Note from the Clerk of the Court

[(His Honor wishes to advise the public at large that the docket for this court will be cleared until 1/16/2005. His Honor has refused to elaborate but the Clerk hereby admonishes counsel with pending cases that he is not indisposed to reading and will not let scoundrels slip through the cracks during this time.)]

Washington Doing the Squaliforme Shuffle

The war for consumer rights is going to boil down to a Senate committee and one of its sub-committees and their equivalents in the House.

Squaliformes are expecting Christmas presents for delivery next year, including bankruptcy "reform," suppression of State's consumer protection laws and making it harder for consumers to file class action lawsuits.

They've spent heavily during the campaign, and wisely. Not one of their goals will get an unfriendly reception at the White House, so the war, what little there will be, is going to be fought in the legislative branch. Don't count on committee chairs to be watching out for consumers; they're the agenda managers for the squaliformes and will be using leverage and deal-making to get the bills out for final approval by the full House or Senate.

The only hope for consumers lies in the time between sessions, when real live citizens can go one-on-one with their elected representatives who can go back to Washington next year with an education about creditoris squaliformes.

The Honorable Judge Roy Bean.

[(Note from the Clerk of the Court: His Honor has been diligently engaged in non-judiciary duties. Life must go on even for a self-appointed jurist. His profuse apologies to those who may have wondered what the hell was going on 'round here.)]

Illinois Governor Caught up in Squaliforme PR Machine

The juggernaut that is Ameriquest's public-relations machine has netted Illinois Governor Rod Blagojevich and the city of Schaumburg.

Now the squaliforme that is spending billions (taken from victims) on everything from a blimp to the Superbowl to a ball field in Texas to a Seattle football team to NASCAR is getting 25 million in Illinois tax credits for a promise to create over two thousand jobs in the Chicago suburb.

Anybody else see what this Honorable Court sees here?

Governor, you come west of the Pecos and you'll learn what a cattle prod can be used for.

The Honorable Judge Roy Bean.

News Media Squaliforme Cheerleader of the Week

Once again this Court must step in (yes, even during the holiday week) and expose another news operation that just doesn't get it.

Submitted to the Court from a source in another part of the great state of Texas, an article by none other than the "Real Estate Editor" of the Dallas Morning News, Steve Brown.

In an article from the November 19th edition, "Foreclosure listings increase," Mr. Brown takes the same, trite, ill-informed and misleading squaliforme-endorsed line on the issue. Without lifting a finger to dial a phone or email a consumer advocate or even explore the 'net about the squaliformes stories in other sources, Mr. Brown quotes only George Roddy, the head of the echeneidae* Foreclosure Listing Service:

"Mr. Roddy said he blames the continued high foreclosure rates on more corporate
layoffs in North Texas and looser loan standards."

"The downsizing of jobs and lowering of salaries continues," he said. "Some people are hanging on, but each month that goes by, more of them can't go on any longer.

"The other problem is the screwball loans they are making," Mr. Roddy said. "They are loaning money to anybody that is breathing."

Wrong, Mr. Roddy, and wrong Mr. Brown for repeating the squaliforme myth about jobs and the economy being behind the foreclosure plague.

And Mr. Roddy is being very disingenous. They don't make loans to anybody that is breathing. They make loans to people because they know they can be taken advantage of by their fellow squaliformes in the loan servicing industry. And when the victim runs out of resources to fight them, another loan will eventually be generated.

This Court is not unaware of the Dallas Morning News' unclean hands in these issues. This Court's source also cited other pieces from writers Pamela Yip and Danielle DiMartino who are unwilling to pull the curtain back and let people see the squaliformes for what they really are.

Given the revenue from real estate and financial services advertising, it is no wonder they take a soft approach in these stories.

But this Court and this Honorable Judge have no such softness for promoters who willingly seek to keep the public misinformed.

The Dallas Morning News gets the News Media Squaliforme Cheerleader of the Week Award.

The Honorable Judge Roy Bean.

[(Note from the Clerk of the Court: His Honor wishes to advise locals to not show up on Court property or the environs thereabout with a copy of the Dallas Morning News.)]

*See October archives for an introduction to echeneidae.

Latest Consumer Credit Counseling Scam action

Well, someone at the FTC decided to move against one of the worst of the squaliforme enablers.

Better Budget Financial Services (BBFS) and its principals, John Colon, Jr. and Julie Fabrizio-Colon, have defrauded consumers out of hundreds or thousands of dollars each, causing many to be sued by their creditors and forcing others into bankruptcy. The FTC has asked the court to award consumer redress to the victims of this scam. On November 3, 2004, the court entered a temporary restraining order halting the defendants’ illegal business practices, freezing their assets, and appointing a temporary receiver pending a preliminary injunction hearing.

As good as that FTC announcement sounds, the problem is the Colons have been stealing people's money for FOUR YEARS!

Restitution? Sure, sounds great. Doesn't work. Frozen assets? Only the ones they know of. The Colons have their wealth protected somewhere, you can bet.

Victims of squaliformes get pennies on the dollar in these kinds of cases. The slowness to act on complaints only helps the crooks amass personal wealth that won't be found, let alone touched.

I guess justice on the other side of the Pecos is a bit different than 'round here.

The Honorable Judge Roy Bean.

Note from the Clerk of the Court

[(The Clerk of the Court is in receipt of a communication from an alleged squaliforme-retained lawfirm suggesting the Honorable Judge Roy Bean is going too far in his public condemnation of their clients.

It is my duty to report for the public record that I have been instructed to advise that His Honor has not had an appropriate amount of time to digest the entire complaint, let alone bring his laughter under control.

There were a number of verbal outbursts related to the ancestry of the complainants, most of which were associated with what His Honor wished to be recorded about them. Be it known that this Clerk managed to prevail in vigorous oral argument to delete their absurdities and their names from the record - at least for the time being.

Something along the lines of "go $#*& yourselves" would seem to suffice.

The Clerk of the Court.)]

Fitch Pitches Petulant (Phony) Fit

You can almost hear them singing "neh-neh-neh-neh-neh, we told you so," behind this one:

On Nov. 7, 2004, the Massachusetts Predatory Home Loan Practices Act (the Act) will become effective. This legislation increases the risk of unlimited assignee liability relative to the existing Massachusetts predatory regulations. Because of this risk of uncapped liability, Fitch Ratings will not rate any deals with Massachusetts mortgage loans that are subject to the Act after the effective date.

So the lap-dog rater who stayed curled up and snoozed all the while the mortgage servicing squaliforme Fairbanks Capital stole billions of dollars from consumers stuck with predatory loans now wants to act on behalf of all of the squaliformes. So they take a slap at the Massachusetts legislators by claiming they won't rate mortgage paper because of the protections the state wisely enacted.

Fitch has previously indicated that it will not rate residential mortgage-backed securities (RMBS) transactions which contain loans that are originated in jurisdictions which have enacted legislation that may result in unlimited purchaser or assignee liability for predatory lending practices of an originator, broker or servicer. Thus, as of Nov. 7, 2004, Fitch will not rate any transactions that contain Massachusetts 'high cost home mortgage loans'.

Note from this Honorable Judge: Massachusetts, stick to your guns, dammit! Responsible lenders will fill any real void the squaliformes supposedly leave.

See here, this Court is fed up with Wall Street's and Fitch's utter disdain for the real sources of their revenue, the victims. As in, the borrowers.

When conduits buy loan portfolios and Wall Street sells bonds and then just sits there immune from liability for what their squaliforme partners set up and then passed on to them, they're only helping them keep the scams going. By providing for assignee liability, they might have to look at who they're feeding and what the results could be. And if they didn't like who put the loan together or the predatory terms they could opt not to buy the bonds.

