Okay, I wrote this on May 21st of last year.  But, the banksters have done it again… they never have a bad day on their trading desks… they made money everyday… again.  My comments still apply.

Goldman Sachs, JPMorgan Chase, Citigroup, and Bank of America have all reported that their trading desks made money every day of the first quarter of 2010.  I heard this news for the first time while watching John Stewart on The Daily Show, which is pretty much the only way I can take in news about the banks these days without putting my health at risk.

To tell everyone the truth, I’ve become so desensitized to the lies and amount of unadulterated fraud involved in our banking system, combined with our government and our bankers, who have obviously come to believe that it’s perfectly okay, when it comes to our financial system, not to tell us whatever the hell they don’t want to tell us, although when this attitude became standard operating procedure I am unclear, that I am unable to hear or otherwise absorb most of the “happy horse pucky news” about the banks that the obtuse talking heads on CNBC like to blather on about most days.

If I do allow myself to actually listen to news of the astoundingly miraculous recoveries being reported by our bankers these days, I become physically ill… and so angry that I prefer to just stop loving my country, which, although a terrible loss to my psyche, is better than the alternative.  I’m certainly not saying that I would ever agree with someone who blew up Goldman’s headquarters, for example, but if it happened, and God forbid it ever does, I’d understand.  I might even consider buying a tee shirt with the likeness of the man who did it emblazoned on it.  See why I can’t talk about this?  Time to move on.

So, when I heard on The Daily Show that Goldman, JPMorgan Chase, Citigroup, and Bank of America all had trading desks that made money every single trading day during the first quarter of 2010, I just laughed, partly because Stewart is funny, which is why I have to get my television news almost exclusively from him these days, and also because I just said to myself… so what?  Even a trained monkey can borrow limitless amounts of money at 0% and then loan it back to the Treasury through the purchase of long-term bonds.  There’s no trick to that.

It does, however, take inconceivable hubris to brag about it by sending out a press release.  When you consider the colossal amount of crap the banks conceal from us on a routine basis nowadays, why in the world would they possibly rush to tell us something like that?

According to a Bloomberg story on May 13^th, written by Jonathan Weil, who is my new hero by the way…

“Goldman said its daily net trading revenue topped $100 million 35 times last quarter out of 63 trading days. JPMorgan and Bank of America disclosed similar eye-popping stats. Citigroup, too, recorded a profit on each trading day, Bloomberg News reported, citing unnamed people who knew the results.”

Now, as Weil points out in his story, no one really knows exactly what the banks are being allowed to do to bring home these completely impossible profits because trying to glean anything meaningful from reading their financial statements is simply not possible, I don’t care who you are. And since none of the accounting regulations really apply to banks anymore, thank you Tim Geithner. it’s hardly worth even trying to figure out.  But, Weil also points out something that’s absolutely worth pointing out…

Assuming you were such an adept trader of securities that you had a 70% probability of making money on any given trading day, which would, by the way, pretty much make you a God of Wall Street…

… the odds that you would make money trading securities 63 days in a row are roughly one in 5.7 billion!

To give you an idea of what that really means, I looked it up and the odds of being dealt a Royal Straight Flush in FIVE cards are about one in 650,000.  That’s ONE in six hundred and fifty thousand.

Well, shave my head and call me baldy… these are some extraordinarily blessed bankers, wouldn’t you say?  I’m sorry to have to say this, but it occurs to me that if you’re a person of the Christian faith, you either believe in Jesus… or these guys… because I don’t see how anyone could resolve the conflict required to believe in both.  Now consider what the Honorable Mr. Weil points out next:

“Now consider that four of the biggest U.S. banks just pulled off a quarter-long win streak — all in the same quarter. Why would any of them even want to?  Do they think the public doesn’t despise them enough? Surely it would have been easy to tweak the values of some illiquid “Level 3” assets lower for a day if they had been so inclined, just enough to avoid looking perfect. Yet none of them did.”

No, none of them did that, now did they?  Nope, they didn’t at that.  No, they damn well did not.  They just didn’t.  Not one of them did, in point of fact.  Nary a single one gave it a thought, now did they?  No.  They obviously chose not to.

That’s enough.  I’m out.  Nobody talk to me about this, don’t send in comments.  I’m going to bed where I will devote all of my energies to pretending we never had this little chat.

But first I have to go wash my mouth out and then take a shower, because I don’t know what it is, but all of a sudden it feels like someone just tossed a shovel full of dirt in my face, and then peed in my hair.

It seems that the Department of Housing and Urban Development’s Inspector General has been conducting five confidential investigations into Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial and with the investigations now complete, HUD has referred the findings to the Department of Justice.

Shahien Nasiripour of The Huffington Post is reporting that the findings accuse the banks of defrauding American taxpayers through the handling of foreclosures on homes that were purchased with government-backed loans.  The audits accuse the five major lenders of violating the False Claims Act, a law designed for use against companies that are alleged to have cheated and/or defrauded the government.

According to Shahien’s story in HuffPo, the secret investigations were initiated in response to last year’s reports, which indicated that large lenders were improperly accelerating foreclosure proceedings… or, in other words… look who just figured out that robo-signing affidavits and other documents required for the legal transfer of title, might just be considered fraudulent in some circles.

Bummer… Just as I convinced my daughter to major in Fraudulent Document Production in college in anticipation of a career in the banking industry, and now I’m not even sure those departments will still exist 5-6 years from now.  Is this the best time to get tough on fraud, don’t we need those jobs?  What will the “Linda Greens” of the world do for work now?

Besides, I thought that last fall, Bank of America froze all foreclosures in order to conduct an internal investigation and two weeks later said everything was ship-shape and commenced foreclosing once again.

Same thing went on at JPMorgan Chase, GMAC/Ally Financial, and Citibank, right?  And, Wells Fargo said they didn’t even have to conduct an investigation because they already knew that they didn’t have a single duck out of line, as far as foreclosures were concerned.  Yes sir, perfect paperwork starts at Wells, the signs should say.

Well, what the heck was all that about?  You don’t mean to say that it was all pure fabrication theater and that in reality the banks lied through their collective teeth and attempted to white wash their crimes so no one could see them, do you?

Actually, that’s not the amazing part, as far as I’m concerned.  What I’m positively dumbfounded over is that there was actually someone in Washington D.C. who wasn’t dumb enough to buy off on the banks inconceivably goofy lies.

“Yes, we were robo-signing” tens of thousands of fraudulent documents a month, but it’s not a problem, because we have the proper paperwork… it’s just that it’s in storage and the robo-signing just seemed easier than driving all the way across town to the storage unit.”

“Oh, and it’s really nothing anyway… just dotting t’s and crossing I’s.  What was that?  Widespread?  Oh heavens, no… we’re going with the words we use to describe everything that becomes public: “isolated incidents.”  What’s that?  Yes, we know we were robo-signing tens of thousands a month and at least the five largest banks were involved, but we were experiencing a lot of do-overs, so 100,000 robo-signed documents may have only translated into 6-7 mortgages… see… “isolated incidents,” like we said.  All but those 6-7 are in tip-top shape, we swear.”

It’s too bad that back then, no one wrote anything that pointed out how absurd this line of crap from our bankers really was… oh, wait… that would be me: Alright Banker-People… That’s Enough. You’re Not Making Sense and You’re Making Me Dizzy.  (It’s even got a Mandelman-adapted Broadway show tune in the middle.)

Okay, Shahien… back to you at HuffPo…

The resulting reports read like veritable indictments of major lenders, the sources said. State officials are now wielding the documents as leverage in their ongoing talks with mortgage companies aimed at forcing the firms to agree to pay fines to resolve allegations of routine violations in their handling of foreclosures.

The audits conclude that the banks effectively cheated taxpayers by presenting the Federal Housing Administration with false claims: They filed for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents.

And, get this…

Two of the firms, including Bank of America, refused to cooperate with the investigations, according to the sources. The audit on Bank of America finds that the company — the nation’s largest handler of home loans — failed to correct faulty foreclosure practices even after imposing a moratorium that lifted last October.  Back then, the bank said it was resuming foreclosures, having satisfied itself that prior problems had been solved.

See… what did I just say?

According to the sources, the Wells Fargo investigation concludes that senior managers at the firm, the fourth-largest American bank by assets, broke civil laws. HUD’s inspector general interviewed a pair of South Carolina public notaries who improperly signed off on foreclosure filings for Wells, the sources said.

OMG, not Wells… what happened to your linear ducks?

The investigations dovetail with separate probes by state and federal agencies, who also have examined foreclosure filings and flawed mortgage practices amid widespread reports that major mortgage firms improperly initiated foreclosure proceedings on an unknown number of American homeowners.

Why is that number always unknown?  Maybe they need some volunteers with decent counting skills to head over to Washington D.C. and lend a hand.   I’ll go… I can count to… gosh… I want to say… well, high.

The FHA, whose defaulted loans the inspector general probed, last May began scrutinizing whether mortgage firms properly treated troubled borrowers who fell behind on payments or whose homes were seized on loans insured by the agency.

Oooh, oooh, pick me, pick me… I know the answer to that one.  No need for too much “scrutinizing” the answer is NOOOOOOO, and HELL NOOOOOOO.

A unit of the Justice Department is examining faulty court filings in bankruptcy proceedings. Several states, including Illinois, are combing through foreclosure filings to gauge the extent of so-called “robo-signing” and other defective practices, including illegal home repossessions.

Uh oh… those things sound like actual crimes though, right… I mean, like criminal crimes?

Such processes “have potentially infected millions of foreclosures,” Federal Deposit Insurance Corporation Chairman Sheila Bair told a Senate panel on Thursday.

Oh, for heaven’s sake… Sheila… what are you doing here… this isn’t your article, you’re two articles to the right.  I covered you two days ago… now back to your page this instant.

Last October, HUD Secretary Shaun Donovan said his investigators found that numerous mortgage firms broke the agency’s rules when dealing with delinquent borrowers. He declined to be specific.

And why should he have to be specific?  It’s only people losing homes that are at issue here… no big a deal.  So what, if by those rules being broken someone lost their home but shouldn’t have… keep the details to yourself Shaun.  Protect the bank that broke the rules… to hell with the homeowner.

In March, HUD’s inspector general found that more than 49 percent of loans underwritten by FHA-approved lenders in a sample did not conform to the agency’s requirements. The agency’s review later expanded to flawed foreclosure practices. FHA, a unit of HUD, could still take administrative action against those firms for breaking FHA rules based on its own probe.

Oh, that sounds positively great… more loans that don’t conform to a federal agency’s requirements?  Because we didn’t collect enough of those this last time around, I suppose.

• The State of Illinois has begun examining potentially fraudulent court filings, looking at the role played by a unit of Lender Processing Services.
• Nevada and Arizona already launched lawsuits against Bank of America. California is keen on launching its own suits, people familiar with the matter say.
• And New York’s top law enforcer, Eric Schneiderman, wants to conduct a complete investigation into all facets of mortgage banking, from fraudulent lending to defective securitization practices to faulty foreclosure documents and illegal home seizures.
• Delaware sent Mortgage Electronic Registration Systems Inc., which runs an electronic registry of mortgages, a subpoena demanding answers to 75 questions.

Well, swing your partner round and round,

And turn those banksters upside down.

We’ll turn the corner ‘fore it’s too late,

And say goodbye to foreclosure-gate,

We’re gonna’ want more than an interest rate.

~~~

Watch out them banksters can be rough,

But this time we will call their bluff.

When they say they’re too big to fail,

Just send them all straight off to jail,

And tell the judge to deny their bail.

~~~

Homes underwater, as you well know,

So our principal you must forego,

We won’t stand for the status quo,

Now is the time, it’s apropos.

Before this turns into a drunken brawl,

And we turn banks from too big to small.

And put banksters up against the wall,

We’re here to fight for the long haul.

~~~

Rather than punishing banks for misdeeds, the administration is now focused on helping troubled borrowers in the hope that it will stanch the flood of foreclosures and increase consumer confidence, officials involved in the negotiations said.

WHAT WAS THAT?  EXCUSE ME… WHICH OFFICIALS SAID THAT… SPECIFICALLY?  I WANT NAMES, DAMN IT.

Rather than PUNISHING banks for MISDEEDS?

Misdeeds?  What happened to fraud on the courts, illegal home seizures, countless abuses of the Servicemember Civil Relief Act… violations of the False Claims Act?  MISDEEDS?  NAUGHTY LITTLE DALLIANCES?  ARE THESE PEOPLE KIDDING?

Look… you can’t possibly think… I mean… there’s absolutely no chance… wait… what I’m trying to say is… no, that’s not right… it’s more that… hold on… are you out of your… how can you say… I’m not going to… because the whole thing is… Excuse me just a moment…

Memo to Nameless Officials…

Not that any of you mindless sycophants ever listen to what I have to say, but in the unlikely event that I’ve caught you in a rare moment of clarity and mindfulness, and I mean this with all due respect…

If you think, even for a moment, that the 20 million ‘troubled borrowers’ and perhaps 60 million people that you have allowed to be abused, shamed and beaten down by the servicing companies of the major banks for the last three years, are going to be in any sense mollified by your “focused help” at this stage of the crisis, while they watch banks not be punished for their ‘misdeeds,’ as you put it… you’re wacked.

I realize that you guys are oblivious to what is going on in America’s middle class communities, but let me assure you people are near enraptured by the prospect that perhaps there might be a shard of hope that we are still a country of laws and not one where justice never visits the wealthy.

So, you go ahead and focus all the help on troubled borrowers you want, and there will never be joy, there will never be peace… as long as their tormenters are allowed to go unpunished, only made richer by their acts.  Amen.

