Monthly Archives: December 2012

If governments confiscate your gold – then what? Part 1/4

Julian Phillips believes more and more that some governments will confiscate citizens' gold holdings and is covering the why's and wherefores in a series of four articles of which this is the first.

Author: Julian Phillips

BENONI -

Several analysts and respected members of the gold community have stated that the confiscation of gold is unlikely because the conditions that precipitated it in 1933 don’t exist anymore. We agree wholeheartedly with the latter part of that view. But, even so, we feel that the confiscation of gold is extremely likely for very different reasons.

For the last 40+ year, the world has used un-backed paper money and attempted to discredit gold. This system is entirely reliant on the confidence people have in governments and the central banks that issue money the money (at will). Over the 40 years of this experiment, gold has gone from $35 to $1,715, a rise of nearly 50 times. Since 2007 we’ve seen banking crises across the developed world leaving bankers borrowing money from central banks and lending it back to them, rather than lend it out into the general economies or in some cases to each other.

Before we continue, we would like to stress one point that gold investors must be made aware of. This is not simply an academic discussion. If we are wrong, you will continue to own your gold with it under your full control. If we are right and you haven’t acted prudently to protect against confiscation, you will lose your gold. It’s all about risks and rewards.

With gold being of a value far in excess of its price in the monetary system –as seen in its use as collateral via the Bank of International Settlements currency/gold swaps of the last few years— and with gold possibly soon to become a level 1 asset on bank balance sheets, the demand for physical gold from the banking system as well as from emerging world central banks is set to rise tremendously and soon. The Basel III discussions should allow for this to happen any time between 1 January 2013 and 1 January 2015. If gold is re-rated to a level I asset, as is proposed by Basel III (U.S. bankers are in on the discussions) then there is not enough readily-available gold to provide both the central banks of the world and the banking system with sufficient for gold to play this role.

That’s why your gold may be confiscated.

The consequential impact on the gold price is overwhelming. We’re moving into dangerous financial waters in this regard which reminds us that ‘gold is money in extreme times’, as Alan Greenspan said. But how could this happen? Investors hold gold in the correct belief that it will rise as the monetary system decays; it has done this since the turn of the century. When these times arrive, the price of gold will not be as important as the number of ounces held by anyone.

What most gold investors have done is to shrug off the probability that they may have their gold confiscated by their government, ‘in the interests of national financial security’. Confiscation is far more than just an event that will hurt individuals. It will hurt institutions (who are allowed to own gold) and change the world’s monetary system significantly.

Importantly, Central Banks and the Authorities possibly will not wait for the monetary system to crash before acting to ensure they have enough gold to keep the monetary system working. They will act well ahead of that time to make sure they avoid a collapse and attempt to engineer the event so as to catch gold investors by surprise, removing their chances of making any contingency plans. With their prime objective being to shore up confidence in the monetary and banking system, they could not afford to signal the market about their intentions beforehand. We are not just talking about the U.S.A. but many other countries that may precede or follow the United States in these acts.

The trouble is that the gold they ‘acquire’ may be yours. Wisdom demands that the banking crises, which have been occurring since 2007, do not happen again because this time around they may well collapse. Prudence demands that investors don’t take that risk but act before it is too late. The risks of not guarding against this eventuality are enormous; the rewards of guarding against it are massive. If it doesn’t happen, then you will lose little if anything. If confiscation does happen, then you lose a lot. It’s a matter of risk and reward.

We believe that the confiscation of gold for this purpose is a very real and present danger.

This prospect brings to the table the following questions which all gold investors, including institutions need to address now before they are caught in the net. We will look at these questions in subsequent articles:

Part 2

1. What will happen to your gold if it is owned directly in your name?

2. What if it is in a safe and hidden place at home?

3. What if it is in a safe deposit box at the bank?

4. What if it is unallocated and sitting in an E.T.F.?

5. Does it help for your gold to be allocated?

6. What if a bank holds it for you?

Part 3

1. What will the Authorities do when they want your gold?

2. How will you use your gold if it is illegal to own it?

3. Will a ‘Black Market’ in gold work?

4. Is it enough to hold your gold outside your country?

5. What if the Authorities order you to repatriate it?

6. What if the Authorities order you to transfer ownership of your gold to them?

7. What if the Custodians banks of your gold E.T.F. are told to pass your gold to the Authorities?

Part 4

1. The evidence of history on Confiscation and Exchange/Capital Controls.

2. After U.B.S. is Switzerland really safe?

3. Are Private Vaults safer?

4. Will you be forced to sell your gold under a confiscation Order?

5. How can you sell or use your gold if it is illegal to own it?

6. Do you have time to wait before you act?

7. How can S.M.A./U.G.T. overcome a Gold Confiscation Order?

Julian Phillips for The Gold forecaster – www.goldforecaster.com and The silver forecaster – www.silverforecaster.com

 

Highly popular CombiBar gold wafers may be coming to the U.S.