And guess what, pretty soon the squaliformes wouldn't be able to make the predatory loans. And the servicers wouldn't be able to prey on the victims and threaten them into paying billions more than they really should!

Of course, this Court recognizes should those circumstances come about, there would be a corresponding reduction in funds available for the servicer squaliformes to pay Fitch to do the ratings.

So instead of wanting to do something about predatory and abusive lending and servicing, Fitch is all to comfortable with how good the squaliformes have been to them! And they're dutifully providing ammunition for Wright Andrews and his ilk to use to get legislation passed at a federal level to prevent states from acting when Washington bows to the squaliforme altar of financial gluttony without regulation.

Get ready for more and more "news" about the consumers in Massachusetts not being able to get loans.

And if some yahoos in Massachusetts back down to these crooks, they bettter not wander very far out here west of the Pecos. We have an aversion to that type of enabler. Don't want 'em taking up good air, let alone space in the jail. Keeping them away is what cattle prods are for. Usually only takes one or two pokes to be effective. (Leaves a helluva mark. Bet it smarts like all get out.)

The Honorable Judge Roy Bean.

Legal Lunacy of the Week Award

Among the worst of the squaliformes, Cross Country Bank and it's Applied Card Systems collection arm are being nipped at by a number of states Attorneys General.

Having fingers wagged at it is more like it. Over and over again.

In Pennsylvania, AG Jerry Pappert sued the companies in June and settled this week for a paltry $450-thousand plus having to set up a refund program for some of the victims.

Any wonder why this crap keeps going on?

Aside from the ridiculously small charge, the Legal Lunacy of the Week Award goes to Pappert for letting the squaliforme get off without admitting they did anything wrong!

If the Judge in the Court overseeing this case approves this idiotic settlement, he'll be the recipient of another LLOTWA as well.

Rocco Abessinio, the head of Cross Country, is the one who tried to get West Virginia's AG voted out of office because they're going after him for at least $2-million for that state's victims. And he threatened to close an office and let 550 people go because of it, but of course, now it turns out they had planned to close it well before the AG went after them.

The FTC settlement in August let them off with nothing more than an agreement to not abuse customers any more. And again, they didn't have to admit they were doing anything wrong!

"The things we agreed to stop doing are things that we don't do anyway," he is quoted as saying.

This Judge wonders what pictures of these officials Abessinio has stashed away in his safe.

If Rocco Abessinio was brought before this court, there wouldn't be a settlement. There'd be a very short, very public trial in which Abessinio admits deliberate wrongdoing among other things. Followed shortly thereafter by a hanging party.

Until that time, Abessinio merely becomes Squaliforme Hall of Shame Dishonoree inductee one.

Induction effective immediately.

The Honorable Judge Roy Bean.

Insulation

The squaliformes are led from the top of their own executive food chain.

Not only are they insulated from prosecution by their wealth and ability to amass legal expertise to guide them away from responsibility when things go wrong, they also like to display the image that they are plausibly ignorant about what their underlings do to victims.

The story is getting as old as the Emperor's New Clothes.

Attempting to blame a few rogue elements in an organization smells like garbage after a week in the sun.

Any executive with three operating brain cells could gain control of predatory lending elements or abusive practices in his or her company. It's nothing more than a matter of will. The evidence of how to treat people with respect and with honorable intentions dominates among reputable businesses led by men and women with truly honorable intentions.

The fact is, those who would be brought to trial and appear in this Court are led by executives who like to insulate themselves and the other members of their boards of directors from responsibility for inculcating a climate of make-the-numbers-no-matter-what all the way down into the customer-facing operations.

Here west of the Pecos they would be subject to logic and appropriate retribution for their collective greed and avarice at the expense of victims.

As it is, they rub shoulders with the financial elite and find ways to pass money around to influence the right politicians to not only maintain the quality of their hunting grounds, but to improve on their chances of not having to worry about justice.

But names are going to be named here. It is time for the public to find out more about the squaliformes dictators, leaders and down-in-the-depths wranglers. The list at the left of the blog will soon display a hall-of-shame of individual shark wranglers.

By the order of this Court, protection from public disdain is hereby lifted.

To the squaliformes leadership, your family, friends and neighbors are going to learn a lot more about you in the near future.

The Honorable Judge Roy Bean.

The unquenchable thirst for information

The squaliformes are among the most data-thirsty of lifeforms. They have actuaries, statisticians, academicians and computer system experts working hard to let executives make decisions that will maximize profits. They also have public relations professionals diligently working on ensuring there will be no limits to what they are able to collect and use about their victims.

The farcical "protections" now in place are nothing more than window dressing for the benefit of the small minority of organizations representing the views of people who understand the peril they are about to be put into. As the information brokers continue to assemble their networks of data sources and implement database systems without actual oversight or effective controls, the data is being gathered and stored for future use when the industry can leverage Congress into letting them openly use it.

Using credit scoring for auto insurance purposes was the first real test of their power, and while a few states have stepped in and taken the only rational step (banning the use of it) the influencers have managed to get some states to either study it before simply letting them do it or they were powerful enough to just bull their way through and do it. A few took some tentative steps to regulate it somewhat but without an outright ban there is no effective restriction because no one is really watching them while they're doing it.

What most people don't realize, but more will as we age and come into contact with the healthcare delivery system in this country, medical records are an almost un-tapped ocean of personal information from which the squaliformes can make judgements about you.

Demographic profiling of medical records will allow them to analyze new risk factors and develop scores based on things like lifestyle choices, illnesses, even dietary patterns. And the data is already being collected and analyzed for the life and medical insurance squaliformes by MIB (formerly known as the Medical Information Bureau).

So if you go to your doctor and get treated for say, alcoholism, don't you think your auto insurer would be interested in that? You bet your a** they are. And with health insurance reform coming down the pike in Washington this next session, don't be surprised if you wake up one morning and find out they've already started sharing MIB reporting data on you for things other than medical insurance claims fraud detection.

The squaliformes are ready to trade almost anything to get around the limits on actually using the information they already have and continue to collect. It's too late to stop the collection (your medical records are routinely sent to MIB), so now it all comes down to trying to keep them from using it for something other than the purposes they say they use it for.

Believe me, I know a bit about horse trading, and it's gonna be fast and furious!

The Honorable Judge Roy Bean.

Finally

[(Note from the Clerk of the Court: His Honor wishes to express his profound relief that the elections are over. The Court will resume a more normal schedule when the Judge completes the rounds of celebratory and commiseratory parties.

The Clerk of the Court.)]

Another Bench Blunder

Now comes before this court a case from one Judge James D. Ward, (California appelate court) who figured the FDCPA didn't apply to stopping a foreclosure when the borrowers challenged the validity of a debt. Styled Sulak, et al. v. Mortgage Electronic Registration System, Inc., et al., No. E035021 (Cal Ct. App. 09/20/04).

The squaliformes, according to this yahoo at least, can violate the Fair Dept Collection Practices Act by refusing to provide debt validation information as the law requires, and they can keep on trying to foreclose and don't have to worry about a victim suing under the Act and stopping the foreclosure via an injunction. In his reasoning (?) the act doesn't offer equitable or injunctive relief, only monetary damages and to top it off, he thinks it's unclear as to whether the Act even applies to mortgage foreclosures! (Even though the notices say that they are attempts to collect a debt!)

Of course, since the victims appeared pro se and they were up against one of the squaliformes foreclosure mills (Moss Pite & Duncan), this Court duly recognizes the nature of the prejudice against the victims so commonly demonstrated in these kinds of cases.