~~~

In a report last week, analysts at Moody’s Investors Service predicted that while the losses incurred by the banks will be “sizable,” the credit rating agency does “not expect them to meaningfully impact capital.”

Oh, well good then.

Representatives of HUD and its inspector general declined to comment.

Of course they declined.  And how transparent of them…

Mandelman out.

First posted in December 2009,… but re-posted at reader’s request.

I’ve had a love-hate relationship going with FDIC Chair, Sheila Bair since 2006.  In case you don’t remember, Sheila was the Bush appointee with a brain and a heart, go figure, who first uttered the term “loan modification,” to which, I believe, Hank Paulson replied: “Yeah right… Sheila, be a doll and run down to the corner and get me a Nonfat Grande Vanilla Latte, would you please.  Thanks.”

And, even though she brought it up several times after that, and Congress asked her to come testify about it, that was about as far as she got with the idea while Bush was in office.  Oh, I know, I’m leaving out the one Hope-4-Homeowners modification… so, big deal.

So, then as all the Bushies were loading up the wagons and heading west to the Lone Star State, Sheila stayed behind.  Republicans accused her of sucking up to the incoming Obama Administration, jockeying for a position that would let her keep her job.  Frankly, I didn’t care what the Republicans said at that point in the game.  If Sheila thought she could get something done in the loan modification department, then by golly, let’s give the woman a try… Lord knows Paulson was in no hurry to modify loans, unless perhaps Goldman Sachs was the borrower.

So, at this point I liked her.  After all she was getting absolutely no support from her Red State pals, and she seemed to have her heart and brain in the right places.

Then she took over IndyMac Bank and did a masterful job, the papers reported.  I don’t really know how perfect it was, but quite a few people said it was a model for the rest of the banks in this country.

Then Obama announced the making Home Affordable program, the one that had absolutely no shot whatsoever of working, and basically she went along for the ride.  She was honest on ABC News last April, telling everyone watching that the Making Home Affordable was not designed to stop foreclosures, and I published several articles in which I referenced her quotes on that subject… but no one listened back then.  That was when the Obama plan could do no wrong.  (Now, it seems, it can do nothing right.)

Sheila is also the one that negotiated with the purchasers of banks like IndyMac, so that they could buy the bank with a loss sharing agreement.  Under most loss sharing agreements, the FDIC agrees to assume up to 80% of any future losses, up to a certain threshold, and the bank gets the other 20%.  If losses exceed that threshold, FDIC picks up 95%.

Pretty cool, huh?  Maybe we should pool our money and buy one of these failed financial institutions. After all, there are going to be quite a few going on sale in the coming months.

FDIC says they have loss sharing agreements with 53 financial institutions, but I haven’t been able to find the list.  Bloomberg reported the FDIC having loss sharing agreements worth $101.9 billion, including 44.7 billion for single-family loans.

Of course, after IndyMac was sold to a new group of investors (the largest two shareholders are George Soros, Michael Dell) and renamed One West Bank, I started liking her less.  She just hasn’t been doing much lately.  Oh sure, she takes over a couple of banks a week these days, but I can’t think of a thing she’s done this whole year to help a single homeowner.  I’m sure I’m wrong about that… I hope, but it doesn’t change the fact that IndyMac and other banks and servicers have been abusing homeowners and she hasn’t done anything meaningful to prevent it.

Well, now Sheila the Care Bair is speaking out once again.  And this time she’s talking about principal reductions.  (You go girl!)  Late this week, Sheila told Bloomberg News:

“We’re looking now at whether we should provide some further loss sharing for principal write downs.  Now you’re in a situation where even the good mortgages are going bad because people are losing their jobs. So you have other factors now driving mortgage distress.”

Sheila has started talking seriously about lenders reducing the principal on $45 billion in mortgages that have been acquired from failed banks taken over by FDIC.  It’s not like this step alone would solve the foreclosure crisis the country is facing, but it would certainly be a step in the right direction, as it would establish the importance of principal reductions.

Up until now, of course, the issue of principal reductions has been a bit of a third rail with the American public.  Why should “they” have their mortgage balance reduced?  “They,” who made irresponsible decisions, took on too much risk… blah, blah, blah.

The truth is, those thinking this way are their own worst enemy, they just don’t realize it yet.  They will soon enough, however.  It may seem counter-intuitive, I realize, but I’m going to take a shot at simplifying the issue… so, here goes.

First of all, let’s just establish a few things:

A. Banks don’t really have much money to lend out for 30 years.  They have a lot of money to lend out for short periods of time, like annual revolving credit lines, things like that, but not much at all for longer-term borrowing.  That’s because people don’t put their money into banks and just leave it there for 30 years. The vast majority of people would put money into a CD for a year or two, but not much beyond that.

B. So, when a bank originates a mortgage, it plans on selling it in the secondary mortgage market*… not keeping the loan on its balance sheet.  (*The one we don’t have any more because no one trusts those AAA ratings Wall St. was so fond of during the bubble.)

C. Banks have ratios they must comply with in order to be considered solvent by federal banking regulators.  They have to have x amount of cash or cash equivalents, and they can only hold x amount of less liquid, and therefore higher interest bearing, types of securities.

D. When a bank holds a loan on its balance sheet and it is paying as agreed, it remains in a homogenous pool of loans and everything is fine.  But when a bank learns that a loan they are holding is at risk of default, the bank has to take that loan out of the homogenous pool of loans and place it as an impaired loan into a heterogeneous pool… and reserve for the future loss of that loan defaulting.  Banks don’t like doing that because the higher the reserve account balance (called the ALLL – Allowance for Liens, Losses and something else I can’t remember at this moment) the lower the profitability and therefore, the annual bonuses.

Okay, got it so far?  Hope so…

We have reached a point where we have to stop foreclosures, because if we don’t property values will continue to fall and more and more people will start walking away from their mortgage whether they can afford the payment or not.  This will put even greater pressure on the bank’s financials, because at a certain point what we’re talking about is stabilizing the banks, remember.  Lower values mean less spending, which in turn means layoffs, which bring more foreclosures… foreclosures breed foreclosures, remember?

There’s another dynamic involved and it involves the so-called toxic assets that are still on bank balance sheets just as they were last fall when Hank Paulson wanted to buy them off of the bank balance sheets with the $700 billion TARP money.  Eventually, we are going to have to buy these “toxic assets,” from the banks, or they won’t recover and start lending again and we won’t see a recovery,

When Paulson tried to buy the toxic mortgages from the Banks into order to try to stop them from closing their doors for good, the problem was that the banks wouldn’t sell them at anything less than face value, even though they had been written down in most cases, and they certainly weren’t worth anything near face value.

Paulson couldn’t come up with another way of valuing them, especially in the time he had before the banks defaulted, so he didn’t have any other option other than to buy preferred shares of stcok.  Without going into detail, preferred shares are equity, but they function more like debt or bonds, and they don’t have voting rights, as do common shares.

Paulson wasn’t fixing anything but the very near term problem of imminent default of the banking system.  And since then we’ve basically done more of the same, except that we’ve run out of money to paper over the real problem… so, the banks remain technically insolvent.  Ultimately, we need to buy the toxic mortgages off of the banks balance sheets, because only the government can take on the re-default risk, or the risk that what says AAA is actually D-.

If we pay some lower amount than the face value of the loans, then we’ll leave a gaping hole in the balance sheets of the bank sold us the assets, and I use that term lightly… and we’ll have to give the banks the money to refill that hole we created by paying less than face value.  In other words, we’re going to paying for them one way or the other.  No question about that.  We only fix the problem by paying the face value of assets we know are not worth face value.

So, the only remaining question really is: How toxic do you want the assets to get before “we” have to buy them all at face value?  We could let the entire housing market drop to essentially zero, but that would cause massive numbers of strategic defaults, which is the phrase being used to describe people walking away irrespective of whether they could afford the payment or not, which would quickly get out of control, collapse the banking system, and make any sort recovery impossible.

Critics, who don’t think homeowners deserve the government’s help, are the cause of the “third rail” aspect of the issue.  These people think that modifying a loan for a homeowner who is seriously underwater is somehow giving that homeowner an undeserved taxpayer funded gift – a reward for having acted irresponsibly.  Speaking about these unfortunate homeowners, you hear them say things like: “They took a risk and lost, so they must pay the price.”

The problem is, and I’ll try to be kind here as some of “these people” are friends of mine, they’re not looking at the situation correctly.

When you have someone with a $500,000 mortgage, and the market value of the home is now $300,000… and you modify the loan by lowering the interest rate by a few points and extending the term to 40 years… that’s no gift, sweetheart.

That may not be considered manslaughter under the law, but it’s certainly the financial slaughter of a man… or woman, as the case may be.  When you modify that mortgage by lowering the interest rate and extend the term, you just cost that person who was already $200,000 underwater, a lot of money.

The banks know this.  They also know that the likelihood of that person staying in that home and making all of the payments is slim to none because it’s going to be decades before that homeowner has any shot at building any equity.

That’s why the bank doesn’t want to modify the loan.  The bank knows that even though the person, when threatened with losing the home, will agree to almost anything to keep it… a year or two later, when the shock of losing the home has worn off, that homeowner is going to wake up one morning and realize that they’re paying twice as much as the home’s worth… and they’re going to walk away.

The only way you’re going to keep that homeowner in that house and paying the mortgage is to write down the principal to the market value.  If you keep the mortgage balance at $500,000, it’s a foreclosure waiting to happen.  Maybe not today… maybe not next year… but at some point that person will realize that they’re paying hundreds of thousands of dollars they don’t have to pay to live where they live.  And that just doesn’t make sense.

I recently received a call from a homeowner who was quite upset with her bank who had treated here unconscionably for months.  I won’t mention which bank it was except to say that it used to be called IndyMac Bank.

In typical IndyMac fashion, they had jerked her around for months before foreclosing and selling her home without telling her about it.  She found out when the new owners stopped by to take a look at the home they had just purchased at auction for $420,000.  Her balance on her loan was $760,000, and she was upset.

After a few minutes, I interrupted her as politely as I could and asked her the following question:

“What if I could call IndyMac’s CEO right now, and then called you back and said that I had struck a deal and you could keep your home. You’re approved to buy it back right now with no money down for $760,000… would you do it?”

There was silence on the phone.  I waited.  After a minute she said quietly: “That’s a really good way of looking at that.”

“What do you mean?” I said.  “You wouldn’t buy it back for $760,000?  Why not?”

“Well, because the investor just bought it for $420,000, why would I pay $760,000?”  She replied.

“But that’s exactly what you said you wanted when you asked for a loan modification,” I pointed out.

“That’s a really good way of looking at that,” she said again.

“Glad I could help,” I said back.

Okay, so I’m not exactly Mr. Sensitive… so, what’s your point?  What I showed her was a glimpse of the future.  How long do you suppose it would have taken her to realize that the modification she would have agreed to was an absurd proposition?  A year… two… three?  My guess would be that she’d wake up to the fact when her youngest, who’s now 14, was about to graduate from high school, if not sooner.

And there you have a loan modification in all its glory.  Some gift.

Hi, Mr. Banker.  Would you mind burying me in my home in such a way that I’ll never build equity while I pay way more than the market price to live here every single month for… oh, say 25 years?  You wouldn’t mind a bit?  Why, thank you kind sir… what a lovely gift.  You really shouldn’t have…

Now, if that banker had written down the principal that would have been a very different story.  In that case there’s a chance that she would continue paying the mortgage on time as agreed.

Let’s get back to the crowd that thinks of mortgage modifications as some sort of undeserved gift.

There are a few facts this crowd is missing.  Try this on for size:

The average REO property sells for 66% of the non-REO sale.  That means that when there’s a foreclosure on your street or very near by, your $100,000 home just dropped in value and is now worth something like $83,000, all things being equal.

Now let’s say another home on your block just went back to the bank.  It will sell for 66% of the $83,000… or $54,780, making your home’s value something like $73,000 and change.  Should I throw in one more REO, or is that enough?