European investors have been buying CombiBar credit card sized gold wafers which can be broken into one gram pieces and used as emergency currency. Now there are plans to market them in the U.S.

ZURICH (Reuters) -

Private investors in Switzerland, Austria and Germany are lining up to buy gold bars the size of a credit card that can easily be broken into one gram pieces and used as payment in an emergency.

Now Swiss refinery Valcambi, a unit of U.S. mining giant Newmont, wants to bring its "CombiBar" to market in the United States and build up its sales presence India - the world's largest consumer of gold where the precious metal has long served as a parallel currency.

Investors worried that inflation and financial market turmoil will wipe out the value of their cash have poured money into gold over the past decade. Prices have gained almost 500 percent since 2001 compared to a 12 percent increase in MSCI's world equity index.

Sales of gold bars and coins were worth almost $77 billion in 2011, up from just $3.5 billion in 2002, according to data from the World Gold Council.

"The rich are buying standard bars or have deposits of phsyical gold. People that have less money are buying up to 100 grams," said Michael Mesaric, CEO of Valcambi "But for many people a pure investment product is no longer enough. They want to be able to do something with the precious metal."

Mesaric said the advantage of the "CombiBar" - which has been dubbed a "chocolate bar" because pieces can be easily broken off by hand into one gram squares - is that it can be easily transported and costs less than buying 50 one gram bars.

"The product can also be used as an alternative method of payment," he said.

Valcambi is building a sales network in India and plans to launch the CombiBar on the U.S. market next year. In Japan, it wants to focus on CombiBars made of platinum and palladium.

Elsewhere, demand is particularly strong among Germans, still scarred by post-World War One hyperinflation, when money became all but worthless and it took a wheelbarrow full of notes to buy a loaf of bread.

"Above all, it's people aged between 40 and 70 that are investing in gold bars and coins," said Mesaric. "They've heard tales from their parents about wars and crises devaluing money."

CRISIS PAYMENT

The CombiBar is particularly popular among grandparents who want to give their grandchildren a strip of gold rather than a coin, said Andreas Habluetzel head of the Swiss business of Degussa, a gold trading company.

Other customers buy gold for security reasons.

"Demand is rising every week," Habluetzel said. "Particularly in Germany, people buying gold fear that the euro will break apart or that banks will run into problems."

Some fund managers, however, remain sceptical.

Stephan Mueller, who manages bank Julius Baer's $6 billion gold fund, said one problem with using gold as a method of payment is that people have to take its value on blind trust.

"Gold is a useful store of value," Mueller said. "However I doubt whether it will succeed as a method of payment."

Nonetheless, as developments in the euro zone lurch from one crisis to another, demand for gold that can be sold in vending machines is also growing.

"Sales rise according to the temperature of the crisis," said Thomas Geissler, whose firm Ex Oriente Lux operates 17 gold vending machines in Europe, the United States and the United Arab Emirates.

The machines saw record sales in 2010, one day after the then Deutsche Bank CEO Josef Ackermann raised doubts over whether Greece would be able to pay its debts.

Since the launch of the machines, which operate under the name "GOLD to go", 50,000 customers have withdrawn more than 21 million euros in gold. The average buyer is male, over 50 years old and well off.

"Customers are hoarding gold mostly at home as a precaution against a crisis, just as their fathers and grandfathers did before them," Geissler said.

California Foreclosure Protection: The Homeowner Bill of Rights

The new California Homeowners Bill of Rights helps protect homeowners in foreclosure from lender abuses.

On January 1, 2013 a new California law, the Homeowner Bill of Rights, will go into effect. The new law reforms some aspects of the California foreclosure process in order to better protect homeowners in foreclosure.

Between 2008 and 2011, more than one million homes in California were foreclosed. In many cases, lenders did not provide homeowners with a significant opportunity to obtain loss mitigation options to avoid foreclosure and also engaged in extensive mortgage servicing misconduct. To address this issue, Governor Jerry Brown signed the California Homeowner Bill of Rights into law on July 11, 2012.