Therefore, Judge Ward, it is the judgement of this Court that you are hereby guilty of judicial lunacy. Your sentence is that you serve five days as a guest in our jail and be fined one hundred dollars in gold pieces.

So ordered. Bailiff, take Judge Ward into custody. And keep him outta sight. And keep an extra shotgun handy. No telling what form of low-life might find its way in here to pay his fine.

The Honorable Judge Roy Bean.

OK, so it aint the NY Times, but

Some time ago this Honorable Court, as in I, warned the media that I would be none-too-soft on reporters who help keep the public misinformed about what is going on with the creditoris squaliformes order.

Now while Gulfport Mississippi isn't exactly the journalism capitol of the world, this fellow exemplifies just how effective the myth-makers have been and still are (at least for the time being) at keeping the focus away from the predators.

So, comes before this court, one Mr. Patrick Peterson, of the SunHerald.com who publishes an article on October 22, 2004, said article in its entirety which the Clerk will now read into the record:

ECONOMY
Investors snap up repo'd homes

By PATRICK PETERSON

GULFPORT - Some of the best real estate bargains on the Coast are homes lost to a rising wave of foreclosures.

The apparent trend in the booming real estate market of South Mississippi has been caused, in part, by a rush to re-finance and take advantage of low interest rates.

"We're seeing a lot of re-financing, where they're taking the equity out to pay off their credit cards and they can't pay off the note," said Realtor Debra Scairono, manager of foreclosures for Coldwell Banker.

No industry-wide figures are available, but, by Scairono's estimates, up to 30 houses a month could be lost to foreclosure each month in South Mississippi.

"We're just seeing a lot of the newer homes coming back on the market as foreclosures," she said. "They walk away from it because they can't afford it."

A decade ago, Scairono handled only one or two foreclosures per month. Now she handles five to 10 a month, which she estimates is about a third of the total. An average of 40 foreclosures regularly appear in the company listings.

South Mississippi's real estate market, which offers bargains compared to the rest of the country, has been discovered by investors from Florida to the Midwest to California. The repossessed homes, usually listed at bargain prices because they need repairs, sell quickly.

"We've got lots of investors out there who have money to spend," said Scairono. "Most of them are either renting or reselling (the repossessed homes) after the repairs."

Other Realtors confirm the trend.

"Within the last three years, (foreclosures) have doubled or maybe more than that," said Dyann Lentz, a Realtor with Danette Shaw and Co. in Gulfport.

The Federal Housing Administration showed a strong increase in repossessions in Hancock, Harrison and Jackson counties from 2002 to 2003, with the number rising from 92 to 118, but the number seems on track to fall in 2004.

Why the foreclosures

Low interest rates make second mortgages and home equity loans seem attractive. However, many borrowers apparently don't change their spending habits after they borrow against the equity in their homes. Some of them lose their homes.

"A big problem is putting second mortgages on their homes, and that overextends them immediately," said Lentz. "Many people walk off and leave everything in their homes. This happens more than you would think."

Bankruptcy attorney David Lord of Gulfport said U.S. banks and credit card companies, which make huge profits from late fees and charges for missed payments, encourage customers to increase their debt, with foreclosures and bankruptcies sometimes a result.

"Credit is a temptress, but so is marketing," Lord said.

Credit card companies often raise credit limits and send applications to folks who are struggling to pay their bills on time. A few consumers fall to the temptation of additional credit, which apparently is a greater vice than gambling.

"I attribute it very little to the casinos," said Lord. "I attribute it to the credit card departments. If you pay the debt in a timely manner, they increase your limit."

Shoppers often leave stores with more merchandise than they intended to buy. Similarly, many credit card holders find they have purchased more than they can afford.

"It is not unusual for an individual to have one or two cards with a $10,000 credit limit," Lord said. "Very soon you find yourself rather deeply in dept."

A home equity loan or second mortgage often is the quickest way to pick up a crushing burden of debt.

"They failed to do to what they should do, which is cut up the credit cards."

And now, Mr. Peterson, while the Court recognizes the inclusion of at least one bankruptcy attorney's very valid opinion that the credit card squaliformes are perhaps deliberately contributing to the problem, the Court asks you:

One, why didn't you do just a tiny bit more research into the burgeoning predatory lending and servicing problem? A simple google search would have introduced you and hopefully your readers to at least a small dose of reality.

Second, did you even bother to consider the possibility that some of these situations might have involved companies abusing their unmitigated power over consumers in sub-prime loan situations? And if that thought crossed your mind, did you look into what servicing companies were involved in the foreclosures? It's a matter of public record and could have easily been looked into and reported on. Chances are there are only a handful of mortgage servicers involved.

Third, do you realize that your article serves to reinforce the myth of the consumer always being at fault in a foreclosure or bankruptcy?

This kind of "tsk, tsk, isn't it too bad people just can't handle credit cards" stuff is getting way too old for this Court. I've put enough bullet holes in that leaky boat that it should have gone down long ago with the reporters still on it but for some reason they keep bailing and bailing.

Problem is other Judges read this kind of stuff and go on figuring anyone fighting a foreclosure in their Court is a deadbeat. And people who get bit by a squaliforme mortgage lender or servicer can't convince their family or close friends that it actually happened.

In due consideration of the fact that you didn't put out the lender's usual "we lose money when we foreclose/we don't want to take people's homes" bushwah, it is the judgment of this Court that you be fined a pound of gunpowder, a side of bacon, a pound of coffee, two hens and four sacks of flour.

A word of warning though, Mr. Peterson, if it happens again you may want to recall there's a cattle prod here.

Make arrangements with the Bailiff on your way out. And don't dawdle. I want the chickens for supper.

The Honorable Judge Roy Bean.

Diligence

Is it just me or is the stench coming in off the lending and insurance ocean just getting stronger? It was bad enough with the predatory lending and servicing stink but now somebody's got a harpoon into at least one big one and it's getting messy as the others turn tail and try to run.

I know there's so much money to be made that it attracts some of the more daring and creative crooks, but why would executives simply believe everyone working for them is honest? Just because they signed something that said they would be? So much for diligence in leadership.

Either they knew about it (likely in the judgement of this court) and approved of it, or they're dumber than a box of rocks.

I don't think Greenburg, et. al., is dumber than a box of rocks, which means he (or they) knew and it looks like for a long time they worked with a lot of the other squaliformes to keep it as part and parcel of industry practices by not doing anything about it.

And the investors who paid any attention to the ratings firms and put money into insurers are getting exactly what they paid for. Which is exactly Nada. Zip. Nothing. In fact, they're getting screwed partly because they were dumb enough to think the raters were smarter than a box of rocks.

More likely, as in the above example, they knew about it and turned a blind eye.

Well, wink-wink nodd-nodd don't cut it in this court. You yahoos at Moodys and S&P didn't learn from Fitch's playing dumb in the mortgage business, so this is two strikes against the lot of you.

I probably don't have to wait long for the third strike. I suspect it's not gonna be long before Mr. Spitzer hauls in one of those buoys that are now bobbing around on the top of the ocean, attached way down below to another squliforme with a harpoon in it.

Mr. Spitzer, please do me a favor and consider a change of venue to my Court. If nothing else the justice out here will take less time and you won't need a lot of cell space.

The Honorable Judge Roy Bean.

Recent Additions to the OSL

[(Note from the Clerk of the Court: His Honor is off today but ordered the following companies be added to the OSL Sleeping Watchdogs section forthwith:

Fitch Ratings
Moody's Investor Services
Standard and Poors.

