Friday, July 23, 2010

Next Bubble: $600 trillion? They Would Rather You Concentrate On The Gulf Disaster, Then This One Coming. Global Green Earl

"everything from commodities options to credit swaps –
topped $604 trillion worldwide at the end of June 2009".  

" To comprehend the relative magnitude of derivative
contracts globally, the CIA Factbook estimates the 2009
Gross Domestic Product of the world was just under $60 trillion. 

Does anyone else here see a problem with the figures above?
_Citizen Activist

WND Exclusive


Next bubble: $600 trillion?

Cities, states, universities could sink from monster derivatives meltdown

Posted: April 19, 2010
9:40 pm Eastern
By Jerome R. Corsi
© 2010 WorldNetDaily

Bank of International Settlements in Basel, Switzerland
As interest rates begin to rise worldwide, losses in derivatives may end up bankrupting a wide range of institutions, including municipalities, state governments, major insurance companies, top investment houses, commercial banks and universities. Defaults now beginning to occur in a number of European cities prefigure what may end up being the largest financial bubble ever to burst – a bubble that today amounts to more than $600 trillion. The Bank of International Settlements in Basel, Switzerland, now estimates derivatives – the complex bets financial institutions and sophisticated institutional investors make with one another on everything from commodities options to credit swaps – topped $604 trillion worldwide at the end of June 2009. To comprehend the relative magnitude of derivative contracts globally, the CIA Factbook estimates the 2009 Gross Domestic Product of the world was just under $60 trillion. Derivative contracts, therefore, have now reached a level 10 times world GDP, meaning even a 10 percent default in derivatives would equal world GDP. The small 800-year-old town of Saint-Etienne in France has just defaulted on a $1.6 million contract owed to Deutsche Bank. The city entered into a complex currency-swap arrangement to reduce the cost of borrowing some $30 million. To cancel all 10 derivative contracts Saint-Etienne currently holds would cost the town approximately $135 million, more than six times the amount initially borrowed, largely because no bank or institutional investor would want to purchase contracts that are now on the losing side of the bet. Saint-Etienne is only one of thousands of EU municipalities that bought into derivative contracts as a way to cut the costs of municipal borrowing. (Story continues below)

A key problem with derivatives is that in the attempt to reduce costs or prevent losses, institutional investors typically accepted complex risks that carried little-understood liabilities widely disproportionate to any potential savings the derivatives contract may have initially obtained.

The hedge-fund and derivatives markets are so highly complex and technical that even many top economists and investment-banking professionals don't fully understand them.

Moreover, both the hedge-fund and the derivatives markets are almost totally unregulated, either by the U.S. government or by any other government worldwide.

But losses on derivatives are not limited to government entities.

Wednesday, July 21, 2010

Next bubble: $600 trillion? Cities, states, universities could sink from monster derivatives meltdown Source:

Harvard's billions
Obama administration economic guru Larry Summers may end up being best remembered for having destroyed almost single-handedly the Harvard University endowment fund as a result of misguided instructions he gave the fund's management during his tenure as Harvard University president from 2002 to 2006.

Summers, currently director of the White House National Economic Council, called for an aggressive investment strategy in which Harvard's endowment fund engaged in risky strategies, including derivative strategies that have burdened the nation's largest university endowment with billions of dollars in toxic assets.

As a result, the Harvard endowment, which peaked at $36.9 billion in June 2008, has since lost some 30 percent of its value, dropping to $26 billion, according to Bloomberg News.

In October 2009, Harvard University paid $497.6 million to investment banks to get out from $1.1 billion in interest-rate swaps that were intended to hedge variable-rate debt for capital projects, Bloomberg reported.
In what amounted to Harvard's biggest endowment loss in 40 years, the university also agreed to pay $425 million over the next 30 to 40 years to offset an additional $764 million in credit-swap deals gone bad.

Citing failed interest-rate swaps that forced Harvard to pay banks $1 billion just to terminate the junk contracts, Bloomberg reported the Harvard endowment's investments have become so toxic that even Summers won't explain what happened during his watch.

The Boston Globe squarely put the blame on Summers' doorstep, noting he came into office with a bold vision to expand the size of its science facilities by more than a third.