Now the homes on your block are selling for $73,000, as a result of the foreclosures, and now someone else on your block goes into foreclosure because they’ve been transferred by their employer and they’re now underwater.  That person wasn’t underwater after the first foreclosure on the block, but by the third or fourth they most definitely are.  And when they have to move, there’s nothing else they can do.

You see, foreclosures breed foreclosures, by destroying the equity in homes not in foreclosure.

If my neighbor is at risk of foreclosure, I pray the bank will modify their mortgage.  Not for them… who gives a damn about them?   I pray the bank will modify my neighbor’s loan FOR ME, and all of the other homeowners on the block who are NOT in foreclosure.

And if that means reducing my neighbor’s principal balance to the market value, well then goodie goodie, because that means my neighbor  won’t walk away next year when he or she comes to their senses about a loan modification that makes no sense.

My neighbor isn’t costing me money by having their principal reduced, they’re saving me from having to lose money.  They’re not taking money out of my pocket by having their principal reduced, they’re stopping the market from taking money out of my pocket.  When my neighbor’s principal gets reduced, I’m the one getting the gift.

In fact, if the bank refuses to grant a principal reduction, and instead decides to foreclose and sell the home at auction, the new sales price will bring down the value of all the other homes on the block.

In fact… the ONLY way I’m not going to lose a good chunk of my home’s value in this scenario is if the bank will reduces the principal balance my neighbor owes on his or her mortgage.  Remember, I own the equity… the bank owns the property.

Of course, I realize that the people who are opposed to helping those they consider irresponsible homeowners are upset and would like to see those people punished for wanting a nice house to live in.

I suppose they think that the irresponsible people should have seen that the credit ratings agencies were about to improperly rate bonds, that Wall Street investment bankers would then sell the improperly rated bonds to investor groups all over the world, and that the result would be the total decimation of the secondary mortgage market, which would make it impossible to get credit for anything essentially overnight.  (But if they do, then they’re nuttier than a fruitcake.)

I suppose it should have been abundantly clear that housing prices were about to be cut in half over 18 months… after all, everyone else saw all of that coming.

And please don’t bring up some outrageous one-of-a-kind example of an unemployed 22 year-old who loaded up on beachfront investment properties financed with nothing down, stated income, spring-loaded adjustable rate loans… because that’s not what we’re talking about here and you know it.

Experian just published data a few days ago about “strategic defaults” that I’m sure made someone in The White House nauseous.  The data showed that 18% of foreclosures are strategic defaults, meaning that the homeowners could have made the payments, but chose not to and walked away.  That’s almost one out of five.  In light of what I explained above, isn’t that just a lovely thought?

If you’re a homeowner who is not yet at risk of foreclosure, assuming such a thing is possible today, you should be campaigning wildly for the banks to be writing down principals for everyone in the country that’s in foreclosure.

I know… you think not modifying those loans is punishing the homeowners for getting in over their heads… but in realty, it’s not punishing them… it’s punishing you.  In reality, you are running about, commenting on blogs, and advocating the kicking of your own ass.

Sheila Bair, the Care Bair, understands what it means when 18% of foreclosures wouldn’t have happened if housing prices hadn’t fallen quite so far.  She knows that the 18% will only go up as prices fall further.  And she knows that, as prices drop the toxic assets will be that much more toxic.  She knows that the sort of downward spiral I’m describing is bringing an end to our already much to wobbly banking system.

She thinks she can start the bowl rolling with mandatory principal reductions from banks with loss sharing agreements, so good for her.  I don’t care how she does it, she can sleep with Jamie Dimon or Kenny Lewis for all I care… just get it done.

Oh, and in case you’re thinking that investors get screwed when reducing the principal on someone’s loan, think again.

Remember… it’s being written down to market value, so if the investor were to have foreclosed instead of writing down the loan, that’s all he or she would have gotten anyway.

Principal reductions don’t cost investors 10¢ more than foreclosures.  And in fact, because principal reductions don’t incur the costs associated with foreclosing, reducing the principal SAVES the investor money.

It would certainly save the rest of us a bundle.

HERE’S A CLIP FROM THE BLOOMBERG STORY THAT SHOULD SUM IT ALL UP:

FDIC CHAIR, Sheila Bair is stepping up her effort to prevent U.S. home foreclosures, using the agency’s relationship with lenders to make change.  The agency now is considering whether lenders that acquire banks should share a larger portion of the losses on loans whose principal is cut, and whether the FDIC will recover the additional subsidy through reduced foreclosure rates.

“I think we’re going to gain by reducing re-default rates or delinquencies with people walking away,” Bair said. “We’ll obviously lose by providing loss-share for principal write-downs.”

Principal reductions will help borrowers who are “underwater” on their payment-option adjustable-rate mortgages, whose principal expands over time, said Julia Gordon, senior policy counsel at the Center for Responsible Lending.

“In order to make those loans affordable and give those homeowners a reason to stay rather than walk away, principal reduction is going to be key,” Gordon said.

The Washington-based FDIC insures deposits at 8,099 institutions with $13.2 trillion in assets. The agency is charged with dismantling failed banks and manages an insurance fund it uses to reimburse customers for deposits of as much as $250,000 when a lender collapses.

(THEY’RE ALSO BROKE, BUT WE DON’T NEED TO MAKE A BIG DEAL OUT OF THAT HERE… GO SHEILA!)

Mandelman out.

Well, first let me just say… it’s about damn time.

The Second District Court of Appeals in Los Angeles has ruled that banks are “legally bound by their loan modification promises,” and can be sued for fraud when homeowners rely on such promises and are damaged as a result.

Did I already say that it’s about damn time?  Well, it totally is.

Claudia Aceves received a foreclosure notice from U.S. Bank, so she filed for bankruptcy protection and the foreclosure was halted.  Her plan was to file Chapter 13, which would mean that she could very likely keep her home and under a court approved repayment plan.

Then she got a call from the nice folks at U.S. Bank… and the bank’s representative said… I’m paraphrasing here…

“Oh, Claudia, Claudia, Claudia… this is all just one big misunderstanding.  You don’t need to trouble yourself with the whole bankruptcy thing.  We’d be happy to help you get your loan reinstated and modified… assuming, of course, you wouldn’t mind just withdrawing your bankruptcy filing.”

So, she did.

And just five days later… without so much as a courtesy call or even a “F#@k you” card… U.S. Bank scheduled her home to be auctioned off a month later.

See… this is an excellent example of why I’m starting to think we’ve become too civilized a society.   I was born back in Brooklyn, New York, I mostly grew up in Pittsburgh, and my wife’s from the City of Chicago… and I’m here to tell you that if someone tried to pull something like that on someone else in any of those places back when we were kids, the offending party would pray for the dispute to be settled in a courtroom, you know what I’m saying here?

Claudia told Bob Egelko of the San Francisco Chronicle that the bank was nice enough to contact her attorney the day before the sale to offer her the chance to save her home by agreeing to a higher monthly payment.

The auction went on as scheduled and would you like to venture a guess as to who purchased Claudia’s home?  Come on, you can do it… why, U.S. Bank, of course!  And just two months later, the bank pinned an eviction notice to her door.

What would they say over in England… oh, that’s right… Jolly good show!  In fact, I’d have to add… crackerjack work… that is one fine piece of banking right there, wouldn’t you say?

So, instead of, let’s say… causing someone great bodily harm or significant property damage… Claudia filed a lawsuit against her bank… only to have a lower court judge dismiss it!

Hey look… I can understand that… I mean, she was the one who was having trouble making the mortgage payment on her $845,000 loan, which almost undoubtedly secures a property worth something under $500k.  And she had a chance to keep her home through a court approved repayment plan had she gone ahead with her Chapter 13 filing.

But, noooo… she withdrew her filing, now didn’t she?  And whose fault was that?  She knew she was dealing with a bank, and she went ahead and relied on what they said… I mean… come on… who would do something like that in this day and age?

I could see it if she had gotten a call from say… the mob… you know, good old organized crime.  Sure, then she could have reasonably assumed that the caller would keep his word and help her modify her loan, but a bank representative?  There’s no way I’d believe anything a bank representative told me over the phone.

So, the lower court dismissed her frivolous claim, but what do you know… it must be a brand new day in the California courts because the Second District Appeals Court picked it right back up and, even though they declined to reverse the foreclosure, this past Thursday the court ruled 3-0 that…

“… a lender who falsely promises to help a homeowner prevent foreclosure can be sued for fraud.”

The court, according to Friday’s Chronicle, said:

“… (she) could have reasonably relied on the bank’s promise to work out a loan reinstatement and modification if she did not seek relief under the bankruptcy law…”

During the proceedings held in Los Angeles, U.S. Bank argued that Claudia had acted in “bad faith,” by attempting to avail herself of our nation’s bankruptcy laws in order to avoid foreclosure.

A spokes-jackass from U.S. Bank supposedly said:

“The betch was trying to avoid getting foreclosed on by hiding behind that bankruptcy shiz, so why should we have to deal fairly, tell the truth, and keep our promises?  She’s the one who set the rules here… and come on… we all know that ho can’t afford no $835,000 loan, and if we don’t take her pad back and dump it now, it could be worth a hundred grand less by the end of this year.

If Americans want this country’s banks to get healthy again, they’re going to have to stop getting in our way, and set aside all those ridiculous rights and laws that deadbeats are always yammering on about.  I’m telling you, if people keep resisting like this, we’ll just have to spend more of your tax dollars lobbying and probably even have to order another trill from Uncle Timmy and Aunt Ben.”

Okay, so I made that last part up, about the spokes-jackass, but can you blame me?

And anyway, the court said that Chapter 13 is a legitimate way for a homeowner to reinstate a mortgage and that they didn’t see how Claudia filing for bankruptcy protection would have violated the bank’s rights.  Not only that, but since a federal bankruptcy judge still cannot modify a mortgage by lowering payments or extending the term, Claudia had darn fine reason to rely on the bank’s promise to help her reinstate her loan, and provide her with more favorable terms.

Claudia’s attorney, Nick Alden, told the Chronicle that the decision should also help other homeowners throughout California who have been told by their bank that they would get a modification, and are making trial payments as a result, but could easily find their homes on the auction block at any moment.

Why?  Because they’re banks, that’s why… and these days, banks and fraud are like bees and honey, don’t you know.

So… hey, banker-people-that-read-me… I know you’re there… Google analytics, remember… are you starting to notice anything changing for you guys of late?  Starting to feel a little bit warmer under your heavily starched collars?  Why you guys are starting to be about as popular as Sarah Palin at an Arizona Liberals convention wearing an NRA tee-shirt with a target on each breast.

Do you remember what I started warning you about over a year ago?  Anyone, anyone?  Remember my article, My Grandmother, Standard Oil and the Banks?  Well if you didn’t read it… it’s sure should pack a powerful message about your collective future.

And homeowners… start your lawyers… Here’s a link to the ACEVES DECISION, but in case it doesn’t work because I had some trouble with it, the decision in its entirety follows below.

