T-minus ? until Countrywide goes under.. . .

NEW -> Contingent Buyer Assistance Program
<p>lawyerliz, et al.</p>

<p>This post is for those of you who may have margin accounts at some of the larger brokerages; some of the larger brokerages who have off balance sheet items or may have involvement with SIVs, MBSs, CDOs, CLOs, yadda-yadda-yadda.</p>

<p>When you signed your margin account agreement, you agreed to let the broker borrow your shares, (to loan to short sellers), and to let them borrow your shares without any particular notice. Even though your margin account may show you as being long 300 shares of RIMM, those shares may not actually be in your possession or in the possession of your broker. OK, so what, you ask?</p>

<p>Well, when you sent money to your broker initially or a various times, the broker takes possession of your funds because it is neccessary to do so in order for the broker to purchase securities for you. The cash shows in your account, but actually it is on the brokers balance sheet as his asset and again as his liability. During this time that you have cash, and all times you have cash in the account, the cash is insured by the SIPC, ( Securities Investor Protection Corporation ). And it stays insured until such time the broker purchases stock or some other security for you. After the purchase, you own the security, and it shows in your account as you owning it, and you own it until you sell it. When you sell it, the cash goes back to the broker and the cash is again insured by the SIPC. <strong>BUT</strong>, during that time in which you owned the stock, the stock was <strong>NOT</strong> insured by the SIPC, because the SIPC only insures the broker against default, but does not insure you against loss for stock that you own. Are we ok so far? Is this making sense?</p>

<p>Ok, now the juicy part. If you have a margin account, ... yeah, you are already starting to figure this out, aren't you? If you have a margin account, your broker may <strong>borrow</strong> your stock while you own it and while it is not insured by the SIPC. And if the broker goes bankrupt, or runs into some solvency issues regarding OTC derivatives, you are just a creditor to whom the broker owes. And you get to line up with all the other creditors.</p>

<p>Now, considering I don't know everything, I am very open to anyone correcting me and pointing out anything I may have missed which is relevant to the above issue. And if you want to know why in the world would I know anything about this, even if wrong? I am the guy for whom your broker borrows your shares for.</p>
 
<p>If one assume's Gretchen, like most journalists, doesn't know what she's writing about ... then you can still assume the story fact checker did their job on the factual parts.</p>

<p>So we can ssume the Chapeter 13 trustee really did say what Gretchen said she said. Which is pretty damning.</p>

<p>Also, I don't find it very hard to believe that a financial services company of some sort can concoct unreasonable fees and try to stick you with them. Come on, that's a cliche to anyone with a bank account or a credit card.</p>

<p> </p>
 
Per awgee's comment - read your account agreement. I looked at a few (not on the risky list from <a href="http://www.rgemonitor.com/blog/roubini/224871">http://www.rgemonitor.com/blog/roubini/224871</a>) and some automatically created cash accounts unless you specifically opt in, while others by default made new accounts margin accounts (which the stock borrowing mentioned in fine print for the margin accounts) unless you specifically opt out.
 
Thanks awgee, I have no idea what kind of account I have; I have sold most of my shares, so am insured by SIPC to that extent.



As a closing atty who as a hobby, defends foreclosures, I will tell you that the payoffs are littered with those rotten fees. As far as I know the mtg contract gives no basis for them, except I do think the inspection fees are justifiable under protection of the security. The rotten fees started small, oh, say 15-20 years ago and have gotten bigger and more onerous as time goes on. They charge them on ordinary payoffs as well as calculations for foreclosure purposes.



So far as I know, they have never caused a borrower to lose their home.



One particularly horrible case was where the mtg company thought erroneously that my borrower client didn't have insurance, and force-placed insurance. He wouldn't pay because he actually always did have insurance. This was Washington Mutual, by the way, some years ago.



Then, they started charging late fees because he didn't pay the insurance a second time. They charged these fees every single month.

I think their position was that if you were late once and didn't pay the late fee on that one late payment, then there were entitled to charge late fees on every single payment after that, even tho you never made another payment late. Most other lenders would just wait until you went to re-fi and charge you the one late fee at that time. Very fairly.



When you file foreclosure, you are supposed to prove you own the loan.

This is easy to do, if you're not a part of MERS (don't ask), you say you are the owner and holder and attach a copy of the mtg and assignment of mtg to the foreclosure complaint. Very often the chain of assignments is screwed up, and I can defend on that basis while my client is getting their act together. Lately, you have biggies which are the trustees of the mtg backed securities filing the complaints. I have one which asserts that they're going to provide a copy of the assignment, but it's been 4 months and they never have. I don't know what you posting states do. Seems like xyz, trustee for blahblah holder of 123 bond pool should be able to show an asgmt from the original lender. But, maybe not. Maybe I can keep this foreclosure going on forever. I think this is one more reason for being very very careful of what you are buying from a bank.



Another sloppiness source: in each and every case I've observed the lender always asserts that they have lost the note. This is a lie. They don't know how to plead a reinstatement of an instrument, so I can drive them crazy over that. But I think that in the current mess, which staffs being sharply cut, it may happen that some disgruntled employee will figure out a scheme to separate the notes and mtges and assign the notes separately as a con job.