Average yearly expenditures for facilities jumped from under $150 million from 1995 to 2000 at Harvard, to $495 million from 2001 to 2005, to $644 million in 2009.

"Summers told the faculty not to think small," the Globe wrote. "Its ambitions were limited only by its imagination, he said. Harvard could always come up with more money from its 'deeply loyal fans.'"

Unfortunately, deeply loyal fans and alumni with deep pockets were not enough to bail the university out from Summers' ill-advised investment advice.

Bloomberg reported that cash-strapped Harvard recently asked Massachusetts for fast-track approval to borrow $2.5 billion.

The damage done to Harvard is not limited to plans to expand the science facility into blue-collar Allston. Now, the university is faced with slashing faculty and staff.

Last year, more than 1,600 of Harvard's staff were offered early retirement, and more than 500 accepted.
"Loyal alumni have contributed generously to stanch the bleeding," the Globe wrote, "but huge deficits remain in spite of all the reductions. Harvard will be a smaller place when the dust settles, with less educational and scholarly reach. It will employ fewer people and will contribute less to local and national prosperity."

What are derivatives?
While the hedge-fund market is small in comparison to derivatives, hedge funds in the U.S. are still a $1.5 trillion industry.

Hedge funds and derivatives share a common characteristic in that both were set up initially by professional investment advisers to assist them in managing the risk contained in institutional investment portfolios, including mutual-fund assets or pension funds that typically involved hundreds of millions of dollars.

One of the original ideas behind derivatives was the realization that professional money managers, including those in banks, investment companies and hedge funds, needed to make bets to offset the possibility of taking losses.
A popular form of derivative contracts was developed to permit one money manager to "swap" a stream of variable-interest payments with another money manager for a stream of fixed-interest payments.

The idea was to use derivative bets on interest rates to "hedge" or balance off the risks taken on interest-rate investments owned in the underlying portfolio.

If an institutional investment manager held $100 million in fixed-rate bonds, for example, to hedge the risk, should interest rates rise or fall in a manner different from projections, a purchase of a $100 million variable-interest-rate derivative could be constructed to cover the risk.

Whichever way interest rates went, one side to the swap might win and the other might lose.

The money manager losing the bet could expect to get paid on the derivative to compensate for some or all of the losses.

In the strong stock and mortgage markets experienced beginning in the historically low 1-percent interest-rate environments of 2003 through 2004, the number of hedge funds soared, just as the volume of derivative contracts soared from a mere $300 trillion in 2005 to the more than $600 trillion today.

Bloomberg reported the number of hedge funds tripled in the last decade to a record of 10,233 at the end of June 2008, according to the Chicago-based Hedge Fund Research Inc.

More than one-third of those funds could be "wiped out" in the economic downturn that began in December 2008, Bloomberg said.

The Bank of International Settlements in Basel, Switzerland, makes no estimate of how much of the $604 trillion in outstanding derivative contracts are today vulnerable to collapse.

Losses in derivatives played a major role in the bankruptcies of both AIG and Bear Stearns.

Related offers:
"AMERICA FOR SALE: Fighting the New World Order, Surviving a Global Depression, and Preserving USA Sovereignty."
Get "Taking America Back," Joseph Farah's manifesto for sovereignty, self-reliance and moral renewal
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Previous stories:
Obama ally targets 401(k) dollars
Obama to meddle with your retirement account?
China warns Obama deficit spending must stop
Economist warns of president's financial 'bubble'
Ex–Treasury official: Dump dollar
Fed begins move that could sink dollar
Economist charges Obama 'manipulating' stock market
Fed says economy even worse than thought
Unstimulated! Dow plunges 300
Trillions? Get ready for quadrillion
Stimulus still can't help Wall Street
Stocks reject Obama's plans
Fed borrowing could reach $4 trillion

Jerome R. Corsi, a Harvard Ph.D., is author of the No. 1 N.Y. Times bestsellers "The Obama Nation" and "Unfit for Command." He also authored "America for Sale" and "The Late Great USA." Along with serving as WND's senior staff reporter, Corsi is a senior managing director at Gilford Securities.
Gilford Securities, founded in 1979, is a full-service boutique investment firm headquartered in NYC providing financial services to institutional and retail clients, from investment banking and equity research to retirement planning and wealth management. The views, opinions, positions or strategies of the author are his alone, and do not necessarily reflect Gilford Securities' views, opinions, positions or strategies. Gilford Securities makes no representations as to accuracy, completeness, currentness, suitability or validity of any information herein and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use.