The Homeowner Bill of Rights makes the nonjudicial foreclosure process in California more fair and transparent. Read on to learn about the new protections for homeowners and how the Homeowner Bill of Rights can help you if you are facing foreclosure in California.

(See our article Summary of California Foreclosure Laws for more information on the California foreclosure process).

What Is the California Homeowner Bill of Rights?

The purpose of the Homeowner Bill of Rights is to provide protections for homeowners facing foreclosure and to reform some aspects of the foreclosure process. It aims to ensure that homeowners are considered for, and have a meaningful opportunity to obtain, available loss mitigation options, such as loan modifications or other alternatives to foreclosure. (Learn more in our Alternatives to Foreclosure area.)

The Homeowner Bill of Rights is part of California Attorney General Kamala D. Harris’ response to the state’s foreclosure crisis and largely came about as a result of the recent national mortgage settlement between 49 states and certain lenders. (Learn more about the the national mortgage settlement.)

However, whereas the national mortgage settlement is only applicable to the five settling banks and their customers, the Homeowner Bill of Rights extends the reforms addressed in the national mortgage settlement to almost all mortgage lenders and servicers.

Key Reforms in the California Homeowner Bill of Rights

The Homeowner Bill of Rights contains four key reforms:

No Dual-Tracking

Under current law, a lender may foreclose on a homeowner even if a loan modification application is pending, which is a process called “dual-tracking.” The Homeowner Bill of Rights bans the dual-tracking of foreclosures. This means loan servicers must make a decision to grant or deny a first lien loan modification application before starting or continuing the foreclosure process.

What does this mean for homeowners? Once the homeowner submits a complete loan modification application, the foreclosure is stalled while the loan servicer reviews the application and makes a decision. Even if the lender denies the loan modification, it still cannot foreclose until any applicable appeals period has expired (this is generally 30 days from the date of the written denial).

Lenders Must Provide Homeowners With a Single Point of Contact

In the past, homeowners who called their lender to get help with mortgage problems have had to explain their circumstances repeatedly, often to several different representatives. Under the Homeowner Bill of Rights, mortgage servicers must designate a single point of contact for homeowners who are potentially eligible for loan modifications or other foreclosure prevention alternatives. The homeowner must be given one or more direct means of communication with the single point of contact.

The point of contact may be an individual person or a team of personnel each of whom has:

  • knowledge of the homeowner’s status
  • information regarding foreclosure prevention alternatives
  • access to decision-makers, and
  • the responsibility to coordinate the flow of documents between the homeowner and mortgage servicer.

The single point of contact will remain assigned to the account until all loss mitigation options are exhausted or until the account is brought current.

Penalties for Robo-Signing

“Robo-signing” occurs when a representative of the lender or servicer signs foreclosure documents without reading them or having any personal knowledge about the accuracy of the information contained in them. The Homeowner Bill of Rights imposes a civil penalty up to $7,500 per loan on lenders or servicers that record or file multiple, unverified documents. (Learn more about robo-signing in the mortgage industry.)

Homeowners Have the Right to Sue for Violations

Homeowners may sue the lender or servicer for violations of the California Homeowner Bill of Rights. Potential relief includes:

  • injunctive relief, such as a halt to the foreclosure sale (if the foreclosure sale hasn't happened yet), or
  • actual economic damages if the foreclosure sale has already occurred.

In addition, if the court finds that the violation was intentional, reckless, or resulted from willful misconduct by a loan servicer or lender, the court may award the borrower the greater of treble actual damages or statutory damages of $50,000.

Effective Date of the New Law

The Homeowner Bill of Rights goes into effect on January 1, 2013. It is scheduled to sunset on January 1, 2018.

Applicability of the California Homeowner Bill of Rights

The protections afforded to homeowners by the Homeowner Bill of Rights generally apply to first lien mortgage loans for properties that are:

  • owner-occupied
  • residential, and
  • no more than four units.

Smaller servicers (entities that conduct fewer than 175 foreclosure sales per year or annual reporting period) are exempt from some of the procedural requirements.