In case you want to reach Nick Alden or Dennis Moore, the two lawyers in this case, here’s their contact information:

Nick Alden, Attorney at Law

1380 Davies Dr.

Beverly Hills, CA, US 90210

Telephone: +1 (310) 275-6664

Fax: +1 (310) 550-1856

aldenlaw@yahoo.com

Dennis Moore, Attorney at Law

5041 La Mart Dr., Ste 230

Riverside, CA 92507

(951) 660-5289

Fax: (951) 340-3276

Mandelman out.

~~~

Filed 1/27/11

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

CLAUDIA JACQUELINE ACEVES, Plaintiff and Appellant, v. U.S. BANK, N.A., as Trustee, etc., Defendant and Respondent.

B220922 (Los Angeles County Super. Ct. No. BC410890)

APPEAL from an order and a judgment of the Superior Court of Los Angeles County, Michael L. Stern, Judge.  Affirmed in part and reversed in part.

Dennis Moore; Nick A. Alden for Plaintiff and Appellant.

Brooks Bauer, Michael R. Brooks and Bruce T. Bauer for Defendant and Respondent.

___________________________________________

As alleged in this case, plaintiff, a married woman, obtained an adjustable rate loan from a bank to purchase real property secured by a deed of trust on her residence.  About two years into the loan, she could not afford the monthly payments and filed for bankruptcy under chapter 7 of the Bankruptcy Code (11 U.S.C. §§ 701–784).  She intended to convert the chapter 7 proceeding to a chapter 13 proceeding (11 U.S.C. §§ 1301–1330) and to enlist the financial assistance of her husband to reinstate the loan, pay the arrearages, and resume the regular loan payments.

Plaintiff contacted the bank, which promised to work with her on a loan reinstatement and modification if she would forgo further bankruptcy proceedings.  In reliance on that promise, plaintiff did not convert her bankruptcy case to a chapter 13 proceeding or oppose the bank’s motion to lift the bankruptcy stay.  While the bank was promising to work with plaintiff, it was simultaneously complying with the notice requirements to conduct a sale under the power of sale in the deed of trust, commonly referred to as a nonjudicial foreclosure or foreclosure.  (See Civ. Code, §§ 2924, 2924a–2924k.)

The bankruptcy court lifted the stay.  But the bank did not work with plaintiff in an attempt to reinstate and modify the loan.  Rather, it completed the foreclosure.

Plaintiff filed this action against the bank, alleging a cause of action for promissory estoppel, among others.  She argued the bank’s promise to work with her in reinstating and modifying the loan was enforceable, she had relied on the promise by forgoing bankruptcy protection under chapter 13, and the bank subsequently breached its promise by foreclosing.  The trial court dismissed the case on demurrer.

We conclude (1) plaintiff could have reasonably relied on the bank’s promise to work on a loan reinstatement and modification if she did not seek relief under chapter 13, (2) the promise was sufficiently concrete to be enforceable, and (3) plaintiff’s decision to forgo chapter 13 relief was detrimental because it allowed the bank to foreclose on the property.  Contrary to the bank’s contention that plaintiff’s use of the Bankruptcy Code was ipso facto bad faith, chapter 13 is “‘uniquely tailored to protect homeowners’ primary residences [from foreclosure].’”  (In re Willette (Bankr. D.Vt. 2008) 395 B.R. 308, 322.)

I

BACKGROUND

The facts of this case are taken from the allegations of the operative complaint, which we accept as true.  (See Hensler v. City of Glendale (1994) 8 Cal.4th 1, 8, fn. 3.)

A.        Complaint

This action was filed on April 1, 2009.  Two months later, a first amended complaint was filed.  On August 17, 2009, after the sustaining of a demurrer, a second amended complaint (complaint) was filed.  The complaint alleged as follows.

Plaintiff Claudia Aceves, an unmarried woman, obtained a loan from Option One Mortgage Corporation (Option One) on April 20, 2006.  The loan was evidenced by a note secured by a deed of trust on Aceves’s residence.  Aceves borrowed $845,000 at an initial rate of 6.35 percent.  After two years, the rate became adjustable.  The term of the loan was 30 years.  Aceves’s initial monthly payments were $4,857.09.

On March 25, 2008, Option One transferred its entire interest under the deed of trust to defendant U.S. Bank, National Association, as the “Trustee for the Certificateholders of Asset Backed Securities Corporation Home Equity Loan Trust, Series OOMC 2006-HE5” (U.S. Bank).  The transfer was effected through an “Assignment of Deed of Trust.”  U.S. Bank therefore became Option One’s assignee and the beneficiary of the deed of trust.  Also on March 25, 2008, U.S. Bank, by way of a “Substitution of Trustee,” designated Quality Loan Service Corporation (Quality Loan Service) as the trustee under the deed of trust.  The Substitution of Trustee was signed by the bank’s attorney-in-fact.

In January 2008, Aceves could no longer afford the monthly payments on the loan.  On March 26, 2008, Quality Loan Service recorded a “Notice of Default and Election to Sell Under Deed of Trust.”  (See Civ. Code, § 2924.)  Shortly thereafter, Aceves filed for bankruptcy protection under chapter 7 of the Bankruptcy Code (11 U.S.C. §§ 701–784), imposing an automatic stay on the foreclosure proceedings (see 11 U.S.C. § 362(a)).  Aceves contacted U.S. Bank and was told that, once her loan was out of bankruptcy, the bank “would work with her on a mortgage reinstatement and loan modification.”  She was asked to submit documents to U.S. Bank for its consideration.

Aceves intended to convert her chapter 7 bankruptcy case to a chapter 13 case (see 11 U.S.C. §§ 1301–1330) and to rely on the financial resources of her husband “to save her home” under chapter 13.  In general, chapter 7, entitled “Liquidation,” permits a debtor to discharge unpaid debts, but a debtor who discharges an unpaid home loan cannot keep the home; chapter 13, entitled “Adjustment of Debts of an Individual with Regular Income,” allows a homeowner in default to reinstate the original loan payments, pay the arrearages over time, avoid foreclosure, and retain the home.  (See 1 Collier on Bankruptcy (16th ed. 2010) ¶¶ 1.07[1][a] to 1.07[1][g], 1.07[5][a] to 1.07[5][e], pp. 1‑25 to 1‑30, 1‑43 to 1‑45.)

U.S. Bank filed a motion in the bankruptcy court to lift the stay so it could proceed with a nonjudicial foreclosure.

On or about November 12, 2008, Aceves’s bankruptcy attorney received a letter from counsel for the company servicing the loan, American Home Mortgage Servicing, Inc. (American Home).  The letter requested that Aceves’s attorney agree in writing to allow American Home to contact Aceves directly to “explore Loss Mitigation possibilities.”  Thereafter, Aceves contacted American Home’s counsel and was told they could not speak to her before the motion to lift the bankruptcy stay had been granted.

In reliance on U.S. Bank’s promise to work with her to reinstate and modify the loan, Aceves did not oppose the motion to lift the bankruptcy stay and decided not to seek bankruptcy relief under chapter 13.  On December 4, 2008, the bankruptcy court lifted the stay.  On December 9, 2008, although neither U.S. Bank nor American Home had contacted Aceves to discuss the reinstatement and modification of the loan, U.S. Bank scheduled Aceves’s home for public auction on January 9, 2009.

On December 10, 2008, Aceves sent documents to American Home related to reinstating and modifying the loan.  On December 23, 2008, American Home informed Aceves that a “negotiator” would contact her on or before January 13, 2009 — four days after the auction of her residence.  On December 29, 2008, Aceves received a telephone call from “Samantha,” a negotiator from American Home.  Samantha said to forget about any assistance in avoiding foreclosure because the “file” had been “discharged” in bankruptcy.  On January 2, 2009, Samantha contacted Aceves again, saying that American Home had mistakenly decided not to offer her any assistance:  American Home incorrectly thought Aceves’s loan had been discharged in bankruptcy; instead, Aceves had merely filed for bankruptcy.  Samantha said that, as a result of American Home’s mistake, it would reconsider a loss mitigation proposal.  On January 8, 2009, the day before the auction, Samantha called Aceves’s bankruptcy attorney and stated that the new balance on the loan was $965,926.22; the new monthly payment would be more than $7,200; and a $6,500 deposit was due immediately via Western Union.  Samantha refused to put any of those terms in writing.  Aceves did not accept the offer.

On January 9, 2009, Aceves’s home was sold at a trustee’s sale to U.S. Bank.  On February 11, 2009, U.S. Bank served Aceves with a three-day notice to vacate the premises and, a month later, filed an unlawful detainer action against her and her husband (U.S. Bank, N.A. v. Aceves (Super. Ct. L.A. County, 2009, No. 09H00857)).  Apparently, Aceves and her husband vacated the premises during the eviction proceedings.

U.S. Bank never intended to work with Aceves to reinstate and modify the loan.  The bank so promised only to convince Aceves to forgo further bankruptcy proceedings, thereby permitting the bank to lift the automatic stay and foreclose on the property.

The complaint alleged causes of action against U.S. Bank for quiet title, slander of title, fraud, promissory estoppel, and declaratory relief.  It also sought to set aside the trustee’s sale and to void the trustee’s deed upon the sale of the home.

B.        Demurrer

U.S. Bank filed a demurrer separately attacking each cause of action and the requested remedies.  Aceves filed opposition.

At the hearing on the demurrer, Aceves’s attorney argued that Aceves and her husband “could have saved their house through bankruptcy,” but “due to the promises of the bank, they didn’t go those routes to save their house.  [¶] . . . [¶] . . . [T]hat’s the whole essence of promissory estoppel.  [¶] . . . [¶]  Prior to [American Home’s November 12, 2008] letter, there’s numerous phone contacts and conversations with [American Home], which was the agent for U.S. Bank, regarding, ‘Yes, once we get leave, we will work with you, . . . and they did not work with her at all.’”  The trial court replied:  “The foreclosure took place.  There’s no promissory fraud or anything that deluded [Aceves] under the circumstances.”

On October 29, 2009, the trial court entered an order sustaining the demurrer without leave to amend and a judgment in favor of U.S. Bank.  Aceves filed this appeal.

II

DISCUSSION

Aceves focuses primarily on her claim for promissory estoppel, arguing it is adequately pleaded.  She also contends her other claims should have survived the demurrer.  U.S. Bank counters that the trial court properly dismissed the case.

We conclude Aceves stated a claim for promissory estoppel.  As alleged, in reliance on a promise by U.S. Bank to work with her in reinstating and modifying the loan, Aceves did not attempt to save her home under chapter 13.  Yet U.S. Bank then went forward with the foreclosure and did not commence negotiations toward a possible loan solution.  As demonstrated in its brief on appeal, U.S. Bank fails to appreciate that chapter 13 may be used legitimately to assist a borrower in reinstating a home loan and avoiding foreclosure after a default.

All but one of Aceves’s remaining claims were properly dismissed.  She adequately pleaded a claim for fraud.  But the record does not support her other claims or requests for relief:  The complaint does not allege any irregularities in the foreclosure process that would permit the trial court to void the deed of sale or otherwise invalidate the foreclosure.

A.        Promissory Estoppel

“‘The elements of a promissory estoppel claim are “(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.” . . .’”  (Advanced Choices, Inc. v. State Dept. of Health Services (2010) 182 Cal.App.4th 1661, 1672.)

1.  Clear and Unambiguous Promise

“‘[A] promise is an indispensable element of the doctrine of promissory estoppel.  The cases are uniform in holding that this doctrine cannot be invoked and must be held inapplicable in the absence of a showing that a promise had been made upon which the complaining party relied to his prejudice . . . .’ . . . The promise must, in addition, be ‘clear and unambiguous in its terms.’”  (Garcia v. World Savings, FSB (2010) 183 Cal.App.4th 1031, 1044, citation omitted.)  “To be enforceable, a promise need only be ‘“definite enough that a court can determine the scope of the duty[,] and the limits of performance must be sufficiently defined to provide a rational basis for the assessment of damages.”’ . . . It is only where ‘“a supposed ‘contract’ does not provide a basis for determining what obligations the parties have agreed to, and hence does not make possible a determination of whether those agreed obligations have been breached, [that] there is no contract.”’”  (Id. at p. 1045, citation omitted.)  “[T]hat a promise is conditional does not render it unenforceable or ambiguous.”  (Ibid.)

U.S. Bank agreed to “work with [Aceves] on a mortgage reinstatement and loan modification” if she no longer pursued relief in the bankruptcy court.  This is a clear and unambiguous promise.  It indicates that U.S. Bank would not foreclose on Aceves’s home without first engaging in negotiations with her to reinstate and modify the loan on mutually agreeable terms.

U.S. Bank’s discussion of Laks v. Coast Fed. Sav. & Loan Assn. (1976) 60 Cal.App.3d 885 misses the mark.  There, the plaintiffs applied for a loan and relied on promissory estoppel in arguing that the lender was bound to make the loan.  The Court of Appeal affirmed the dismissal of the case on demurrer, explaining that the alleged promise to make a loan was unclear and ambiguous because it did not include all of the essential terms of a loan, including the identity of the borrower and the security for the loan.  In contrast, Aceves contends U.S. Bank promised but failed to engage in negotiations toward a solution of her loan problems.  Thus, the question here is simply whether U.S. Bank made and kept a promise to negotiate with Aceves, not whether, as in Laks, the bank promised to make a loan or, more precisely, to modify a loan.  Aceves does not, and could not, assert she relied on the terms of a modified loan agreement in forgoing bankruptcy relief.  She acknowledges that the parties never got that far because U.S. Bank broke its promise to negotiate with her in an attempt to reach a mutually agreeable modification.  While Laks turned on the sufficiency of the terms of a loan, Aceves’s claim rests on whether U.S. Bank engaged in the promised negotiations.  The bank either did or did not negotiate.