The Clerk (thankfully) was not ordered to use the precise language his Honor used in depicting these buffoons. Better to simply say something along the lines of "... who supposedly are keeping an eye on some of the squaliformes," and let you use your imagination. In addition, "asleep" wasn't considered a strong enough descriptor, and his Honor's depiction is more tactfully explained by this Clerk as the raters being "in bed with" those being rated.

Please note the Clerk makes every effort to consider the tastefullness of his Honor's Orders when posting them but has only marginal influence on his Honor when he's writing for himself.)]

ps: And to our lurking vistitors from Kroll, his Honor asked specifically to remind you that he isn't the only one armed around here.

Louisiana Judge Blunder

Here comes legalized credit-card slamming!

So now a retail outfit can check your credit without your permission, then have their squaliformes partner issue you a credit card with charges already on it even though you wanted to charge your purchases on another card.

According to Judge Carl Barbier, US District Court (Eastern Division of LA), that's OK. Not only is that OK, the squaliformes can then sick a slimey collection suckerfish on you when you cut up the card you didn't want and send it back to the retailer who started the scam.

Now far be it for me to say anything against the fine, er, shall I say, highly intriguing products Ms. Langtry routinely acquires and admirably, er, wears from time to time from the well-known retailer of women's, er, delicates and such, but they pulled this fast one on a lady who wanted to buy some products on an American Express card.

And this so-called judge ruled that it's OK for them to just run a credit check without you even knowing let alone authorizing it, just because they say they intended to extend you credit? Even when you didn't ask for it and in fact wanted to pay another way (and indeed thought you already had)?

It wasn't until the new un-requested card and statement showed up in the mail that the victim even knew they had pulled a fast one.

This is the same adle-brained philosophy that let long distance carrier slamming get out of hand some years ago.

If they had brought this case before this court I would have had a very difficult time balancing out my own desire to see more of, er, allow Ms. Langtry to continue her consumer-wearables pursuits with the afforementioned retailer versus fining them and their squaliforme partners into oblivion.

And this judge is hereby sentenced to six weeks in the hoosegow with only a few items of, er, clothing from the retailer's catalog. No, he can't keep the catalog, either.

The Honorable Judge Roy Bean.

Mortgage Fraud, My A**

The squaliformes don't like to admit it, let alone talk about it, but they all know their pell-mell rush to adopt automated credit scoring and underwriting tools simply opened them up to being nipped by some fellow opportunists.

The holy grail for mortgage (and auto) squaliformes is instant approval and so-called "risk-based pricing," (read: interest-rate ratcheting) or rejection at the click of a mouse. And to meet that need, Fair Isaac sells their concocted data product.

Instead of knowing who they're lending money to and the other parties in the transaction and developing a relationship designed to last more than thirty minutes, the squaliformes decided to work the volume/greed game rather than follow the quality/responsible lender track. After all, they'll probably never see the victim again.

Now come all the sob stories of how rampant mortgage fraud is and they've got everyone from the IRS and the FBI to local prosecutors dancing to their drumbeat of "we're being scammed!"

Whaaaaaa. Whaaaaaa. Whaaaaaa. Sniffle. Sniffle.

I'm over it, thank you.

Fair Isaac touts the predictability of borrower behavior via the score. But most of the data going into that score has been so contaminated that it's only FICO's ability to distort so-called "studies" and point to the growth and profitability of the market to keep lenders from actually looking under the hood and finding a lawn mower engine they were told was a turbocharged V8.

So more data sources are cropping up with the theoretical prospect of detecting the fraud being perpetrated against the squaliformes.

"LexisNexis RiskWise works by searching multiple databases to verify and validate the authenticity of an applicant's identity and to provide a risk assessment indicator."

And they're trying to hide from the law by calling it a "non-consumer" report product so they don't have to worry about protecting consumer's already miniscule rights under the FCRA:

"The information gained from LexisNexis non-consumer report products is not to be considered a consumer report (as that term is defined in the Fair Credit Reporting Act 15 U.S.C. Section 1681, et seq., "FCRA") and may not be used to determine a consumer's eligibility for credit or insurance for personal, family, or household purposes; employment; a government license, or benefit, or other transaction initiated by a consumer, or for any other purpose permitted by the FCRA."

So if the squaliforme can't use it to determine eligibility for credit, what is it for?

"Well, Your Honor, let's see, since we say we can't use it for what we say we can't use it for then we can't use it and we don't really use it and we don't have to reveal what's in it so...please, Your Honor, don't ask us about it any more."

Complete and utter SS (Squaliformes Scatology). We all know what they're going to use it for and they just don't want to have to live within the law to do it.

The judgment of this court is that the squaliformes need to stop your $%*& whining. And I've got Mr. Colt here so start gettin' the @$%& outta my courtroom NOW.

The Honorable Judge Roy Bean.

[(Note from the Clerk of the Court: The ringing in your ears means you're still alive. By the way, Doc and the undertaker's bills aren't paid by the Court.)]

Entangled in the net

Up near the top of the squaliformes food chain you will find AIG, Marsh and McKlennan and ACE ltd., (a division of Munich Re). In the latest NY Attorney General's swipe at the industry, bid rigging on insurance deals among the players has been found and guilty pleas obtained from at least two people directly involved.

But what most news accounts don't report is the fact that the CEO's of those three companies are rather closely related. Marsh & McLennan chief executive Jeff Greenberg and Evan Greenberg (president and chief executive of ACE), are the sons of AIG Chairman Hank Greenberg. Now there are some family phone conversations that would be interesting.

Marsh & McLennan also owns Kroll, the investigative company they bought earlier this year (which was originally bought by AIG in 1993), which also owns the credit and personal background data squaliforme Factual Data. Kroll operates as a world-wide private investigations and security firm. Some would go as far as calling Kroll's investigative arm a private CIA.

AIG isn't new to condemnation or intrigue. The PNC issue has come back to haunt them only three years after they set up structured finance deals that were the target of SEC scrutiny. (PNC sold off its mortgage business to WAMU in 2001).

Just one year ago they agreed to pay the SEC $10M for a fraudulent slush-fund-appearing-to-be-insurance deal for Brightpoint to make the company's income statements look better.

AIG's power and influence are almost unlimited. In this case, Spitzer may have finally bit off more than he can chew. If he persists in poking this particularly vicious and unprincipled squaliforme with his little bitty stick, I would expect to see some really nasty things about him mysteriously come out just prior to his run for governor, or federal preemptive legislation to limit the AG's power to investigate or prosecute insurance firms will be used to bring him to heel.

The Honorable Judge Roy Bean.

News Media Enablers

If one only looks at the squaliformes as their PR firms continue to portray them, the average consumer would get the idea that victims bring these problems on themselves. Stories are almost always published in terms of the victim having bad credit and/or some problem came along and made it hard for them to keep up with the payments.

The stories where the victims actually take the squaliformes to court apparently aren't interesting enough to follow, especially when somebody knows somebody who knows somebody in the newsroom to keep that kind of story from even being looked at before the case disappears in an out of court settlement.

Instead of talking to the people who know something about the scams, the average reporter sees a press release about something like foreclosures then talks to one or more of the squaliformes spokespersons and maybe a couple of blind and deaf regulatory bureaucrats. Of course, all of them have a vested interest in supporting the myth of the importance of the valuable service being provided to consumers. Nobody wants to test them on the collateral damage being done.

What other industry could have multi-multi-millionaires and billionaires (who got that way by vicitmizing consumers) without investigative reporters and video camera crews crawling all over them? If it were defense contractors or drug or oil companies doing this there'd be full blown encampments outside the gates of their estates with helicopter flyovers at least once a week.