To Learn More About the California Homeowner Bill of Rights

For more information, go to the State of California Department of Justice’s webpage at www.oag.ca.gov and click on the link to “CA Homeowner Bill of Rights”.

by: Amy Loftsgordon

SECURITIZED DISTRUST

by Gary Victor Dubin, Esq. Honolulu, Hawaii

Securitized trusts — that is, the bundling and selling of shares therein to investors via a business merger between lenders and wall street (mortgage backed securities or MBS) — is relatively new, not even understood by many lawyers today and very few if fully any Hawaii judges, and certainly not by me until only a few years ago, and I am still learning day by day.

In recent years, my law firm has handled dozens of securitized trust foreclosure defense cases and one defense of an SEC civil prosecution against broker-sellers of such MBS shares. The fraud throughout the secondary mortgage market has been pervasive:

1. Promissory notes intended for securitized trusts based on my experience were either intentionally never deposited into the securitized trust in the first place on purpose with full knowledge by everyone involved or were deposited in the trusts only as copies.

2. Based on the testimony of whistleblowers and forthright bank executives, lenders intentionally destroyed most of their original notes and instead before doing so digitized them, supposedly for convenience — which of course destroyed their status as negotiable instruments, leaving only copies somewhere, and often not with the Trustee.

3. At first, it appeared that that was just sloppiness, but subsequently in our cases we have discovered that it appears to have been common practice intentionally not to deposit the notes (or the mortgages) in the securitized trusts, but to withhold them and unlawfully use them on the side as collateral to support loans or credit from Federal Home Loan Bank Boards, a practice that apparently mushroomed as lenders found themselves in financial trouble and in need of capital.

4. Documented evidence has recently just been brought to my attention that many notes and mortgages were even put simultaneously into two or three or perhaps even more separate securitized trusts, unknown of course to individual investors who thought that they had sole security for their investments, unknown to insurance companies like AIG that insured the MBS based on certified loan underwriting guidelines that they were unaware were being ignored and intentionally compromised by false appraisals and false loan applications.

5. All of this recently surfacing has of course started to generate a massive amount of litigation between lenders and investors and mortgagors and insurers and title companies, in which inevitably the question of fraudulent notes and fraudulent mortgages as well as fraudulent mortgage assignments has occasionally arisen. Just this week I had an incredible hearing before Judge Ayabe in one such case involving a claimed lost mortgage assignment and the submission in court of a false note to get around the absence of the mortgage assignment.

6. All of this of course is pregnant with fraud and criminality, particularly against MBS investors. Securitized trusts also have special IRS preferential status, called REMIC, able to pass through income to investors and avoid taxation so long as the deposit of the note and mortgage occur at the time of the formation of the securitized trust. Having violated REMIC requirements which could cost securitized trusts each millions, the securitized trusts have been a ticking IRS time bomb.

7. As a result, as all of this began to surface a year or so ago, as a corollary to the so-called “too big to fail” hobgoblin, the Obama Administration and regulatory agencies began to seek frankly to cover things up, recently convincing the AGs to settle with the big five banks which are either securitized trust loan servicers or Trustees themselves and to grant them immunity, especially I understand from IRS violations.

8. The effect on borrowers has been dramatic. As foreclosures increased, the securitized trusts have had a huge problem, how to foreclose in court (or nonjudicial proceedings) without the notes or even the mortgages — so they began to falsify promissory notes when needed (we have even found evidence that some lenders have been photo-shopping notes), to create phony allonges and phony bearer notes, and to submit in court no less fraudulently notarized and fraudulently signed mortgage assignments to the securitized trusts — a practice now having become famously known as “robo-signing.”

9. At first, the foreclosing mortgagees got away with it as judges and attorneys were virtually unanimously unaware of what was going on, until a few relentless attorneys and investigators on the Mainland exposed the fraud — one recently getting I understand $18,000,000 from the recent AG settlement for her False Claims Act whistle-blowing!

10. For some time my law firm has been arguing such issues in defense of borrowers — particularly as standing issues — but with little success, until recently, as more and more Hawaii judges are finally beginning to understand.

11. Very rarely in our cases is the issue one of lost notes or lost mortgages, but usually phony note endorsements or phony allonges or phony mortgage assignments — or all three.

12. Mortgages of course in Hawaii are all recorded at the State Bureau of Conveyances, but as a result mainly due to the use by securitized trusts of the private Mortgage Electronic Registration System (MERS), mortgage assignments have not been contemporaneously recorded — which has allowed the illicit trafficking in mortgage interests — which has generated still additional legal issues, such as whether the ownership of the promissory note can be separated from the ownership of the related mortgage, an issue now before several state high courts on the Mainland.

