would ever have thought that our most respected names on Wall Street would cheat the house by playing with a marked deck!

May I respectfully suggest that this crisis did not start on Main Street, it started on what should become Prison-Wall Street!

According to The New York Times editorial, the Federal Reserve has proposed a rule that would disable one of the more effective legal tools that borrowers have to fight foreclosures.

The Truth in Lending Act from 1968 gives borrowers the “right of rescission,” the ability to undo a home refinancing or home equity loan within three years of the closing if the lender did not make proper disclosures. The Fed’s proposal would change all that.

But the bigger question is why would the Fed even get involved with this hot potato? Isn’t the Fed a non-partisan – above the politics – holier-than-thou institution that keeps the economy humming and rocking? Aren’t they the ones with the ability to print money and inject it into the economy as they have the ability to suck money out of circulation when things get too heated? Aren’t they the ones that paid 100 cents on the dollar for underwater virtually worthless sub-prime mortgage bonds under the ruse that the funds paid for the bonds was the fastest way to get money into the economy?

So… why is the Fed so concerned about a homeowners right of rescission when the banks were originally the ones who over stepped their bounds? The answer is pure and simple! The Fed is a wolf in sheep’s clothing. They are not concerned about you and me. They are there to protect their own turf. They are there to protect the big banks and Wall Street interests.

The Fed is concerned that if the consumer truly begins to catch on that their statutory and constitutional rights have been abridged on a systematic basis, many banks would likely no longer pass the very financial stress tests that the Fed put in place to ensure that the economy dos not collapse. How ironic. Set up new tests and then bend the rules so that the banks can continue to cheat the system.

The Fed siding with the banks over the consumers is not new. Why is it that every government program to help homeowners has failed to date? First it was going to be a cram -down provision change in the bankruptcy code, then wide-spread modifications, then under-water refis! None of these proposals have worked and won’t work because the Fed has been too concerned with consumers taking matters into their own hands. Until now I had only surmised that that was what was going on… but this time the Fed went too far by openly letting us all know where they truly stand.

The New York Times says it best:

The Fed failed to protect consumers before the financial crisis, and is failing again.

I think it’s a shame that a well scholared man like Ben Bernanke who is the utmost expert on how the government re-stimulated the economy during the Depression could have become so co-opted. I have four words for Mr. Bernanke:

DO YOUR JOB BEN!

From the Trenches,

Roy Oppenheim

There is something so deeply wrong and disturbing with the current foreclosure crisis.

Simply:  While most of us have some opinion as to the foreclosure mess, many don’t seem to care about the incredible amount of fraud that has occurred and continues to take place each day.

Some argue that people who fail to pay their mortgages, regardless of their reasons, are “deadbeats.”  But, what about the fact some of the largest and wealthiest banks are missing documents used to remove people from their homes?  And, in our “rocket docket” State of Florida, there are retired judges who are merely rubber stamping the foreclosure papers filed by the lenders’ firms without actually reviewing the merits of each case?

In Matt Taibbi’s rather eye opening and disturbing article Courts Helping Banks Screw Over Homeowners appearing in Rolling Stone Magazine November 10 issue, he recounts a day of going to a Jacksonville court and experiencing first hand the outrageous and flagrant rubber stamping of cases without judicial review.

Shouldn’t it matter that many of these cases result in people being forced to leave their homes when the very banks in question can’t even produce the documents needed to prove their case?  Isn’t it a bit odd that these wealthy banks are not being subject to the same level of scrutiny?

Or is this politics as usual?  After all, many of these banks sold the mortgages of people to “investors” –other banks or trusts.  And, many of those trusts do not have the documentation to prove they have the original documents.  Wall Street, in fact, was part of this process and made huge sums of money.

And, what about the fact that banks have broken into homes that are in foreclosure?  Where is the punishment called breaking and entering?

While each of us has a responsibility to pay our debts, there has to be some accountability by the banks for creating an environment where many people borrowed too much and where they themselves have not responsibly acted.    Ironically, our government spent billions to bail out the banks who, for the most part, have acted without impunity in this foreclosure nightmare.

Will the government bail out the homeowner?  Or will the massive fraud that is now being exposed, and yet used everyday in court, continue to be ignored?

Humpty Dumpty sat on the wall.
Humpty Dumpty had a great fall.
All the king’s horses and all the king’s men.
Couldn’t put Humpty Dumpty back together again.

Most Americans, including some lawyers and even judges don’t understand what happened. Yes, it is complex and confusing. But at the end it’s real simple.

In the old days, a bank would lend a homeowner money to buy a house.  The homeowner would sign a promissory note promising to pay the money back to the bank.  The homeowner also signed a mortgage, giving the bank the right to foreclose and take the house back if the homeowner did not pay back the money.

Mortgage Follows the Note

Lawyers and judges grew up with the legal doctrine that the “mortgage follows the Note.” Simply put, if the note was transferred from one bank to another the mortgage would follow the transfer.

But that was then, this is now.

At some point, the folks who brought you this mess  (i.e. overly ambitious bankers on Wall Street) had the “great idea” of slicing and dicing the interest of the Note and literally severing it from the Mortgage. Why this was done was actually for a matter of convenience, expediency, and, arguably, greed. Such motivations for now are secondary to the crisis we are experiencing.

Humpty Dumpty = Mortgage and the Note

But this is clear:  If you think of Humpty Dumpty as the Mortgage and Note, and you break it apart (as what occurred on Wall Street), when the Notes were broken into pieces and the mortgages were assigned to Mortgage Electronic Recording System (MERS), the fact is that it may well be nearly impossible to bring the mortgages and their corresponding Notes all back together again. Plain and simple!