Part of the answer is pure business. One shouldn't wonder why the newspapers and radio and TV outlets don't want to have articles and stories about lending predators appearing when real estate, automobile and lender ad revenue is especially important to the bottom line.

"Sure, Joe, I'd love to run another forty spots on your TV station, but that story whatsername is running, you know, that series with questions about...yeah, that's it, the predatory lending thing...right...no, we just don't need that crap so we're going to focus on radio for a month or two...sorry."

This Court sees the hand of highly paid public relations firms making sure the industry's image has just the right glow, starting with how important it is to make sure people have access to credit. They also know how to make sure unwary, unsuspicious and in-a-hurry reporters have instant access to just the right contacts with just the right answers. And these PR firms also know how to influence not only reporters, but producers and assignment editors when it comes to what is and what isn't considered news. The quid-pro-quo is alive and well in the news business.

But the next reporter who comes before this court with another one of these superficial squaliformes-approved kind of puff-piece stories is in for a rude and public shock.
[(Note from the Clerk of the Court: His Honor is referring to the cattle prod he keeps next to the .45 Colt on the bench.)]

The Honorable Judge Roy Bean.

Buy a Home? Maybe NOT!

If some or even a few of these apply to you, the opinion of this Court is you should stay out of the home ownership water and thus avoid being bitten by the squaliformes:

• Your income averages less than $35,000 per year and varies significantly for whatever reason. Mortgage servicing squaliformes are notorious for not giving a damn about why your income changes. They want the payment every month but are more than happy to make profits from the late payment fees and interest. They will pile fees on top of fees on top of interest on top of anything they can to take money from you. If your income varies a lot, either wait until your career stabilizes or you have a way to keep six months worth of house payments stashed away that you can draw on (and then refill) during the gaps.
• You have little or no medical insurance coverage. One of the most common threads of mortgage foreclosure and bankruptcy stories involves people with serious unexpected medical bills.
• The home is situated within a "Homeowner's Association" that can impose dues, conditions and restrictions that could result in a lien against your property and even foreclosure. The only way to stamp out these menaces is to kill them off economically by never buying a property in one.
• You don't have a few thousand dollars readily available to cover having an attorney on your side, the moving expenses as well as the unexpected stuff, i.e., uninsured or deductible damages, utility deposits, miscellaneous household repairs, yard tools, etc.
• You're planning to get married and will be counting on having two incomes to survive. Given the percentage of marriage failures (which are exacerbated by financial problems) one of the last things you want to have to deal with is how to split up the ownership of a house and the responsibility for the mortgage payments. Make sure the relationship has some proof of survivability before you expose yourself to the risks. Walking away from a lease is a lot cleaner than dealing with real property ownership.
• You're having relationship problems with your spouse. Buying a home and having the financial burdens that will come along will only add to your problems.
• The IRS says you owe them money. They will find you and will attach a lien to the property which you will find nearly impossible to clear up even if you dispute the amount.
• You have more than $5,000 in credit card debt and it isn't declining. You're in over your head already and just don't realize it. The expenses you haven't counted on in buying and setting up a home are going to ramp that to over $10,000 in less than a year.
• You're leasing a car. You're either trapped into another lease at the end or paying twice what it's worth to buy it out, or you're going to have to go into debt to buy a car when the lease runs out. And you may have to pay for mileage overages and various cosmetic condition problems. If you're a homeowner, chances are you won't be able to save enough to make a substantial down-payment and you'll end up with a high-interest rate loan over too long a period of time.
• You're renting-to-own your major appliances and furnishings. If you're trapped into one of these schemes, you not only risk having them taken back when you have to choose between the house payment and food and that big-screen TV, but you're not contributing anything to your credit rating. And the fact that you're dealing with these squaliformes indicates you have not learned how important it is to save money in advance of buying even modestly expensive items.
• You aren't capable of doing basic maintenance and home repair tasks, either because you physically can't or you simply don't know which end of a wrench does what. You could end up buried in expenses for having people do routine things, and many of them will show up on your credit card(s).
• You or your spouse are thinking about going back to school or making a career change. Better to wait until you get through the change and restabilize the income before picking up the burden of a home.
• You own a vehicle but it is more than five years old. One of these days something major is going to die on the car and you'll be hard-pressed to decide whether you make the mortgage payment or fix the car.
• You've borrowed money (especially the down-payment) from a friend or relative or you need a cosigner for the mortgage. Quick way to ruin a relationship and if you've falsified anything on the loan application and it's a federally insured loan, you're going to face possible criminal charges if they find out.
• You think you're going to change jobs. There can be lags in income. Companies make mistakes in setting up payrolls and there are misunderstandings about things like when commissions are paid. Your new employer's payroll check might come from out of state and your bank will hold the funds longer than you expected. Depending on the job, you may find you need to update your wardrobe or buy some tools. Sometimes when cutbacks come about the most recently hired are the first to go. There can also be unexpected expenses if your medical insurance coverage doesn't start and you get sick or injured. Best to wait a few months to see how things are going to work out.
• Your employer is having a hard time making a profit. Companies have little or no loyalty to employees. If your company is in trouble, you could find yourself out of a job and unable to make the house payment.
• You're going to have your first child in the next year or so. Consider what will happen to the mother's income for some weeks or months. Better to wait until you have a handle on what it takes to raise a child before you commit to a house payment.
• You think now's the time because of seemingly low interest rates. Yes changes in interest can make a significant difference in what you pay, but don't rush into something just because the broker is leaning on you to get the deal done. Interest rates are driven by things far beyond your control and are not easy to predict.
• You think you're going to save a ton of money on income taxes. Not necessarily. It depends on your deductions. If you do look at itemizing, you may even find you don't have enough to exceed the "standard deduction," so not everyone is automatically going to see a dollar-for-dollar income tax savings.
• You're planning to move within a couple of years. You have to take into consideration what it will cost to not only sell a home but what you'll spend moving. Balance all of those costs against what you think are the advantages. Don't forget to look at what the real value of the property might turn out to be. Don't assume prices will go up and don't forget to take into consideration the stress you'll be under every time you go through the buy/sell/move process.
• You don't have at least 20% down. The squaliformes will tell you they have programs for you but there's a reason they do that: They make a ton of money off of you for the supposed privilege.

It is the judgment of this court that the great American dream of homeownership is highly over-rated for a lot of people. It is the squaliformes dream of American indebtedness that goes unnoticed.

The Honorable Judge Roy Bean.

Double Whammy / Shark Bites

The squaliformes are secretly excited by the pressures gasoline prices are putting on their prey's finances.

In a little over a year, the amounts charged by their victims for gasoline have nearly doubled, and they are salivating over the millions being added to credit card accounts every day.

Every 10 cent per gallon increase means the average driver will probably pay about $1.50 more (per 15-gallon fill up), and if they do that just once a week, that's about $6.00 more per month. Given usurious credit card rates credit card companies are allowed to use, that means about $0.11 (eleven cents) in additional interest per month for every month the charge remains on the card. Doesn't sound like much until you multiply it by the millions of consumers who use their credit cards to buy gasoline and don't pay them off every month.

Bottom line: While inflation isn't growing and raising prices for a lot of other consumer items, every penny increase in gas prices translates to about 1.1 cents in interest per month, per credit card consumer for the squaliformes.

You can hear them cheering if you get close enough to the water.

The Honorable Judge Roy Bean.

A Re-write

[(Note from the Clerk of the Court: His Honor has taken it upon himself to make corrections to a previously published squaliformes document.)]