Friday, July 16, 2010

Distressed Short Sale Investment...Mortgage Elimination Is Here N.J. judge rules lenders must prove they hold note before they can foreclose on a property

N.J. judge rules lenders must prove they hold note before they can foreclose on a property
Thursday, 08 July 2010 08:14

moneyhouse_optBY JOE TYRRELL
With mortgage loans increasingly chopped up and repackaged into other investments, lenders must be able to demonstrate they still hold the underlying note before they can foreclose on a property, a Superior Court judge has ruled.
In Atlantic City, Judge William C. Todd dismissed The Bank of New York's attempt to foreclose on a Brigantine house, saying the bank had not adequately documented that it holds the mortgage after a complex trail of financial transactions.
The ruling is not binding on other courts, but pulls New Jersey into a trend emerging in other states, what some observers have called a "borrower rebellion."
As a tide of foreclosures sweeps the nation, more American homeowners and businesses are asking courts to take a closer look at the sometimes obscure transactions that precede them. Some decisions have required banks to prove they are more than issuers or investors in securities derived from mortgages.
In August, the Kansas Supreme Court ruled that both a secondary lender and a national mortgage registration system used by many banks lacked standing in a foreclosure case.
In October, a federal court in New York expunged a foreclosure on a home in White Plains, returning it to the borrowers after finding the plaintiff bank also lacked necessary documentation for its claim.
"This ruling is definitely part of that trend, and it's the first case in New Jersey," said attorney Eric Garrabrant, who represented Roman Krywopsuk, a real-estate investor.
Besides triggering a financial crisis and a taxpayer bailout, the increasingly exotic market in mortgage-related securities has become hard for the layperson to follow, said Karen DiPrima, spokeswoman for Garrabrant's firm, Flaster/Greenberg PC.
The new ruling "is ironic, because as the transactions get more complicated, we've seen people in foreclosure get confused while trying to find out who holds their mortgages, and now banks seem to be falling into the same little web."
Krywopusk and Michael Raftogianis bought the beachfront house in Brigantine in September 2004 as an investment, Garrabrant said. They took out a mortgage of almost $1.4 million from American Home Mortgage Acceptance Inc.