Banks Under Siege

This is why the banks are now under siege. Banks are accused of fraud and perjury in trying to put the Note and mortgage back together. In fact, The New York Times is running Foreclosures Slow as Document Flaws Emerge today as its lead story. The Sun Sentinel quotes Nova law professor, Robert Jarvis (an old Bronx Science classmate of mine) who stated that this problem is now too large for the courts to handle and that the federal government or the banking industry itself will have to step in.

Following Chase’s Lead – Sun Sentinel Cover Story by Harriet Johnson Brackey

I spoke with Harriet about this yesterday and now it is today’s cover story.

Weston attorney Roy Oppenheim says the state Supreme Court’s decision to spend millions to speed up foreclosure cases is ultimately going to slow down the whole process.

“It’s going to backfire on everyone who thought they could ramrod these foreclosures through while denying people due process,” he said.

And it will!

Title Insurance Companies Stop Insuring

Adding insult to injury, some title underwriters are now not willing to insure any real property where GMAC foreclosed. That means if you recently purchased a home just pray you have title insurance because you have a huge claim looming. You will not be able to resell or refinance your property for a long time.

So… while some of us have warned for some time that many of the banks are really not “good” eggs,  Chicken Little has come home to roost.

“All the kings horses and all the kings men will not be able to put Humpty Dumpty back together again.”

Oppenheim continues to help Florida homeowners learn more about developing stories concerning bank fraud and will focus on this subject in his monthly foreclosure defense workshop on Wednesday October 6 at 6pm.

Roger Lowenstein, an extremely well respected financial journalist took the trade association for mortgage bankers (the MBA) to task in Sunday’s New York Times Magazine for calling homeowners “immoral” who strategically walk away from their mortgage obligations. Lowenstein points out that Wall Street walks away from their obligations all the time and effectively asks how they dare call the kettle black.

For more than a year now through the South Florida Law Blog, monthly Florida foreclosure defense workshops and social media outlets like Facebook and Twitter @OPLaw, Oppenheim Law continues to help homeowners and other real estate holders such as investors and second homeowners. A constant and key consideration is determining the sense of continuing to pay a mortgage that is upside down and may remain that way for many years to come.

Oppenheim Law believes foreclosure defense strategies are not a moral issue, but an issue of what is economically rational.  However, John Courson, President of the Mortgage Bankers Association, decided this past week to enter into the discussion when he was quoted in the WSJ as saying: “Homeowners should think about the ‘message” they will send to their families and their kids and their friends.” He was somehow trying to convince all of us that there is still a social stigma to walking away.

JOHN COURSON READ MY WORDS: YOU ARE SO WRONG…. IN FACT YOU DON’T EVEN HAVE A CLUE!

The fact is the evidence has arrived that the social stigma of foreclosure is eroding quickly, and once one embraces the process, there is a sense of freedom or liberation that my clients frequently experience. They no longer feel enslaved to the bank or to the payments and are able to get on with their lives. Of course there is nothing wrong with first fighting the Bank over whether the loan was even valid in the first place.

Pictured above is John Courson, president of the MBA. "John Courson, read my words: You are so wrong... In fact you don't even have a clue!" says Florida foreclosure defense attorney Roy Oppenheim.

Ironically, or paradoxically, Courson stepped into the largest of hornets’ nests. Lowenstein points out that Wall Street and the businesses they acquire walk away from debts all the time!  Just ask Morgan Stanley that walked away from commercial mortgages after they purchased certain properties at the wrong time. Or private equity firms that buy businesses and then close them down to pick out the bones. Is that not a form of walking away? As opposed to keeping the folks employed and trying to build a better company? But NO… NO ONE would call John and his lobbyist friends immoral for allowing the banks to get bigger than the government and then have the nerve to flaunt it over and over again with the mantra that the banks are “too big to fail.

John… let me tell you a little secret: The banks are not too big to fail… THEY are TOO BIG!  You know if the banks were still like the one Jimmy Stewart ran in “It’s a Wonderful Life,” folks would still feel an obligation to their banks and bankers. But not when the Banks have an asset base larger than most countries in the world, and when you never get to talk to someone that you personally know.

So John answer me this… what do you tell your children at night?

Do you tell them you lobbied the taxpayer for the largest bailout in the Nation’s history after creating a system that allowed for unfair and deceptive trade practices to rule the day due to lax oversight because of pure politics?

Do you tell them that the Attorney Generals are now after your members for creating an organizational environment from the top down that created a festering hive of immoral and unethical activity such as making loans to folks who one knew would default, yet the loans were bundled and sold to teachers and firemen all over the world as their retirement?

Or the fact that mortgage applications were intentionally doctored by your members staff or brokers who also helped get inflated appraisals?

And John don’t forget to let them know you had a big hand mortgaging their futures and their grandchildren’s future. Tell them NOW that one day they will need to add a zero onto every dollar bill because the dollar will be so devalued we will copy our neighbors in South America. Let them know now, John, who the moral one was! Make sure you send them the right “message.”

I invite your comments, tell us what you think?

Wall Street, One Year Later

The Times’s Andrew Ross Sorkin, Gretchen Morgenson and Joe Nocera recount the events of the weekend that Lehman Brothers failed and discuss the lessons learned from the financial crisis…

Until now, as reported in the New York Times yesterday if you adjusted academic performance and compared graduating students from Harvard for the past 50 years, those that went on to Wall Street made a whopping 300% more than their counter-parts!  Well those days are officially over!  So now, maybe we can and will deploy these top minds into the real business of America: making her stronger, leaner, and better.  I know I am not alone here… even the President of Harvard, Drew Faust, just last year admonished the graduating class to follow their passions and dreams and not their wallets. Ironically, those that heeded her wise advice will likely stand better in this new post 20th Century economy… where small, creative and passionate may truly be beautiful.