The National Home Equity Mortgage Association (NHEMA) outlined six positions/messages that it is working diligently to keep out front. They are herein included for the record of this Court (with appropriate corrections).

1. Our industry provides a major stimulus to the American economy by expanding [the real financial risks of] home ownership, [diminishing non-housing] consumer purchasing power, creation of jobs [in the financial services industry], and increases to tax revenues [and income for the legal profession].

2. In 2002, our industry helped [gain control of the financial futures of] over 2.5 million borrowers with approximately $250 billion in capital, by providing [us with] access to [their] equity and [ultimate control of the] opportunity for home ownership when they are in need of specialized financing options [and we can profit from them with minimal risk].

3. [Many of] our borrowers mirror the demographics of [some of] the nation’s [least informed and most desperate and vulnerable] homeowners.

4. We have expanded [our market and profits by granting more and more] access to credit while significantly reducing the cost of [lending, continuing to inflate interest rates and] borrowing, creating [the impression of] an ever more competitive market.

5. NHEMA educates financial service providers and [mis]informs consumers to enhance competition and ensure [that the image of] fair and ethical business practices [will help us conceal the damage done to victims of predatory lending and servicing].

6. Our industry is [quasi-]regulated by a wide array of federal, state and municipal laws that help industry practices and consumer protection [without any real risk of significant punishment for willful and deliberately predatory acts].


Herefore corrected and submitted for further publication,

The Honorable Judge Roy Bean.

Upcoming Feeding Frenzy

The squaliformes and their minions are getting ready for a long-anticipated feast.

The implementation of the "Check 21" process at the end of this month will create vast floods of overdraft and return-check fees to be taken from consumers who don't have overdraft protection.

Millions of mortgage payments are sent into the mail every month, many with the full expectation that a deposit is going to be made in time to cover the check.

Given the somewhat variable postal delivery efficiency and the even more variable processing of these checks, most consumers who live paycheck to paycheck have come to count on at least a few days from the day they drop it in the mail to when the money actually has to be in their checking account.

That's precisely what everyone in the squaliformes food chain is counting on, and there are billions of dollars to be taken from victims in November.

Interesting to note that the feeding frenzy will not really start until just after the elections as monthly payments start arriving (and bouncing). No telling what a few million enraged bounced-check writers might have done if the law had taken effect in early October and they'd taken it out on the legislators and Bush in the voting booths.

Behind the guise of improving the processes, it's a convenient ploy to pressure checking account holders into usurious interest rate "loans" for overdraft protection. The banking squaliformes see this as an opportunity to bring millions and millions of consumers further into the debt nets.

The other thing they've accomplished is making it easier for the predatory servicers to effectively work the delayed-payment scheme (it's called "drawering" among the squaliformes). Now, without having the cancelled checks with their statements, it will become a significant burden for a consumer to prove when a payment was actually processed. In fact, chances are the bank will charge yet another fee to produce a copy of the digital image of the check.

And of course, the data gathering mafia will record each and every one of these bounced checks and resulting late payments so that even more victims will be smeared with lowered credit scores.

There is no end to their creativity.

The Honorable Judge Roy Bean.

[(Note from the Clerk of the Court: His Honor only accepts cash, gold, silver, working firearms or decent horses in payment of fines.)]

Echeneidae

Surrounding the Creditoris Squaliformes in the economic ocean are the remora, or the family echeneidae. Sometimes known as suckerfish.

They survive by attaching themselves to various sharks and living off the scraps. They aren't equipped to hunt down and kill their own food. They just hang along for the ride and pick up what's left after the kill. Without the squaliformes, they wouldn't live long.

Some of these are more visible than others.

What's left over in the process of being victimized by the predators is usually a car or a house. With a vehicle the echeneidae reposessus either need a willing accomplice and/or or a tow-truck to recover it from the former owner and then a secure place to stash it. With a house it's a bit more complicated but the end result is a removal of a person or family and a for-sale sign via the echeneidae preservatae evictus, the so-called property preservation specialists.

But there are other remora that would be severely diminished in numbers if the ranks of their host squaliformes were thinned significantly.

First in sheer numbers are bankruptcy attorneys (echeneidae chapternumeris), followed by the alleged "law firms" that specialize in collections and foreclosures (echeneidae threatenscamis and echeneidae stealyourhouses, repectively).
[(Note from the Clerk of the Court: His Honor does not recognize collections or foreclosure attorneys as having standing in his Court, hence the use of the term "alleged" in referring to such "law firms.")]

So many bankruptcies are filed in order to somehow slow down foreclosures that you start seeing the same pairings of echeneidae over and over, going through the process and knowing they're part of a giant perpetual motion machine the squaliformes started. These lawyers seem to realize they probably wouldn't exist in as great a number without each other so they are content to share in the spoils without doing each other any real harm.

The next largest echeneidae group fall into the "make a fortune in [ fill in the blank ]" promoter crowd known as echeneidae opportunis who just can't seem to run out of idiots to fill seats in their seminars and sell books and tapes to. Some of these con men make enough money to run television ads at all hours of the day and night, luring wannabes into coughing up hundreds of dollars to learn the secrets of being a successful echeneidae in real estate or "cash flow." Most of these fools who spend hundreds or even thousands of dollars end up looking for the next get-rich-quick guru or scheme when they find there are already plenty of echeneidae already attached to their squaliformes friends.

Similar to the "get rich in foreclosed properties" crowd are their distant cousins, the echeneidae saveyourhomis, or more commonly referred to as "loss mitigation" or "foreclosure prevention" specialists. This rapidly growing sub-species has attracted the same business model as the opportunis but feeds directly off the victim prior to the actual foreclosure by implying they can intervene to somehow keep the squaliformes from finishing the job. They have a disturbingly dangerous family member, one with a long pedigree of fraud drawn from arcane legal machinations: Echeneidae debtus eliminatis secretis that would have victims believe they can "eradicate your debt" (for a price, of course).

Another often unrecognized echeneidae that would be impacted are the companies that have sprung up to provide foreclosure data on the Internet. The battle for data supremacy rages in order to get the echeneidae and wannabes signed up to learn how to fight over the deals that they think are going to make them rich (just like they learned in the seminars).

Echeneidae is not an endangered species, so if and when they appear in this Court, they are likely to end up in the swill the Clerks put out for the pigs out back. (The horses won't go near the stuff.)

The Honorable Judge Roy Bean.

[(Note from the Clerk of the Court: His Honor does not intend to demean the pigs.)]

Your Tax Dollars at Work

Because most of the squaliformes are national in scope their victims tend to not see where they can fight back right in their own towns, cities, counties and states. They also don't realize they're paying taxes to local governments that are doing business with companies who help fund (and in some cases even own) the predators.

Find out who your city, county and state governments do business with. Start with the treasurer's office and find out what companies and banks provide financial services.

Not much gets done around here in the way of public works projects without municipal bonds. You know those boring bond elections that only a few people care about? Those kinds of bonds are tax free so they attract investors who don't want to pay taxes. And behind them are guess what? INSURANCE companies who help the municipalities increase the value of their bond issues by guaranteeing them. So if the city fails (and some have), the investors don't lose their money in the bonds.

Hint, hint: A search on "municipal bond insurers" is a good place to start. Then match up their subsidiaries and you'll soon find the interrelationships. Then walk in to your next scheduled city council or county board meeting and let them know if they're using your tax dollars to do business with creditoris squaliformes. Particularly useful just before an election.

Not in my town!

The Honorable Judge Roy Bean.

Hear Ye, Hear Ye, Court Is Now in Session

(Beware, the Judge is in a foul mood. [The Clerk of the Court.])