The above flood of new legal issues is just starting to hit Hawaii appellate courts, as my law firm has several related cases presently working their way through our appellate system, as the largest financial scandal in American history plays out.

Unlike the recent AG settlement, I prefer the approach that enforces traditional real property and UCC negotiable instruments laws, like the New York and New Jersey courts are now doing, and let the chips fall where they may — directly on top of the heads of those who violated the law — by refusing to reward fraud.

Gary Victor Dubin 3/14/12

Dubin Law Offices
Harbor Court, Suite 3100
55 Merchant Street
Honolulu, Hawaii 96813
gdubin@dubinlaw.net

(808) 537-2300 (office)
(808) 523-7733 (facsimile)

Home Seizures Rise as Banks Adjust to Foreclosure Flow | Foreclosure Fraud – Fighting Foreclosure Fraud by Sharing the Knowledge

Home Seizures Rise as Banks Adjust to Foreclosure Flow | Foreclosure Fraud - Fighting Foreclosure Fraud by Sharing the Knowledge.

Home seizures in the U.S. rose 5.4 percent last month, the first annual gain in two years, as lenders seek to manage the flow of distressed properties without disrupting the housing recovery, according toRealtyTrac.

Banks repossessed 59,134 homes, up from 56,124 from November 2011, the Irvine, California-based data firm said today in a report. The increase was the first since October 2010, when foreclosures slowed after allegations that lenders were using faulty practices to take property from delinquent homeowners. Seizures climbed 11 percent from the previous month.

“Lenders have figured out how to play the foreclosure game in this new world where they’re getting a lot more scrutiny,” Daren Blomquist, RealtyTrac vice president, said in a telephone interview. “Everybody involved in the foreclosure industry has finally got a good handle on how to manage these properties to create a more managed and stable flow.”

The five largest lenders in February agreed to a $25 billion settlement of the charges and have since been pursuing foreclosure alternatives such as short sales, where a property is sold for less than the amount owed. Repossessions since March have slowed to fewer than 60,000 a month, an “acceptable” level for servicers that previously had struggled to process a flood of distressed homes, Blomquist said.

In the peak year of 2010, banks took back an average of 87,542 homes a month on the way to a record 1.05 million completed foreclosures, according to RealtyTrac.

Complete article here...

National Mortgage News – Angelo Mozilo Called It an Idiot s Market – What We’re Hearing Article

Angelo Mozilo Called It an ‘Idiot’s Market’

Countrywide Financial co-founder Angelo Mozilo is back in the news today – thanks to the public release of a 2010 deposition he gave tied to an MBS civil fraud case brought by MBIA. In that legal document Mozilo boasted that he had “no regrets” about how he managed CFC. He also said he settled a civil fraud case with the Securities and Exchange Commission ($67.5 million) to protect his children...

Read complete article:

via National Mortgage News - Angelo Mozilo Called It an Idiot s Market - What We're Hearing Article.

CoreLogic: Rental income profit, demand remain strong for investors

 

By Kerri Ann Panchuk
 
Rental income on residential properties shot up 12% over last year during the month of September as rents continued to rise on new demand, CoreLogic ($27.45 0.31%) said in its latest December MarketPulse report.

The property analytics firm expressed a great deal of confidence on where the real estate economy for the past several months, but also noted a general sense of trepidation heading into the new year.

"Ongoing uncertainty in the overall business climate brings into question whether the economy can fire on all cylinders," wrote Anand Nallathambi, CEO and president of CoreLogic.

"The lack of a workable plan to resolve the fiscal cliff so close to deadline has impacted the confidence of business leaders," he added. "The ongoing, unresolved problems related to the European debt crisis also weigh down confidence."

But what does stand out is how well real estate has been doing for the past few months. CoreLogic researchers point out that the real estate cycle is now producing residential investment that is contributing to economic growth. Further, lenders are returning to lending, albeit slowly, and only to the most qualified borrowers in many cases.

The uptick in rental income year-over-year reflects how affordable rental properties became for investors and ongoing demand for rentals in the wake of the housing market crash.

CoreLogic expects rental demand in the residential sector to continue to rise next year with weak wage income and job growth. This in turn will create some tightness in the single-family rental market.

Analysts from the research firm note all the uncertainty blocking a full recovery can be combated with a reduction in mortgage risk, an economy driven by investments and more clarity from policymakers on housing policies.

Click Here to read full report: The Market Pulse