At the time, "they were buying a number of properties in the area, but then the real estate market did what it did," Garrabrant said. The two men were not alone in being unable to make payments.
According to a report today by Lender Processing Services, 12.4 percent of mortgages nationwide were delinquent or in foreclosure through May, the last month for which data was available.
New Jersey has been spared the worst of the calamity, which has particularly hit western and southern states. But in May, New Jersey crept into 10th place in foreclosure filings as listed by Realty Trac, the Irvine, Calif., firm that tracks the foreclosure market around the country.
Like others coping with the financial meltdown, though, Krywopusk and Raftogianis were surprised by the foreclosure action.
"They borrowed money from American Home Mortgage, and then The Bank of New York comes along and forecloses," Garrabrant said. "People have a right to question."
In his ruling, Todd noted the mortgage was the first stop in a lengthy series of transactions. Unbeknownst to Krywopusk and Raftogianis, after they closed on the property, their loan note kept moving.
The lender elected to out the transaction into the Mortgage Electronic Registration System, the judge said. Member lenders across the country use MERS, a private corporation, to transfer and track ownership and servicing rights in mortgage loans, and can designate it as the mortgagee of record.
For the banks, this has several advantages, according to the judge. Using MERS, they can transfer their interests in loans without publicly recording the action or incurring fees. Many of these secretive registrations also give MERS the right to assign mortgages for foreclosure.
But the judge also saw a weakness, because the system "can make it difficult for mortgagors and others to identify the individual or entity which actually controls the debt at any specific time."
According to the ruling, the mortgage defined AHMA as the lender, and referred to MERS as "a separate corporation that is acting solely as a nominee for Lender and Lender's successors and assigns." AHMA transferred its interest to an investment partnership, American Home Mortgage Securities LLC.
Next, AHM Securities established a trust with Wilmington Trust and The Bank of New York. The latter served as "trustee on behalf of the holders of the notes and the insurer," that is, those who invested in the securitized mortgages. In turn, the trust former a three-party servicing agreement, with AHM Servicing and The Bank of New York.
Todd described the documents as "typical" of mortgage loan securitizations, "lengthy, complex and difficult to understand." An attachment that simply described terms used in the indenture ran to 55 pages, the judge wrote.
But what might be incomprehensible to the average person should have been clear to the financiers, according to Todd.
"It is apparent that the parties to the securitization did understand that some of the loans being securitized were evidenced by negotiable notes," the judge said. "Several provisions deal with the handling of notes in very specific terms."
When it filed for foreclosure in February 2009, The Bank of New York reported that it was already the owner of the loan note and mortgage, without mentioning any securitizations, Todd said. Krywopusk filed an answer and counterclaim three months later.
But in February, MERS said that as nominee for American Home Mortgage Acceptance, it had assigned and transferred the mortgage to the bank.
While that may have been "intended" to transfer the debt, Todd wrote, "it is now apparent that is not what occurred."
The Bank of New York needed to show that it was not merely the trustee for investors, but actually held possession of the mortgage note. But that got more difficult as the court asked for documentation.
A copy of the endorsement provided to the court, intended to show the note had been transferred to the bank, was blank, the judge wrote.
The bank then submitted a certification from AHM service. But records showing three separate servicing agreements as part of the security sales, without a loan schedule showing whether the Brigantine mortgage had been part of those sales, the judge said.
In April, the bank for the first time said it had note, Todd said. Instead, it presented another certification, this one from one of its own vice presidents with what he described as a "redacted" loan schedule. It was very heavily redacted, the judge noted dryly.
The only entry still visible "appears to list the loan at issue here," Todd said. The context was unclear, and there was no explanation for how and when the bank had found the schedule, the judge said.
Still missing, the judge wrote, were "any meaningful proofs as to the transfer or negotiation of the note" or when that occurred.
The dismissal is almost certainly not the end of the case. The Bank of New York did not respond to a request for comment. But Garrabrant acknowledged he would be "surprised" if the bank does not re-file a foreclosure action with some documentation. Even so, he said, this outcome is not a foregone conclusion.
In the meantime, that beachfront house belongs to Krywopusk and Raftogianis, Garrabrant said, "and it's for sale."
For More Information on Mortgage
Elimination Go To
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Thanks For The Visit.

Monday, July 5, 2010

MORTGAGE ELIMNATION $150K Balances Owed and Above SFR Reservations Now Being Taken

Reservations now being taken... If you owe $150K or more
on your home loan contact me at:
Please put ELIMINATION in subject line...

More information you should know on MORTGAGE ELIMINATION,,id=179414,00.html

Sunday, July 4, 2010

Commercial Short Sale-Coming Soon-BEWARE of Chinese Bearing Gifts and EB5 Regional Visa Investment Dollars_By Earl Allen Boek

Commercial Short Sale Properties and What It Takes To Earn A Living At It.

More On This Topic Soon...

What can commercial short sales do for you?

An introduction to the rewards and problems of commercial
property short sales

What you should know about how to short sale commercial
properties what some of the gurus don't tell you could hurt you

Recently more and more authors and webmasters are offering
information about commercial short sales. You hear everything
from how they are an easy certain way to make a lot of money
and can be done very fast to people stating that they take
forever and require highly specialized knowledge.

The truth is that your mileage may vary. To be successful,
become familiar with the terms used in commercial real estate.
You may be able make the big paycheck simply by flipping
the property, but both the buyer and seller have ways of
reducing or eliminating your profit if that is your only strategy.

It would be better to line up partners or hard money, close
on the property and then market it. That way the original
note holder will not be able to limit your paycheck and the
buyer will not be able to go around you. You are most likely
dealing with experienced people in both the lender and the
buyer. They may not mind you making a relatively small fee,
but there is a good chance of them trying to keep you
from making a large profit.