Notice to the judiciary: I'm growing more than just a little weary of seeing some of my learned colleagues and fellow jurists let illegal actions on the part of the Creditoris Squaliformes order be smothered under court-approved settlement agreements.

It's time for judges to find some cajones and step up to their duty to dispense justice instead of backing away from your responsibility. Every time one of these cases settles without exposing the company and its management you are facilitating the perpetuation of crimes against consumers.

I realize a lot of you have investments and they might include some among the squaliformes order; they're so damn tied together it's hard not to. But except in New York (where you don't have to worry about your conflicts in rulings involving financial institutions you have an interest in) the rest of you ought to start rethinking this bovine scatology of not wanting to rule against the predators. Especially where you're elected.

A word of warning: If you're elected and you have a track record of shielding the creditoris squaliformes by forcing victims to agree to secrecy in settlements instead of actually trying cases and exposing them for what they are, there's going to be a space (at the left) just for you.

Be it so ordered.

The Honorable Judge Roy Bean

The Hidden Shifting of Debt

The order Creditoris Sqauliformes is accomplishing a number of things other than just making executives multi-millionaires while fueling the American economy and pumping up campaign war chests. One thing in particular that stays under the radar of consumer watchdogs is the industry's drive to shift unsecured debt (i.e., credit cards) into the category of secured debt.

Because of the failure to ram so-called "bankruptcy reform" down the throats of a few recalcitrant lawmakers, the next best thing for the industry as a whole is to get more and more of the highest-risk debt moved out of the potential protection of bankruptcy and into secured debt.

It may sound counter-intuitive; why would a credit card company want to have a card balance paid off rather than keep collecting interest and all those yummy fees? Shouldn't they see the home equity lender as a competitor?

The short answer is no, especially if they think the victim might run for cover under the bankruptcy law. And there is so much money to be made, complaining about a supposed competitor would be like a fishing captain bitching about another boat somewhere else on the ocean. Besides, it's bad form to diss your fellow squaliformes.

To secure this debt requires someone to "own" something like real property that can have a lien placed against it which is used as leverage to make sure the victim keeps up on the payments. Hence the thrust to get prospective bankruptcy filers who own homes to refinance anything and everything into some kind of a mortgage-linked loan. Pay off your cards, your student loans (really dumb idea), your car, fix up your house, go on vacation, etc., etc., all at the risk of losing your home.

The great "American dream" of homeownership is much like the marketing of diamonds. That industry managed to convince the women of the world to believe only a diamond is worthy of that ultimate symbol of marriage. And yes, ladies and gentlemen, size is everything.

Home ownership is supposedly so good for the economy that Washington provides some tax benefits for the interest paid on mortgage loans. Why? Because everyone should have the opportunity to own a home.

Why? Sociologically, it appears there are benefits. Financially, it can be a very good investment. That does not mean it is right for everyone, and in a growing percentage of situations, it is far better for the squaliformes than for a consumer. As mentioned previously, a certain amount of collateral damage is acceptable.

Squaliformes know once they find the right kind of victims there will be multiple opportunities to profit. Many in the order thrive on taking small chunks of wealth over time, while leaving the larger members like predatory mortgage servicers to ultimately finish off the meal when there is nothing left but the home.

Part of this works because it works. In other words, when someone gets far enough behind their debt, everything costs more, which simply makes it more profitable for the lending industry because everything ends up being paid for with higher interest rates, which makes it harder for victims to pay for them, and so on and so on and scooby-dooby-dooby. [ed. A little bit of morning bench humor.]

The victims just can't seem to get ahead. The fact is though, they're not supposed to. If they somehow managed to actually get ahead, they wouldn't qualify as food for the squaliformes. The sub-prime food chain must be kept in operation, otherwise those who are ahead would have to pay more for everything and they might slow down their spending.

The entire economy relies on debt and the flow of wealth. It was designed and institutionalized that way. There is nothing inherently wrong with that situation unless you believe in some far-less viable economic system such as communism or socialism.

But what is inherently wrong is the legalized manipulation of middle and lower-middle class consumers to subsidize the rest of the economy with usurious interest rates and inflated insurance premiums. And at the same time, lowering the squaliformes risk by securing more and more of their debt with their only real assets; their homes.

The Honorable Judge Roy Bean.

Court is adjourned on weekends

The Honorable Judge Roy Bean's court is adjourned until Monday.

Unless his honor gets a bug up his ass and decides to show up before that.

Regards,
The Clerk of the Court

Collaboration with Other Species

Creditoris Squaliformes thrives in part because of the diversity of other forms of life in the consumer ocean.

There is at least one symbiotic relationship working on a macro-economic scale that re-redistributes wealth back toward the upper-middle and upper classes; wealth that was originally taken from them by so-called "progressive taxation" policies.

As members of the investor economic class see diversification of their portfolios into the RMBS (bond) markets, the higher return issues generate cash flows that are coming directly from the higher-interest rate loans foisted onto the allegedly sub-prime borrowers.

So while the pro-tax contingent in Washington continues to try and reverse the tax cuts, they and their opponents both know full well that even if they do increase tax rates on the wealthiest 25% of Americans, those who have any investment guidance or sense will realize they can get much of that money back directly from the people who pay little or no taxes by investing in sub-prime RMBS issues.

Obviously while the lenders continue to feed off this interesting situation, neither side of the legislative aisle is willing to expose their designation of Creditoris Squaliformes as a protected species.

The Honorable Judge Roy Bean.

Corporate Arrogance & The Myth of the Sub-Prime Borrower

Creditoris Squaliformes as an order has a lot going for it.

First, the family believes it is legitimate business to take advantage of people who may not know or understand complex financial issues involving credit and debt.

Secondly, they have a lot of help. Their partners-in-crime who market products, cars and homes turn to the lenders to keep themselves in business because the vast majority of people don't save before they buy. Everyone wants it now and Creditoris Squaliformes are ready to make that happen.

Let's face the fact that there are people who are not well educated and have lower incomes. Some of them aren't ever going to make six figures. Whether they should own a giant screen television and a $35,000 SUV and a $100,000 home is not something lenders want to think about.

To Creditoris Squaliformes those people are just a large and growing demographic market segment, ripe with opportunity and conveniently labeled as sub-prime.

The mask of convenience helps defray questions about mistreatment. After all, who would a judge be more likely to believe, a large, well established business represented by highly-qualified counsel or a consumer/borrower that has been painted as being inherently questionable because they're having "credit problems."

After all, to those who currently don't have "credit problems," the only people who do must be deadbeat low-lifes that can't pay their bills and spend irresponsibly. Only until the unaffected run into the credit data scam themselves will they get a taste of what it can be like to be called something you're not.

The lending industry operates against consumers with a level of arrogance that would not be possible if they didn't wield absolute power over who they want to call "borrowers with less than perfect credit." They are unchallenged for the most part, and the correlation between lower credit scores and supposedly higher risk, higher interest rate loans works perfectly in their favor.

Since the usury laws were done away with back in 1980, Creditoris Squaliformes have deliberately and diligently worked to create millions of sub-prime borrower/victims.

Consider that just the errors in credit data negatively effect at least 30% of people who apply for credit. The opportunity to charge nearly twice as much for a loan for that many people is just too tempting to ignore.

Abuse in reporting by collections firms alone is rampant. The fact that credit card companies get to raise their rates based on changes in your credit score (that they can easily manipulate) only helps enlarge the target market of victims.

The arrogance required on the part of executives and managers also finds its way down into the ranks of supervisors and employees. To perpetuate the scheme, everyone in the life cycle of a loan has to firmly believe three things:

1 - The borrower is wrong but won't admit it.
2 - The company and its computers are always right.
3 - The victim will lose the fight and there's no limit to the litigation budget.