Further, U.S. Bank asserts that it offered Aceves a loan modification, referring to the offer it made the day before the auction.  That assertion, however, is of no avail.  Aceves’s promissory estoppel claim is not based on a promise to make a unilateral offer but on a promise to negotiate in an attempt to reach a mutually agreeable loan modification.  And, even assuming this case involved a mere promise to make a unilateral offer, we cannot say the bank’s offer satisfied such a promise in light of the offer’s terms and the circumstances under which it was made.

2.  Reliance on the Promise

Aceves relied on U.S. Bank’s promise by declining to convert her chapter 7 bankruptcy proceeding to a chapter 13 proceeding, by not relying on her husband’s financial assistance in developing a chapter 13 plan, and by not opposing U.S. Bank’s motion to lift the bankruptcy stay.

3.  Reasonable and Foreseeable Reliance

“‘Promissory estoppel applies whenever a “promise which the promissor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance” would result in an “injustice” if the promise were not enforced. . . .’”  (Advanced Choices, Inc. v. State Dept. of Health Services, supra, 182 Cal.App.4th at pp. 1671–1672, citation omitted, italics added.)

“[A] party plaintiff’s misguided belief or guileless action in relying on a statement on which no reasonable person would rely is not justifiable reliance. . . . ‘If the conduct of the plaintiff in the light of his own intelligence and information was manifestly unreasonable, . . . he will be denied a recovery.’”  (Kruse v. Bank of America (1988) 202 Cal.App.3d 38, 54, citation omitted.)  A mere “hopeful expectation[] cannot be equated with the necessary justifiable reliance.”  (Id. at p. 55.)

We conclude Aceves reasonably relied on U.S. Bank’s promise; U.S. Bank reasonably expected her to so rely; and it was foreseeable she would do so.  U.S. Bank promised to work with Aceves to reinstate and modify the loan.  That would have been more beneficial to Aceves than the relief she could have obtained under chapter 13.  The bankruptcy court could have reinstated the loan — permitted Aceves to cure the default, pay the arrearages, and resume regular loan payments — but it could not have modified the terms of the loan, for example, by reducing the amount of the regular monthly payments or extending the life of the loan.  (See 11 U.S.C. § 1322(b)(2), (3), (5), (c)(1); 8 Collier on Bankruptcy, supra, ¶¶ 1322.06[1], 1322.07[2], 1322.09[1]–[6], 1322.16 & fn. 5, pp. 23–24, 31–32, 34–42, 55–56.)  By promising to work with Aceves to modify the loan in addition to reinstating it, U.S. Bank presented Aceves with a compelling reason to opt for negotiations with the bank instead of seeking bankruptcy relief.  (See Garcia v. World Savings, FSB, supra, 183 Cal.App.4th at pp. 1041–1042 [discussing justifiable reliance].)

We emphasize that this case involves a long-term loan secured by a deed of trust, one in which the last payment under the loan schedule would be due after the final payment under a bankruptcy plan.  (See 11 U.S.C. § 1322(b)(5).)  Aceves had more than 28 years left on the loan, and a bankruptcy plan could not have exceeded five years.  In contrast, if a case involves a short-term loan, where the last payment under the original loan schedule is due before the final payment under the bankruptcy plan, the bankruptcy court has the authority to modify the terms of the loan.  (See 11 U.S.C. § 1322(c)(2); In re Paschen (11th Cir. 2002) 296 F.3d 1203, 1205–1209; 8 Collier on Bankruptcy, supra, ¶ 1322.17, pp. 57–58; March et al., Cal. Practice Guide: Bankruptcy (The Rutter Group 2010) ¶ 13:396, p. 13‑45; compare id. ¶¶ 13:385 to 13:419, pp. 13‑42 to 13‑48 [discussing short-term debts] with id. ¶¶ 13:440 to 13:484, pp. 13‑49 to 13‑54 [discussing long-term debts].)  The modification of a short-term loan may include “lienstripping,” that is, the bifurcation of the loan into secured and unsecured components based on the value of the home, with the unsecured component subject to a “cramdown.”  (See In re Paschen, supra, 296 F.3d at pp. 1205–1209; 8 Collier on Bankruptcy, supra, ¶ 1322.17, pp. 57–58; see also March et al., Cal. Practice Guide: Bankruptcy, supra, ¶¶ 13:370 to 13:371.1, p. 13‑41 [discussing lienstripping].)  If a lien is “stripped down,” the lender is “only assured of receiving full [payment] for the secured portion of the [bankruptcy] claim.”  (In re Paschen, supra, 296 F.3d at p. 1206.)

4.  Detriment

U.S. Bank makes no attempt to hide its disdain for the protections offered homeowners by chapter 13, referring disparagingly to Aceves’s bankruptcy case as “bad faith.”  But “Chapter 13’s greatest significance for debtors is its use as a weapon to avoid foreclosure on their homes.  Restricting initial . . . access to Chapter 13 protection will increase foreclosure rates for financially distressed homeowners.  Loss of homes hurts not only the individual homeowner but also the family, the neighborhood and the community at large.  Preserving access to Chapter 13 will reduce this harm.

“Chapter 13 bankruptcies do not result in destruction of the interests of traditional mortgage lenders.  Under Chapter 13, a debtor cannot discharge a mortgage debt and keep her home.  Rather, a Chapter 13 bankruptcy offers the debtor an opportunity to cure a mortgage delinquency over time — in essence it is a statutorily mandated payment plan — but one that requires the debtor to pay precisely the amount she would have to pay to the lender outside of bankruptcy.  Under Chapter 13, the plan must provide the amount necessary to cure the mortgage default, which includes the fees and costs allowed by the mortgage agreement and by state law.  Mortgage lenders who are secured only by an interest in the debtor’s residence enjoy even greater protection under 11 U.S.C. § 1322(b)(2) . . . . Known as the ‘anti-modification provision,’ [section] 1322(b)(2) bars a debtor from modifying any rights of such a lender — including the payment schedule provided for under the loan contract. . . . [Cf. 11 U.S.C. § 1322(c)(2) [bankruptcy court has authority to modify rights of lender, including payment schedule, in cases involving short-term mortgages]; see pt. II.A.3, ante.]

“Even though a debtor must, through reinstatement of her delinquent mortgage by a Chapter 13 repayment plan . . . , pay her full obligation to the lender, Chapter 13 remains the only viable way for most mortgage debtors to cure defaults and save their homes.  Mortgage lenders are extraordinarily unwilling to accept repayment schedules outside of bankruptcy. . . . There is no history to support any claim that lenders will accommodate the need for extended workouts without the pressure of bankruptcy as an option for consumer debtors.  Reducing the availability of [C]hapter 13 protection to mortgage debtors is most likely to result in higher foreclosure rates, not in greater flexibility by lenders.”  (DeJarnatt, Once Is Not Enough: Preserving Consumers’ Rights To Bankruptcy Protection (Spring 1999) Ind. L.J. 455, 495–496, fn. omitted.)

“It is unrealistic to think mortgage companies will do workouts without the threat of the debtor’s access to Chapter 13 protection.  The bankruptcy process is still very protective of the mortgage industry.  To the extent that the existence of Chapter 13 protections increases the costs of mortgage financing to all consumers, it can and should be viewed as an essential form of consumer insurance . . . .”  (DeJarnatt, Once Is Not Enough:  Preserving Consumers’ Rights To Bankruptcy Protection, supra, Ind. L.J. at p. 499, fn. omitted.)

We mention just a few of the rights Aceves sacrificed by deciding to forgo a chapter 13 proceeding.  First, although Aceves initially filed a chapter 7 proceeding, “a chapter 7 debtor may convert to a case[] under chapter []13 at any time without court approval, so long as the debtor is eligible for relief under the new chapter.”  (1 Collier on Bankruptcy, supra, ¶ 1.06, p. 24, italics added; accord, March et al., Cal. Practice Guide: Bankruptcy, supra, ¶¶ 5:1700 to 5:1701, 5:1715 to 5:1731, pp. 5(II)‑1, 5(II)‑3 to 5(II)‑5; see 11 U.S.C. § 706(a).)  In addition, Aceves could have “cured” the default, reinstating the loan to predefault conditions.  (See In re Frazer (Bankr. 9th Cir. 2007) 377 B.R. 621, 628; In re Taddeo (2d Cir. 1982) 685 F.2d 24, 26–28; 11 U.S.C. § 1322(b)(5); March et al., Cal. Practice Guide: Bankruptcy, supra, ¶ 13:450, p. 13‑50.)  She also would have had a “reasonable time” — a maximum of five years — to make up the arrearages.  (See 11 U.S.C. § 1322(b)(5), (d); 8 Collier on Bankruptcy, supra, ¶ 1322.09[5], pp. 39–40; March et al., Cal. Practice Guide: Bankruptcy, supra, ¶ 13:443, p. 13‑49.)  And, by complying with a bankruptcy plan, Aceves could have prevented U.S. Bank from foreclosing on the property.  (See 8 Collier on Bankruptcy, supra, ¶¶ 1322.09[1] to 1322.09[3], 1322.16, pp. 34–37, 55–56.)  “‘“Indeed, the bottom line of most Chapter 13 cases is to preserve and avoid foreclosure of the family house.”’”  (In re King (Bankr. N.D.Fla. 1991) 131 B.R. 207, 211; see also March et al., Cal. Practice Guide: Bankruptcy, supra, ¶¶ 8:1050, 8:1375 to 8:1411, pp. 8(II)‑1, 8(II)‑42 to 8(II)‑47 [discussing automatic stay]; In re Hoggle (11th Cir. 1994) 12 F.3d 1008, 1008–1012 [affirming district court order denying lender’s motion for relief from automatic stay]; Lamarche v. Miles (E.D.N.Y. 2009) 416 B.R. 53, 55–62 [affirming bankruptcy court order denying landlord’s motion to set aside automatic stay]; In re Gatlin (Bankr. W.D.Ark. 2006) 357 B.R. 519, 520–523 [denying lender’s motion for relief from automatic stay].)

U.S. Bank maintains that even if Aceves had pursued relief under chapter 13, she could not have afforded the payments under a bankruptcy plan.  But the complaint alleged that, with the financial assistance of her husband, Aceves could have saved her home under chapter 13.  We accept the truth of Aceves’s allegations over U.S. Bank’s speculation.  (See Hensler v. City of Glendale, supra, 8 Cal.4th at p. 8, fn. 3.)

5.  Absence of Consideration

U.S. Bank argues that an oral promise to postpone either a loan payment or a foreclosure is unenforceable.  We have previously addressed that argument, stating:  “‘[I]n the absence of consideration, a gratuitous oral promise to postpone a sale of property pursuant to the terms of a trust deed ordinarily would be unenforceable under [Civil Code] section 1698.’  (Raedeke v. Gibraltar Sav. & Loan Assn. (1974) 10 Cal.3d 665, 673, italics added.)  The same holds true for an oral promise to allow the postponement of mortgage payments.  (California Securities Co. v. Grosse (1935) 3 Cal.2d 732, 733 [applying Civil Code section 1698].)  However, ‘. . . the doctrine of promissory estoppel is used to provide a substitute for the consideration which ordinarily is required to create an enforceable promise. . . . “The purpose of this doctrine is to make a promise binding, under certain circumstances, without consideration in the usual sense of something bargained for and given in exchange. . . .”’  (Raedeke, supra, 10 Cal.3d at p. 672.)  ‘“Under this doctrine a promisor is bound when he should reasonably expect a substantial change of position, either by act or forbearance, in reliance on his promise, if injustice can be avoided only by its enforcement. . . .”’”  (Sutherland v. Barclays American/Mortgage Corp. (1997) 53 Cal.App.4th 299, 312; accord, Garcia v. World Savings, FSB, supra, 183 Cal.App.4th at pp. 1039–1041.)  We further commented:  “When Raedeke and California Securities Co. were decided, Civil Code section 1698 provided in its entirety:  ‘A contract in writing may be altered by a contract in writing, or by an executed oral agreement, and not otherwise.’ . . . In 1976, a new section 1698 was enacted which states in part:  ‘A contract in writing may be modified by a contract in writing . . . [or] by an oral agreement to the extent that the oral agreement is executed by the parties. . . . Nothing in this section precludes in an appropriate case the application of rules of law concerning estoppel . . . .’”  (Sutherland v. Barclays American/Mortgage Corp., supra, 53 Cal.App.4th at p. 312, fn. 8, citations omitted.)  Our earlier analysis in Sutherland applies here.

Finally, a promissory estoppel claim generally entitles a plaintiff to the damages available on a breach of contract claim.  (See Toscano v. Greene Music (2004) 124 Cal.App.4th 685, 692–693.)  Because this is not a case where the homeowner paid the funds needed to reinstate the loan before the foreclosure, promissory estoppel does not provide a basis for voiding the deed of sale or otherwise invalidating the foreclosure.  (See Garcia v. World Savings, FSB, supra, 183 Cal.App.4th at p. 1047, distinguishing Bank of America v. La Jolla Group II (2005) 129 Cal.App.4th 706, 711–714.)

B.        Remaining Claims

The elements of fraud are similar to the elements of promissory estoppel, with the additional requirements that a false promise be made and that the promisor know of the falsity when making the promise.  (See McClain v. Octagon Plaza, LLC (2008) 159 Cal.App.4th 784, 792–794 [discussing elements of fraud].)  Aceves has adequately alleged those facts.

Aceves’s other claims and requests for relief lack merit as a matter of law.  All of them are based on alleged irregularities in the foreclosure process.  We see no irregularities that would justify relief.  For example, Aceves contends U.S. Bank’s designation of Quality Loan Service as the trustee under the deed of trust was defective because the “Substitution of Trustee” was signed by the bank’s attorney-in-fact.  But Aceves cites no pertinent authority for her contention.  (See Schoendorf v. U.D. Registry, Inc. (2002) 97 Cal.App.4th 227, 237–238 [party forfeits contention absent citation of authority].)  Neither Civil Code section 2934a, which governs the substitution of trustees, nor the trust deed itself precludes an attorney-in-fact from signing a Substitution of Trustee.  And case law strongly suggests Aceves is wrong.  (See Tran v. Farmers Group, Inc. (2002) 104 Cal.App.4th 1202, 1213 [“an attorney-in-fact is an agent owing a fiduciary duty to the principal”]; Burgess v. Security-First Nat. Bank (1941) 44 Cal.App.2d 808, 818–819 [person can perform any legal act through attorney-in-fact that he or she could perform in person, including entering into contracts].)

Aceves also takes issue with the notice of default, pointing out that it mistakenly identified Option One as the beneficiary under the deed of trust when U.S. Bank was actually the beneficiary.  Although this contention is factually correct, it is of no legal consequence.  Aceves did not suffer any prejudice as a result of the error.  Nor could she.  The notice instructed Aceves to contact Quality Loan Service, the trustee, not Option One, if she wanted “[t]o find out the amount you must pay, or arrange for payment to stop the foreclosure, or if your property is in foreclosure for any other reason.”  The notice also included the address and telephone number for Quality Loan Service, not Option One.  Absent prejudice, the error does not warrant relief.  (See Knapp v. Doherty (2004) 123 Cal.App.4th 76, 93–94 & fn. 9.)