The notes are the primary instrument; the mtges are merely security.



Theoretically you could sue on the note and ignore the mtg. And you might want to do that, if you are suing Big Toxic Chemical Company, which is solvent, but has hopelessly contaminated land. No way does a lender want to become responsible for an expensive cleanup, if they can just get their money back.



Dare I say it? I think that neither Tanta nor Gretchen really has a total handle on the issues because neither one of them does closings or foreclosure defense for a living.
 
Anon,





My point of Gretchen being a hack is, not only does she not know what she is writing about, but she takes normal practices out of context. For example:





<em>'Most of the fees were less than $200 each, but collectively they could raise millions of dollars for loan servicers at a time when the other side of the business, mortgage origination, has faltered." "Others include $145 in something called “demand fees,” $137 in overnight delivery fees, fax fees of $50 and payoff statement charges of $60."





</em>This is perfectly normal. These fees are typical for an "A" borrower when they refinance. I don't recall anyone complaining about these fees when people were refinancing every year. And to say that these fees will raise millions of dollars as the business falters is ridiculous. If anything these fees will go down without the Kool Aid infused equity extraction.





<em>"In <strong>one</strong> example, Ms. Porter found that a lender had filed a claim stating that the borrower owed more than $1 million. But after the loan history was scrutinized, the balance turned out to be $60,000."





</em>One example out of how many billions of loans Wells Fargo services? And what about the borrowers who thought they owed more than what the lender stated? This is a huge corporation that, as unfortunate as it is, made one giant mistake.





<em>"At Countrywide, $285 million came from late fees last year, up 20 percent from 2005. Late fees accounted for 7.5 percent of Countrywide’s servicing revenue last year."





</em>Duh! Hello, defaults for CFC are through the roof. To even bring this up, proves my point of sensationalism. Anyone with a brain would figure out as late payments have increased, that the late fees would increase.





<em>"She also found that some creditors ask for fees, like fax charges and payoff statement fees, that would <strong>probably</strong> be considered “unreasonable” by the courts."





</em>This is redundant. Why bring it up again? Notice she says <em>probably</em>? So, you didn't actually ask a judge or BK attorney if it would be considered "unreasonable"?





My disdain is not directed at you, Anon, but at this gawd awful, lazy, fact lacking, <em>sea of sensationalist swill</em>. Gretchen is a hack and not worthy to be a NY Times writer. And to say that she doesn't know what she is talking about, is the lamest excuse I have ever heard. Matt Padilla of the OCR, admits that he is learning. At least he has the respect for people that do have the knowledge and ask people, like Tanta, questions. That is what a real reporter does and Gretchen, is not a real reporter.
 
<p>The key with reporters is to read the facts from the articles and ignore the opinions.</p>

<p> One could say that was true with just about anyone's opinions - ex. there are statics for job starts or GDP or whatever, which are empirical data. You can quibble which method should be used to collect them, but if people use the same method, they calulate the same number (ie. like the scientific method, the experiment can be verified). Then a zillion economists all try and interpret the data this way or that way to support various opinions. The trick is to read the data, then form your own opinion.</p>
 
<p>awgee --</p>

<p><em>"<strong>BUT</strong>, during that time in which you owned the stock, the stock was <strong>NOT</strong> insured by the SIPC, because the SIPC only insures the broker against default, but does not insure you against loss for stock that you own. Are we ok so far? Is this making sense?"</em></p>

<p>No... and no. The SIPC does not just insure cash; the SIPC insures most registered securities, including stocks. In fact, SIPC coverage for securities is five times the limit for cash. As long as your securities are worth less than $500k, there is no need to fret about the stocks and bonds in your account evaporating if your broker goes BK.</p>
 
<p>I do not even know what to say about this video so I will just give you guys the link:</p>

<p><a href="http://cosmos.bcst.yahoo.com/up/player/popup/?rn=289004&cl=4905785&src=finance&ch=633473">cosmos.bcst.yahoo.com/up/finance;_ylt=Ah57_7h3PwbxLniqE4PpWgG7YWsA</a></p>
 
<p>IC</p>

<p>OMG. I now have some new red wine stains on my keyboard. I wonder if the Tan Man has enjoyed that moment in time yet ? Too Funny ! </p>
 
LM. I am a local. Just a special occasion. Got a wine shipment in at work. Had to give it a taste as incoming inspection requires. Ferrari Carano. Love that Dry Creek area. Just a taste before 5. It took another glass after that post by IC.



With all the banks and other institutions claiming huge writedowns. The publicity coming out about the board at CountryFried just skimming while the shareholders hold the bag. It cant be long before the Tan Man says Adios.

"I am moving to Costa Rica or the Caymans for health reasons". Note: Non extradition countries.

And the stock goes Sub $ 10.00. I saw something the other day about short positions on the SP500. Countrywide was

the "number one" stock shorted by volume of contracts. Now thats something to be proud of as a company. When this company tanks its going to be much harder and faster after that last dog and pony show they pulled 10/26.
 
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