This innate position of arrogance creates an operational environment that attracts people who can function without regard to truth or any concern for right and wrong as long as the company is there to reinforce the above three tenets. The collections and customer service call center environment is often conditioned to measure performance in what most normal people would consider emotionally as well as morally bankrupt.

Like Homer Simpson once said: "De fault! De fault! The two sweetest words in the English language! Woohoo!"

Until the leadership of these giant companies admits there is a problem, they're not going to fix it, and they are doggedly trying to avoid admitting there is anything at all wrong.

The Honorable Judge Roy Bean

Foreclosure myths

The most common myth about foreclosures you will hear from the creditoris squaliformes order goes something like "...we don't want to take your home..." or "...we want people to keep their homes..." etc. More elaborate and seemingly convincing statements include estimates of the losses the species faces when foreclosing, often referring to amounts in the tens of thousands of dollars per foreclosure.

The statements are an almost ingrained mantra from any squaliformes who comes face to face with a reporter.

Like so many things business executives are trained to say, they are designed to protect the image of the company as opposed to being entirely honest. They serve to deflect the uninformed reporter or writer by not having to actually discuss or explain the realities of the mortgage market.

Unlike automobile reposession, which deals with assets that functionally decline in value (depreciate), in the vast majority of cases, real property increases in value. In fact, unless the loan was fraudulently created or significantly damaged, the property is almost always worth more than the balance owed.

One would hope reporters would understand the concept of equity and would then explore the issue in a little more depth with the executive, as in: "But what if the house is worth a hundred and fifty thousand and the loan balance is only a hundred thousand?"

Surely, that's not always the case, but neither can it be said that a lender "loses" tens of thousands of dollars on a foreclosure.

It is particularly disingenuous of sub-prime loan originators to imply they lose money on foreclosures. Few of them own or service the loans they originate so when a foreclosure occurs it is essentially meaningless to them. In reality, they stand a chance of seeing another borrower come through the door.

Because most foreclosed properties end up back on the market, a foreclosure and eventual home sale and new loan generates new income for almost all the players:

Property "preservation" services
Real Estate agent(s)
Private property investors (rental property buyers)
Listing services
Locksmiths
Mortgage Broker
Appraiser
Survey
Credit bureau (Fair Isaac)
Lender
Underwriter
Wholesale lender
Mortgage insurer (GSE or PMI)
Title insurance company
Courier/delivery service
Property/Casualty Insurer
Conduit
Trustee
Master servicer
Servicer/sub servicer
Bond brokers (Wall Street)
Bond holders

Everyone gets a slice of the pie. The bigger the pie (the more loans written) the more money is made. The amounts may be small, so the key is to do lots of loans.

The other facet of the argument they won't dwell on is what happens to that borrower's equity in a foreclosure. The fact is, much of it will be eaten up in various fees, including thousands of dollars in legal fees supposedly billed by and paid to a network of specialty attorney firms for what is mostly an electronic filing process. To make a long story short, the goal is to get enough at the auction to cover all the creative charges and fees and never have to write a check to a borrower.

This takes some expertise as well as creativity. The analysis of when to foreclose has become rather scientific, and goes beyond the simple mathematical equity opportunity/cost analysis. It even includes computerized analysis of what it said by borrowers when they're communicating with company representatives. Savvy servicers even get credit notifications to see if borrowers are shopping for refinancing.

Under the guise of "loss mitigation" the process culls the fattest cattle from the herd and sends them off to the meat packers (the law firms).

The statements of servicing industry executives need some editing. To wit:

"...we don't want to take your home..." should read: "...if you've got a sharp attorney, and we're going to lose money on a foreclosure, we don't really want to take your home, but we will try if you really piss us off, and if we do win, and the auction sale doesn't cover all of it, we'll come after you anyway."

"...we want people to keep their homes..." should read: "...we want people to keep their homes as long as they'll pay us what we tell them to pay without too many questions..."


Just one of many lender myths to be exploded.

Judgment hereby ordered in favor of the victims.

The Honorable Judge Roy Bean.

And so it begins

In the process of exploding myths on at least a weekly basis, there will be companies and people identified in this blog. Some of them may squirm a little if it shows up in a search about them or their company. Some of them may get really bent out of shape. Some of them will call their attorneys. Some will have their PR firm write rebuttals and get articles placed in major newspapers to keep the myth of their good citizenship going.

But none of them will take steps to fix the problems they are creating for millions of consumer victims of their loan sharking. When it comes to profits in comparison to ethics, accountability or responsibility, profits will win every time.

Creditoris Squaliformes is the broad definition of a class of sharks who engage in all manner of businesses surrounding the process of lending and collecting money. There are literally hundreds of different businesses involved and even more sub-specialties, some of which you never even knew existed until one of them came after you.

The cross-ownerships and interlocking relationships create a web through which our entire economy moves. This web is where capital moves and consumers load themselves up with debt as they keep the machine oiled. But there are firewalls between the various parts that serve to not only keep prying investigative eyes away, but also serve to protect players from potential litigation or prosecution.

The mortgage-related portion of the industry alone is measured in TRILLIONS of dollars. It's no wonder Washington is incapable as well as unwilling to take steps to protect consumers. The task is simply too daunting, particularly when large amounts of money are provided to those who are supposed to take legislative action to protect victims.

The nature of the industry is to prey on just enough of a selected part of the consumer base to leave others unaware of the danger and still willing to do business with them. A certain amount of this financial collateral damage to consumers is acceptable in Washington; after all, it's not their neighborhood or their relatives being fed into the wood chipper in what has become known as "predatory lending" and "mortgage servicing fraud."

Most of the victims of these squaliformes are in the part of the bay marked off as "sub-prime," where their allegedly higher-risk credit scores isolate them from the kinds of offers for those who are seemingly more responsible. We used to call it "redlining." Now it's just "credit scoring." If you map it, guess where the lines are drawn?

But, sharks need a food supply. And the credit information industry works hand in glove with lenders and other credit providers to effectively keep the food chain full.

And there are all kinds of smaller predators with some equally large appetites for other people's money; they are popping up all over the net, even on radio and television with "save your home" offers, most of which are simply multi-level-marketing schemes to sell "secrets" about things you and I don't know about doing away with debt. Many take on the guise of "credit repair" or "loss mitigation" but usually end up making the victim pay even more.

Along with exploding myths, I will be relaying stories about victims and the people and companies who participate in that victimization. Without this kind of publicity, these companies will simply continue to operate as usual.

Consider what they call "the poster child" for predatory mortgage servicing, Fairbanks Capital (now "Select Portfolio Servicing"). Without a web site (the contifairbanks site is no longer operating) frequented by thousands of victims, the news media may not have picked up on the story. Without the TV stations running their investigative reports, the two Maryland Senators would not have publicly demanded that the FTC finally get off their asses and investigate. Without that investigation and negative publicity, Fairbanks would have only had to keep fighting the myriad of class-action suits and would have kept growing. Now it appears the victims got pennies on the dollar, but SPS is tiny compared to what it used to be so the number of its potential victims is smaller as well.

There are literally hundreds of lawsuits, maybe thousands, representing a modest fight against these industry giants and their henchmen. Every once in a while a victim will have the resources to fight back, but most don't, especially those cast out into the sub-prime wasteland. To expose these crooks, I intend to track as many as I can and report here on decisions that affect consumers, especially when the courts continue to dance to the tune of the companies involved.

Here, the playing field is actually tiltable toward the victim.

The Honorable Judge Roy Bean.