Last, after the filing of the reply brief and before oral argument, we requested additional briefing on the protections accorded by chapter 13.  In her letter brief, Aceves went beyond the scope of the request and presented arguments not previously made about the order in which various documents were recorded.  The new arguments were unsolicited; Aceves did not explain why the arguments were not raised earlier; and U.S. Bank had no opportunity to respond.  Accordingly, we do not reach them.  (See City of Costa Mesa v. Connell (1999) 74 Cal.App.4th 188, 197; Campos v. Anderson (1997) 57 Cal.App.4th 784, 794, fn. 3.)

It follows that the trial court properly sustained the demurrer without leave to amend with respect to all claims and requests for relief other than the claims for promissory estoppel and fraud.  Aceves should be allowed to pursue those two claims.

III

DISPOSITION

The order and the judgment are reversed to the extent they dismissed the claims for promissory estoppel and fraud.  In all other respects, the order and judgment are affirmed.  Appellant is entitled to costs on appeal.

CERTIFIED FOR PUBLICATION.

MALLANO, P. J.

We concur:

ROTHSCHILD, J.

JOHNSON, J.

My goodness, I’ve been doing quite a few radio programs lately, have you noticed?  I really like doing the radio show thing, it’s a lot easier than writing long, in-depth articles… LOL… just kidding… sort of.  Anyway, this is a link to me on Danny Schechter the News Dissector’s show, which is out of New York.  We’re talking about the economy and the foreclosure crisis, what else?

Here’s a link to the show:

Mandelman on the News Dissector, with Danny Schechter

Danny Schechter produced and directed the movie, PLUNDER, and I like the movie so much that I suggested that others watch it and even hold “Plunder Parties” so that people across the country would start to realize who caused the economic catastrophe we’re going to be living with for the next way-too-many years.  Here’s a link to that, in case you missed it:

Have a Plunder Party and Help Change Our World

I’m not kidding when I say, “help change our world,” by the way.  The only way we’re going to change things in this country (short of waiting for them to change on their own which will happen eventually, but at 49 years old, it won’t matter to me by then) is for the people to speak out and demand balance… in other words, tell our elected representatives that the banks aren’t the only important members of our society… and the only way the people will speak out is if they realize that what’s happened is not their fault.

Until they (read: you) understand that its not the borrowers, it’s the banks that caused our national meltdown… they’ll (read: you’ll) remain ashamed and unable to speak out.  So, watch Plunder… seriously… buy it and watch it.  It’s like $16.99… and  you can throw $16.99 at something this important.

Anyway… all this radio show practice is going to come in handy… because soon I might just be doing a radio show of my own.  And maybe even some Podcasting… I’m so techie, after all.

Mandelman out.

It’s amazing how different it is when you’re the Chairman of the Federal Reserve, as opposed to being the retired Chairman of the Federal Reserve.

Ben Bernanke, the current Chairman of the Fed, says of the economy, that there is “unusual uncertainty”.  He’s not sure about anything, this guy.

It’s funny because he was sure that the “sub-prime crisis” was a sub-prime crisis and that it would contained to the sub-prime sector… and none of that was correct.  It was never a “sub-prime crisis,” and it certainly wasn’t contained to anything but planet earth.

June 20th, 2007 – Bernanke: The fallout from the housing markets will not affect the economy overall.”

He was sure that it would not be appropriate for the Federal Reserve to bail out the banks:

October 15th, 2007 – Bernanke: “It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions.”

He said things about unemployment that have never been even close to correct, underestimating it for at least 11 months straight by six figures, or very close… I stopped counting after that.

June 9th, 2008 – Bernanke: “Despite a recent spike in the nation’s unemployment rate, the danger that the economy has fallen into a “substantial downturn” appears to have waned.”

And about Fannie and Freddie, he was sure the two mortgage giants were safe and sound, like a bug in a rug… as my grandmother used to say.

July 16th, 2008 – Bernanke: Freddie and Fannie will make it through the storm and are in no danger of failing; they are more than adequately capitalized”

Now, however, with a snowcapped mountain of evidence of our deflationary collapse staring him in the face, all he sees is “uncertainty,” and he calls that “unusual?”  See… that’s not funny, that’s just sad.

Alan Greenspan is the retired Fed Chief, and he sees things much more clearly now that he’s no longer directly responsible for what the markets do when he sneezes.

“We’re still nowhere near the bottom of the home price thing,” Greenspan told CNBC in an interview today.

Asked about Fannie and Freddie, the two failed mortgage messes that like to threaten homeowners over strategically defaulting, Greenspan said the government had no choice but to take them over but he added that the government will probably have to nationalize the two companies, calling them a “major accident waiting to happen.”

Don’t you love that… Ooopsie!  Lookie who had an accident.

Asked about whether we’ll slip back into a recession, which is a stupid question since we’ve never slipped out of the recession that started a couple of years back, he said:

“I think we’re probably likely to go there. We’re right on the brink. And I would be more surprised if we didn’t than if we did, given the financial  state.”

He also pointed out that recent signs of slowing in the rest of the global economy is also a source of concern.  Genius, the man is a genius.  It’s truly awe inspiring, the way he’s got his arms around the whole global thing.

These guys are really clown-like.  In my mind, I keep seeing them all getting out of one tiny car.

Yes… it’s a long slide down… but make no mistake… that’s where we’re headed.  Stay tuned, because I may not be able to save the country, but I can certainly try my best to help you.

Mandelman out.

Boy, what a difference a 10-hour plane ride makes.  While the news here continues to be “happy-happy,” the news about here… but written over there, is an entirely different matter.  The London Telegraph, or now the UK Telegraph, just published an article written by Ambrose Evans-Pritchard, and since I realize that not many people here in the U.S. subscribe to the paper, I thought I’d go ahead and post what Mr. Evans-Pritchard had to say about our country’s economic conditions.

Because, believe it or not, not everyone agrees with our Treasury Secretary, or our President for that matter, when they say that our economy is “on track”.  In fact, many think that quite the opposite is the case, and Mr. Evans-Pritchard is one such individual.

By the way, here’s a short bio for Ambrose Evans-Pritchard:

Ambrose Evans-Pritchard has covered world politics and economics for a quarter century, based in Europe, the US, and Latin America. He joined the Telegraph in 1991, serving as Washington correspondent and later Europe correspondent in Brussels. He is now International Business Editor in London.

Not a bad bio, wouldn’t you say?  I would.  Well, here’s what Evans-Pritchard has to say about our “recovery” and the whole “double dip” nonsense.  Just thought you’d want to know…

With the US trapped in depression, this really is starting to feel like 1932

By Ambrose Evans-Pritchard
 (As seen in Telegraph.co.uk)

The US workforce shrank by 652,000 in June, one of the sharpest contractions ever. The rate of hourly earnings fell 0.1pc. Wages are flirting with deflation.

“The economy is still in the gravitational pull of the Great Recession,” said Robert Reich, former US labour secretary. “All the booster rockets for getting us beyond it are failing.”

“Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing,” he said.

California is tightening faster than Greece. State workers have seen a 14pc fall in earnings this year due to forced furloughs. Governor Arnold Schwarzenegger is cutting pay for 200,000 state workers to the minimum wage of $7.25 an hour to cover his $19bn (£15bn) deficit.

Can Illinois be far behind? The state has a deficit of $12bn and is $5bn in arrears to schools, nursing homes, child care centres, and prisons. “It is getting worse every single day,” said state comptroller Daniel Hynes. “We are not paying bills for absolutely essential services. That is obscene.”

Roughly a million Americans have dropped out of the jobs market altogether over the past two months. That is the only reason why the headline unemployment rate is not exploding to a post-war high.

Let us be honest. The US is still trapped in depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP.

The share of the US working-age population with jobs in June actually fell from 58.7pc to 58.5pc. This is the real stress indicator. The ratio was 63pc three years ago. Eight million jobs have been lost.

The average time needed to find a job has risen to a record 35.2 weeks. Nothing like this has been seen before in the post-war era. Jeff Weniger, of Harris Private Bank, said this compares with a peak of 21.2 weeks in the Volcker recession of the early 1980s.

“Legions of individuals have been left with stale skills, and little prospect of finding meaningful work, and benefits that are being exhausted. By our math the crop of people who are unemployed but not receiving a check amounts to 9.2m.”

Republicans on Capitol Hill are filibustering a bill to extend the dole for up to 1.2m jobless facing an imminent cut-off. Dean Heller from Nevada called them “hobos”. This really is starting to feel like 1932.

Washington’s fiscal stimulus is draining away. It peaked in the first quarter, yet even then the economy eked out a growth rate of just 2.7pc. This compares with 5.1pc, 9.3pc, 8.1pc and 8.5pc in the four quarters coming off recession in the early 1980s.

The housing market is already crumbling as government props are pulled away. The expiry of homebuyers’ tax credit led to a 30pc fall in the number of buyers signing contracts in May. “It is cataclysmic,” said David Bloom from HSBC.

Federal tax rises are automatically baked into the pie. The Congressional Budget Office said fiscal policy will swing from 
a net +2pc of GDP to -2pc by late 2011. The states and counties may have to cut as much as $180bn.

Investors are starting to chew over the awful possibility that America’s recovery will stall just as Asia hits the buffers. China’s manufacturing index has been falling since January, with a downward lurch in June to 50.4, just above the break-even line of 50. Momentum seems to be flagging everywhere, whether in Australian building permits, Turkish exports, or Japanese industrial output.

On Friday, Jacques Cailloux from RBS put out a “double-dip alert” for Europe. “The risk is rising fast. Absent an effective policy intervention to tackle the debt crisis on the periphery over coming months, the European economy will double dip in 2011,” he said.

It is obvious what that policy should be for Europe, America, and Japan. If budgets are to shrink in an orderly fashion over several years – as they must, to avoid sovereign debt spirals – then central banks will have to cushion the blow keeping monetary policy ultra-loose for as long it takes.

The Fed is already eyeing the printing press again. “It’s appropriate to think about what we would do under a deflationary scenario,” said Dennis Lockhart for the Atlanta Fed. His colleague Kevin Warsh said the pros and cons of purchasing more bonds should be subject to “strict scrutiny”, a comment I took as confirmation that the Fed Board is arguing internally about QE2.

Perhaps naively, I still think central banks have the tools to head off disaster. The question is whether they will do so fast enough, or even whether they wish to resist the chorus of 1930s liquidation taking charge of the debate. Last week the Bank for International Settlements (“BIS”) called for combined fiscal and monetary tightening, lending its great authority to the forces of debt-deflation and mass unemployment. If even the BIS has lost the plot, God help us.

Gee whiz… but Tim Geithner says everything is going along swimmingly… and Mr. Bernanke says there’s “unusual uncertainty”.  But, maybe just maybe… maybe we’re in much deeper doodoo than our government says we are… ya’ think?

Mandelman out.

Elizabeth Warren is the only person I’ve seen in Washington D.C. that is both aware of what consumers are facing today, and I believe truly cares about homeowners in this country. She gets it in ways that no one else in government does, and she appeared just a few days ago on PBS to talk about the new agency and the foreclosure crisis. And I found it breathtaking to watch, and hear what she she had to say.

She says…

“It’s about respect. I believe that the American people ought to be part of the conversation about what’s happening in our economy, and what’s happening in Washington D.C. and what’s happening on Wall Street. I truly believe that if the insiders get together and rewrite all the rules, those will be rules that will benefit the insiders and the rest of America will just be left out of it.”

She was asked whether she believes that Tim Geithner is right about the way he’s handling the commercial real estate meltdown that’s around the corner.  She responded by saying:

“We have not seen a strong response from Treasury. I hope he’s right, but I would feel better if I saw more action, if we saw some plans in place. It is our job in oversight not to say ‘Oh good, let’s relax!’ Our job in oversight is push and say these are problems, and show us what you’re doing here, and we do this on behalf of the American people.”

She described it as a downward spiral. (Sound familiar?) She knows what’s ahead and she knows it doesn’t look good. People… she is our one true real hope. We need her now, and if we can’t make her the President of the United States, we must make sure she is allowed to establish and lead the consumer protection agency of which she conceived. It is only because of her that the agency will exist, and to pretend that there is anyone else to lead it, would be a travesty and a tragedy on an historic scale.

I pray… literally pray… that all of you reading me take the time to write to the White House and to  your elected representative telling both that her appointment is the single most important thing to you… and to all of us.

At the end of her interview, and I hope you’ll watch every single second of it as it appears below… she admits that she doesn’t know whether it’s possible to push back against Wall Street’s power, and she admits that many have told her that it is not. But, I’ve never felt more in-sync with anyone as when she utters her last words, saying: “I don’t know. I just refuse to give up.”

I was told by someone inside the beltway, as they say, that Treasury Secretary Tim Geithner is still working hard to oppose her appointment to lead the new consumer protection agency. I’ve also been told that Larry Summers will also oppose her appointment.

These are the two guys who have bailed out the banks at every turn, and don’t want to see anyone question those banks, or limit what they’re allowed to do to us, in order to become solvent again.

The banks, however, are no more solvent today than they were a year ago. The toxic assets… remember the “toxic assets”… are right where they were in October of 2008. Geithner has not dealt with that problem. It is abundantly clear that his plan is to allow the banks to continue crippling our economy until they can make enough money to return to solvency.

But, and please listen when I say this, and go check it out for yourself if you don’t believe what I’m about to say… Japan took that approach and it took their banks over a DECADE. It could take our banks even longer.

My daughter is 14. How old are those that you love? We are literally staring down the barrel of a DECADE LONG GUN RIGHT NOW. Geithner cannot be allowed to continue doing what he’s doing to this country.

Last year, we spent more than $4 trillion propping up the banks, and we are no better off today than we were then. In fact, as everyone will know in a matter of months, if they don’t know it already, we are much worse off than we were a year ago.

It’s not just about the TARP for $700 billion, by the way. The TARP was just the beginning. The rest is not covered by the media, but you can look it up for yourself. Try Googling the following, because these are all programs Geithner and Summers and the Obama Administration have established and approved… quietly.

TLGP (Temporary Liquidity Guarantee Program) This was set up by Geithner and Bair. It guarantees certain types of debt issued by financial institutions, and deposits in certain accounts. Thousands of banks are participating in this program. ALLOCATED: $1.5 TRILLION

GSEP (Government Sponsored Entity Purchases) This was set up by Tim Geithner and Ben Bernanke. It allows the Federal Reserve to being purchasing the toxic debt issued by Fannie and Freddie. ALLOCATED: $1.4 TRILLION

CPFF (Commercial Paper Funding Facility) This program was established by Geithner to fund the commercial paper market after Lehman’s demise. Commercial paper can be thought of as short term loans that many large companies use to cover payrolls. It was funded by the Federal Reserve Bank of New York… Geithner was the President of the Federal reserve Bank of New York before becoming Treasury Secretary, by the way. They say this program is closed, but how do we really know? ALLOCATED: $1.4 TRILLION

TALF (Term Asset Backed Securities Loan Facility) Geithner and Bernanke set this up last year to loan money to banks that offer bundled loans to small businesses and consumers. The hope was that it would make it easier for people to get car loans, student loans, and other forms of credit. Did it work? Maybe a little, but it sure didn’t fix anything. ALLOCATED: $200 BILLION

TAF (Term Auction Facility) A program whereby the Federal Reserve auctioned funds to depository institutions. Bids are submitted by phone through local Federal Reserve banks, and all advances must be collateralized, but how do we know what’s passing for collateral these days. ALLOCATED: $600 BILLION

AMLF (Asset Backed Commercial Paper Mutual Fund Liquidity Facility) This program provides loans to banks so they can buy certain types of commercial paper from money market mutual funds. The goal of this program was to make it easier for the funds to pay the investors that wanted to cash out. ALLOCATED: $1.6 TRILLION

FEDS (Foreign Exchange Dollar Swaps) This is a program whereby the Federal Reserve goes around the world offering dollars to the European Central Bank, the Swiss National Bank, the Bank of England and other central banks. These banks can print Euros, Francs, Pounds, etc. but not dollars. The european banks give the Fed their own currencies to hold, and then lend the dollars to other banks in an attempt to ease the strain in those banks. ALLOCATED: UNREPORTED AMOUNT SPENT AS OF A YEAR AGO: $420.26 BILLION

PDCF (Primary Dealer Credit Facility) This is an overnight loan facility that provides funding to primary dealers in exchange for any tri-party-eligible collateral. The purpose is to keep the markets functioning. Loans are taken out for one day, but new loans can be taken out each day. ALLOCATED: UNREPORTED SPENT: UNREPORTED

Still think it’s all about the TARP funds?

People have called me and said… “But the banks paid back the TARP funds, doesn’t that mean they’re doing better?” And I’ve replied: No, I’m afraid not. It just means they wanted to have the restrictions on executive pay lifted, and only the TARP funds place such restrictions on the banks. The rest of the programs above don’t place any restrictions on anyone.

Tim Geithner and Larry Summers are directly responsible for the situation we are in today. It’s worsening and worsening faster than ever. Don’t wait until you actually feel the pain to take action, because by then it will be too late, if it isn’t already.

Oh, and stop listening to the double dip nonsense. It’s not true. We won’t have a double dip, because we never had a recovery. We’re in the same downward spiral we went into in 2007. Elizabeth Warren knows this, but she also knows that government cannot continue to abandon the American people as it pumps trillions into the banks who caused and are continuing to cause such monumental and intense pain. We need her now… we need balance, as much as we can get.

And just like I’ve said many times over the last two years… she won’t give up. Write to the White House, and to your elected representative today. Demand that Elizabeth Warren head up the new consumer protection agency… please.

Here’s she is being interviewed just three days ago on PBS. Please watch the whole thing. Thank you… Mandelman

Watch the full episode. See more Need To Know.

Those names should ring some bells by now, but in case you can’t place them all, they are the names of the CEOs of Goldman, Morgan, Citi, JPM Chase, and the new guy at BofA who replaced Kenny Lewis at the beginning of this year.

Now, there are all sorts of reasons that I could go after these guys for being beyond offensive.  I mean, just the fact that any of these CEOs still has her job is nothing short of astonishing.  Traditionally, as far as I can remember, CEOs that captain their corporate ships only to go fatally crashing into the cliffs of insanity get canned, right?  Not only did these guys keep their jobs after, at the very least, spectacularly failing, but they also picked up very nice bonuses to boot.  So, I’d have to say, very well done there.

But I’m not even going to worry about any of that today.  No, today I’m only concentrating on what this group of overbearing oligarchs has done lately, like as in over the last five quarters, according to the Federal Reserve Bank of New York.  That’s right, new stuff.  They didn’t do enough to destroy the global financial system over the last decade, so I guess it’s a matter of why-quit-on-a-winner sort of thinking?

Apparently, data released by the Federal Reserve Bank of New York shows that 18 banks, including those listed above of course, have been lying about their levels of debt that are used to fund their trading of securities at the end of the last five consecutive quarters, lowering them by an average of 42%, and then increasing those debt levels back to the real numbers in the middle of the following quarters.

Oh, I know… it’s not really “lying,” in this, our horribly-distorted-by-bank-lobbyists-world, I’m sure it’s actually perfectly legal, and equally sure there’s some banking lawyer out there who can set me straight on this.  If such a lawyer ever contacts me I think I’ll introduce myself by saying: “Hi, I’m a human being.  What are you?”

The Wall Street Journal reported the story saying:

“The data highlight the banks’ levels of short-term financing in the repurchase, or “repo,” market. Financial firms use cash from the loans to buy securities, then use the purchased securities as collateral for other loans, and buy more securities. The loans boost the firms’ trading power, or “leverage,” allowing them to make big trades without putting up big money. This amplifies gains—and losses, which were disastrous in 2008.”

Were they now?  Disastrous?  I hadn’t heard… pray do tell.  Disastrous for whom, exactly?  Not for any of these fine fellows, right?  They all did pretty darn well, following that little speed bump of a financial hiccup that people were all upset about for a few months, as I seem to recall.  It’s all better now, right?

I mean they hardly need any taxpayer support now, beyond a few trillion in free loans, and some suspended accounting rules that allow them to not recognize losses, right?  That’s no big deal, why that’s practically free market.  And quit it with all the “disastrous” talk, okay.  From now on, how about we refer to the events that took place during the fall of 2008 as being “challenges,” or better yet, “issues”?

The WSJ article went on to say:

“According to the data, the banks’ outstanding net repo borrowings at the end of each of the past five quarters were on average 42% below their peak in net borrowings in the same quarters. Though the repo market represents just a slice of banks’ overall activities, it provides a window into the risks that financial institutions take to trade.”

And I do love windows, don’t you.  I always ask for the window seat when on a long flight.  And I even like opening windows to let fresh air in when hanging around my house.  The problem with this “window,” is that if I were to open it, I’m fairly certain that whatever air would come in as a result, would be so toxic as to kill me within seconds.  Like a poisonous gas that would dwarf the power of Zyklon B.

The New York Fed declined to comment for the WSJ story, as did representatives from Goldman, Morgan, JPMorgan Chase, and Citigroup, which I thought was, collectively speaking, very transparent of them.  A spokes-liar from Bank of America, however, did say the following:

“The efforts to manage the size of our balance sheet are appropriate and our policies are consistent with all applicable accounting and legal requirements.”

As if that’s even remotely the point.

The WSJ also pointed out that it was excessive borrowing, or “leverage,” as the banksters are fond of calling it (unless it’s a homeowner, of course, in which case “excessive borrowing,” is only a euphemism for “irresponsible deadbeat”), that was a big part of what caused the “issues” of 2008.

“Excessive borrowing by banks was one of the major causes of the financial crisis, leading to catastrophic bank runs in 2008 at firms including Bear Stearns Cos. and Lehman Brothers. Since then, banks have become more sensitive about showing high levels of debt and risk, worried that their stocks and credit ratings could be punished.”

Damn, that was beautiful, was it not?  “Since then, banks have become more sensitive about SHOWING high levels of debt and risk…”  They’ve become more sensitive about SHOWING it, not that they don’t do it anymore.  So, you see… they’re not lying, they’re just being more “sensitive” to our needs by not sticking in our face the fact that not a damn thing has changed since they all cashed out on breaking the world.  Well, that’s different… thanks Lloyd, John, Vikram, Jamie and Brian… I do appreciate your newfound sensitivity.

Tell you what… if this was all there was with these guys, then I’d probably be willing to let them all off with a securities fraud conviction, but it’s far from being an isolated incident.  These guys are now operating essentially as if they are beyond the law, beyond even the scope of our democracy.

Did you see them report last month that their trading desks all made money every single day of the first quarter of 2010?  And then a guy from Bloomberg who’s apparently quite adept with numbers figured out that if a trader was someone with a 70% chance of making money on any given day the odds of him or her making money for 63 consecutive days would be 5.7 billion to one?  And I looked it up and found that, to give that mind-numbing numerical probability some context, the chances of being dealt a royal straight flush in five cards is only 650,000 to one.

Obviously, whatever these banksters did 63 days in a row during the first quarter, it’s bears no resemblance to “trading”.  And yet they touted it, as if we should all stand back and applaud their superior intellect, trading expertise, and general prowess with all things financial.

Well, I have a different idea of how these guys need to be treated.  They are failures.  Not a one of them would still be in business as the company they are today, were it not for the sycophants we have at Treasury, and the weak-kneed rubes we’ve elected to represent us, to say nothing of the administration, all of which decided that taxpayer largesse was in order.

It’s not a question of what’s merely legal anymore, fellas.  It’s a question of whether or not you’re the right guys to restore confidence in a financial system that’s proven itself to be morally and legally bankrupt.  You know, so that maybe… just maybe… the day will come when someone other than the federal government will want to invest in a mortgage backed security of one kind or another.  Because if that goal can’t be achieved, then I’d say that the banks of the future need be nothing more than another public utility.  Are you feeling me?

My God… lowering your debt at the end of the quarter to appear one way or the other?  Really?  Well, all I can think of is a quote from Clarence Darrow, who once said: “I’ve never killed a man, but I have been known to read a few obituaries with great pleasure.”

Shape up, banksters.  Because you’re currently on a path that doesn’t end well for anyone.

Mandelman out.

(Only in America… Nina Easton.  More on that in a moment.)

The New York Post is reporting that a new gold rush is sweeping the country and it’s all about… are you ready for this… “people looking to get fat off of the $4 billion home foreclosure industry”.

Apparently, in the last two years four companies have either gone public or are about to go public, and each is looking to raise the cash they need to become a “national powerhouse” in the business of providing “streamlined and low-cost methods” for kicking people out of their homes.

According to the Post, “there are currently 6 million homeowners 60 days or more delinquent on their mortgage,” which makes these companies very attractive to investors.

These companies, DJSP Enterprises, whose revenues have increased by 31% over the last year, Altisource Portfolio Solutions, with its 182 percent increase in profits last year, and of course, Lender Processing Services, a company with $2.4 billion in revenue up 29 percent last year — all offer technology linking lenders with law firms in order to reduce the cost and streamline the process of foreclosing on homes and evicting their ex-owners.

Oh, and let’s not forget Prommis Solutions, which turned a $7.9 million profit in 2009 and has filed to go public.

Now, Lender Processing Services is the parent company of DocX, a company that one of the companies under investigation by the Florida Attorney General’s office for being in the business of creating fraudulent documents used in foreclosure proceedings when the servicer doesn’t have any paperwork showing that the trust actually holds the mortgage.

But, LPS doesn’t seem terribly concerned about that investigation, or any of the others that threaten to expose this company for wrongdoing.  They say it’s all just a mix-up… funny story, that sort of thing.  Here’s the company’s CEO on May 20th:

LPS’ CEO Jeffrey Carbiener said “our earnings are quality earnings. They translate into cash flow.  LPS generated $349 million in cash last year.”

LPS provides all levels of mortgage default services services for when a loan goes bad.  “Because we have a strong business model, we’re able to weather economic challenges,” Carbiener said.  LPS’s growth is continuing into 2010, with first-quarter revenue up 11.8 percent and adjusted earnings up 26.5 percent.

“We’ve had good success and we expect that success to continue into the future,” Carbiener said.

These types of companies get fees from the lenders on each property, and from the law firms that file the foreclosure actions. So, their prospectuses warn investors:

“A turnaround in the housing market or additional mortgage-modification plans from Washington may negatively impact our profits.”

Well, there’s not much to worry about in either of those regards, at this point anyway.  But, I suppose there is always the risk that there could be an outbreak of competence in Washington.  Still… I’d probably go long at this point.

As long as our economy continues to sink into an abyss, any of these companies is poised to become the next Microsoft, but God forbid our elected representatives actually figure something out and we start to see stabilization in the housing market, leading to a real recovery, well… better sell these stocks short and fast, ‘cause the better things get the worse they’ll do.

The whole thing got me to thinking… this must be awfully confusing to John Paulsen and the guys at Goldman.  They want to short the housing market in every possible way, but to do that in this case, they have to go long.  I’ll bet some traders have become dizzy and maybe even passed out just thinking about that.

A Goldman Trader: “What do I do again?  I need 3.5 million shares short… no, long… no, short… no, damnit!”

So, if you’re a homeowner at risk of losing your home to foreclosure, or even if you’re not looking at foreclosure, but just can’t stand the thought of watching another hundred grand in equity go up in smoke, I have some important investment advice for 2010 and 2011 that you’ll want to hear.

Why not consider strategically defaulting on your underwater mortgage in order to start dollar cost averaging into this brand new and exciting offering:

Nina Easton’s

Empty Homes Hi-Yield Bond Fund

To learn more about Nina’s role in the foreclosure crisis, click where her name appears in orange above.

The fund’s objective is to acquire significant positions in bonds issued by growth companies that are positioned to capitalize on the emerging and exciting multi-billion dollar foreclosure industry.  The fund’s investment strategy focuses on:

• Technologies that enable faster, high-quality document forgeries.
• Property preservation companies that throw people out first time, every time.
• Title insurance companies that don’t care who owns the property.
• Lock-Box and REO-FOR-SALE sign manufacturers.
• Home auction companies.
• Firms that lobby on behalf of the banking industry.
• And, of course, the makers of Xanax and Ativan.

People, this is a once in a lifetime investment opportunity to place a bet on our growing foreclosure industry, supported by the total and ongoing incompetence of our government!  And that’s not all…

In order to hedge your position in Nina’s Empty Homes Hi-Yield Bond Fund, or for those of you who think the administration and other branches government may at some point actually start getting something right, I’m also working on getting the Obama Administration to agree to be a counterparty in credit default swaps related to certificate holders in Nina Easton’s Empty Homes Hi-Yield Bond Fund.

Nothing is definite at this point, but I think it’s important that dumb money be able to short our multi-billion dollar foreclosure industry, so for those that think the foreclosure crisis will be ending soon, stand by because my soon to be available Obama Competence Credit Default Swaps should be available soon.  That’s right, you can sell the foreclosure industry short when you invest in Obama Competence Credit Default Swaps.

Plenty of Upside Remaining…

Some have said…

“But Nina… we’ve already lost 7 million homes to foreclosure.  Haven’t I already missed out on my chance to profit from this exciting opportunity?”

No, no… silly human… there’s plenty of upside remaining in the foreclosure market.  Housing prices are still in a free fall, foreclosures are still coming in at over 300,000 a month, and we’re on the fifteenth straight month at those levels.

There are 6 million people more than 60 days delinquent on their mortgages right now, and Goldman Sachs forecasts 14 million more foreclosures in the next five years!  And don’t forget… the good news is that the ALT-A and Option ARM loans that haven’t even started adjusting yet!

Unemployment?  Fuggetaboutit!  I mean, no one is even trying to fix that anymore!  We’ve got more people unemployed for more than 30 weeks than since before I was born, and at this point our only strategy is to report made up numbers generated by the Bureau of Labor Statistics.  I think it’s pretty safe to say that it’s all downhill from here!

So, worry not.  It’s not at all too late for you to get involved and make your fortune in the fast-paced and exciting foreclosure industry, because there’s plenty of upside left in the American foreclosure market.  Let’s see the Chinese beat us at this!  No chance… they won’t even try.

And the people trying to stop this foreclosure thing… please.  Here’s what Nina Easton wrote in her blog about a demonstration near her home:

Now this event would accurately be called a “protest”; if it were taking place at, say, a bank or the U.S. Capitol. But when hundreds of loud and angry strangers are descending on your family, your children, and your home, a more apt description of this assemblage would be ‘mob.’

You tell ‘em Nina!

Others ask…

“Nina, I heard HAMP was doing better at modifying loans lately.  Is this something I should be concerned about?”

I wouldn’t be the least bit concerned, and here’s why…

First of all, you’d have to believe that the government’s program will actually continue to show improvement, and at this point, there’s very little evidence upon which to base that sort of assumption.

As of right now, there have been about the same number of homeowners kicked out of HAMP as have received permanent modifications, and don’t forget there are still more than 600,000 homeowners stuck in the purgatory that the government refers to as a “trial modification,” so look for at least a few hundred thousand more foreclosures there, for sure!

It really is an exciting time to be investing in the foreclosure industry in this country, and there’s no better way than through Nina Easton’s Empty Homes Hi-Yield Bond Fund.

Now, it is true that HAMP, as of June 1^st, will start requiring homeowners to verify their incomes prior to being placed into a trial modification, and the early indications are that a much higher percentage of homeowners will ultimately be granted permanent modifications in future months as a result of this new requirement.

Big deal… The numbers of homeowners entering the program declined dramatically as soon as the servicers started asking for proof of income in advance of being granted a trial modification, so even if this does make HAMP incrementally better, it won’t come close to touching the more than 300,000 new foreclosures occurring each month in this country!  How could you ask for better fundamentals than that?

And the best part is… you can still rely on the fact that HAMP is “VOLUNTARY” as far as the banks and servicers are concerned!

So, relax… you don’t think the banks and servicers are going to do anything to stop foreclosures, do you?  Of course not!  And it’s still… ALL UP TO THEM!

If there’s one thing you can depend on, it’s that the banks and servicers will continue to fuel the foreclosure industry’s growth, so with the government allowing the banks total discretion on all foreclosure decisions, investing in Nina Easton’s Empty Homes Hi-Yield Bond Fund is a safe bet and a sure winner.  It’s like we’ve got Colonel Sanders guarding the chickens, if you know what I mean.

Barring some totally unforeseen change in the administration, like Paul Volker being taken seriously, Bernanke allowing us to audit the Fed, Tim Geithner turning on his banking buddies on Wall Street, or Liz Warren being given teeth, there’s no way Obama’s Making Home Affordable program is going to address the millions more homes that will be lost as a result of the foreclosure crisis.

And come on… I understand that past performance is no assurance of future results, but Volker taken seriously?  Geithner turning on Wall Street?  Liz Warren being given teeth?  Bernanke letting anyone inside the Fed?  HAHAHAHAHA… I know… anything can happen, but come on… it’s like thinking that maybe the banksters are going to wake up one morning afraid of Obama.  Come on… you’re killing me… not in this lifetime, baby!

No, folks… the good news for our emerging foreclosure industry, and for Nina Easton’s new Empty Homes Hi-Yield Bond Fund, is that our government has failed at every single turn in trying to stem the tide of foreclosures in this country, and there’s no reason to believe they’re going to be any more competent in the future!

Some say that America has lost its leadership position in the world, but I don’t believe that for a second, and I think we’re already proving it with our clear dominance in the foreclosure industry.  There’s no other country on the globe that has anywhere near as vibrant a foreclosure industry as we do here in the good old U.S.A.

We’re the dominant world leader in foreclosure production, and with nothing in place to stimulate economic growth, nothing even on the drawing board to reverse the trends in unemployment, and all of our money and then some going to prop up failed financial institutions that remain insolvent, how can anyone not think that we will maintain our leadership position as the foreclosure capital of the free world?

And don’t worry about all these pesky demonstrations by homeowners.  Like Nina wrote in her blog last week about the unwashed masses that were demonstrating in front of her house, just because her neighbor works for some bank:

Waving signs denouncing bank ‘greed,’ hordes of invaders poured out of 14 school buses,” childishly putting “greed” in quotes as if referring to unicorns, hobbits, or some other imaginary entity.

Ooooh, snap!  We love you Nina!

So, don’t miss out on the opportunity to go long on the promise of our government’s ongoing incompetence by investing in Nina Easton’s Empty Homes Hi-Yield Bond Fund today!

Disclaimer: Past incompetence is no assurance of continued ineptitude, or future ineffectiveness.

Don’t worry about not having any money left in your IRA or 401(k), many of our investors simply stop making mortgage payments and then invest those amounts in the fund each month.  We even offer direct deposit, so you can just call your bank where your mortgage payments are automatically going now, and have them redirected to Nina Easton’s Empty Homes Hi-Yield Bond Fund!

It’s that simple!  Why not start rooting for more foreclosures today?

Isn’t it time to get on the right side of this foreclosure crisis thing, by investing on the winning side!  Sure you may lose a house or two, but so what?  You’re so far underwater that the only difference between you and a renter is that a renter has more rights and can’t be evicted as quickly.

Besides with the money you’ll make investing in my new Empty Homes Hi-Yield Bond Fund, soon you’ll not only be able to buy the home across the street for half the price, you’ll be able to pay  cash!

For more information, call:

1-800-4-EMPTY-HOMES

Or send email to:

invest@throwthemouttoday.com

Operators are standing by to take your call.

~~~~~~~~~~~~

IMPORTANT DISCLAIMERS:

The Empty Homes Hi-Yield Bond Fund is not registered with FINRA or the SIPC, but so what, neither are trillions in derivatives.

Although current personnel working for the administration can be counted on as entirely lacking in ability or skill, the Empty Homes Hi-Yield Bond Fund makes no assurances pertaining to the stupidity or utter uselessness of those who may work for the administration in the future.

In the event of an outbreak of competence in Washington D.C. investors should recognize that they could lose their investment in the Empty Homes Hi-Yield Bond Fund, although at this point, the FUND’s management believes that statistically this risk falls somewhere between the risk of shark attack in Indiana, and being killed by falling airplane parts while shopping at an indoor mall.

Nina Easton’s

Empty Homes Hi-Yield Bond Fund

Your Ticket to Winning Our Nation’s Race to the Bottom

Fictional Securities Not Offered by Mandelman Matters.  This, of course, was a joke.  Except for the stuff at the top about the companies like Lender Processing Services… that stuff is real, and should make you want to throw up.  Oh, and the stuff about Nina Easton was real too, and I can’t decide whether to ignore her, or write something about her every single day for the rest of my life.