When The Housing Market Crashes, So Does The “Recovery”

April 28th, 2011 - by: danny

Tomorrow at 1 PM, News Dissector Radio is back on Progressive Radio Network.com Guest Cherie Welch and former prosecutor/author Vince Bugliosi and Aaron Krowne of the MI-implode.com website.

APOLOGY: Yesterday’s blog was accidently NOT ON LINE. I rectified the situation last night, but too late for most readers, You can access it here.

WHEN HOUSING GOES DOWN, THE ECONOMY CAN’T GO UP

In its editorial section yesterday, The New York Times reminded us that “the continuing housing bust means the economy is still at great risk.” Please read it again.

This why I focused on mortgage fraud in my film Plunder and write about this issue every day. Yesterday, I also reported on the problems renters are having staying afloat. This is an issue that continues to menace us, with few progressives aware of it or active in support of homeowners. “Fraud was pervasive” (in the FBI lingo) — but little if anything was done by an Administration more concerned about the well being of the banks than the people losing their homes and hope.

Here’s how the Times put it: “If there was any lingering doubt, the latest data confirm that housing is still in a deep and broad recession. In the Standard & Poor’s/Case-Shiller home price report for 20 large cities, house prices in February fell to a level last seen in April 2009 – their lowest point in the bust. In a Census Bureau report, new home sales in March remained near their lowest levels since records were first kept in 1963.
It would be comforting to believe that housing-market distress represents a normal, if painful, correction after a period of excess. But all housing trends – in prices, sales, construction and foreclosures – indicate a market that is likely to decline even more, and far more than is needed to erase the artificial gains of the bubble.”

But the Times is not doing the systematic investigative work into the crimes behind the collapse of housing. One website that is, Ml-implode.com is fighting for its life as the fraudsters push back. Here’s the latest in their fight with those who want to muzzle their investigative work. Here’s their take on what’s happening from editor Aaron Krowne.

(P.S.: Don’t be put off by the detail – that’s what makes news interesting!

Economic Watchdog Site Hits on $100 Billion Fraud at HUD —
Largest Government Fraud In History?

ML-Implode.com “SLAPP” Sued By Perpetrators To Keep Quiet

In the course of its activities in bringing transparency to the housing sector and broader economy, in 2008 an ML-Implode.com blogger published a piece detailing a down payment fraud scheme which had just been explicitly outlawed by Congress in the July 2008 Housing Bill.

Surprisingly, the individuals at the nexus of this scheme went out of their way to sue ML-Implode in an attempt to silence the critique of their now-defunct activities. As a result they have rendered ML-Implode financially defunct. The scheme, in short, revolved around dodging the FHA’s 3% down payment requirement by laundering seller monies through an entity posing as a charity (or otherwise beneficent entity) which did not putatively have an interest in the transaction.

The seller monies were recouped by a mark-up in the sale price (typically by a home builder selling a new home). The end result was a 100%, no-money down financed loan, guaranteed by the federal government — without the Federal government realizing the risk it was taking on. The builder (or other seller) got to unload their property at an inflated price (possibly more than the 3% markup) and the lender got to make a no-risk loan.

The buyer? Well, record numbers of these buyers have subsequently gone into foreclosure, and the entire racket will cost FHA (so far) in excess of an estimated $13 billion in outright losses.

In large part, the FHA has raised fees on normal, law-abiding borrowers to maintain its solvency in the face of the losses due to this racket, which is called “seller-funded down payment assistance”, or SFDPA. FHA had prohibited seller monies from being used as a down payment going back years; the prohibition against the practice was published clearly in FHA guidelines from at least 2005, and HUD officials had been speaking out publicly against the racket as early as 1999.

HUD spend about 10 years from 1998 fighting back against companies engaged in the practice; finally resorting to an explicit provision of the law in 2008 when other means continued to be evaded.

The primary individual fighting against ML-Implode is Chris Russell, co-founder of SFDPA purveyor Ameridream. After a falling-out with the rest of management, Russell started a string of his own SFDPA operations.

In 2006, the IRS cracked down on SFDPA, eliminating their 501(c)(3) tax-exempt status in a blanket ruling, in which it stated powerfully that the use of seller funds for down payments constituted a seller concession, and therefore entities engaged in these transactions as their primary activity were not charitable. Nearly 200 operations were effectively shut down by this ruling.

But this did not dissuade Russell, who then went on to found the “Grant America Program” in partnership with the Penobscot Indian Tribe of Maine. The purpose of using an Indian Tribe was that they are considered a “government agency”, not a charity subject to the jurisdiction of the IRS.

This allowed them to make HUD down payment grants, in principle, but of course those grants are supposed to be from funds not derived from the seller.

Russell persists in suing ML-Implode in order to whitewash the record. He was a key individual in pioneering “SFDPA specialist” companies that do nothing other than launder seller monies to defraud HUD in extending FHA loans, for which they collect a fee.

Now that all parties agree SFDPA is illegal, Russell wants the critical record of his activities eliminated. ML-Implode maintains that these activities, always in contravention to HUD regulations, were always illegal, despite lackluster enforcement by HUD and the Department of Justice.

ML-Implode believes that HUD should be “clawing back” losses on SFDPA loans, as each loan is colored by multiple elements of fraud, as a necessary consequence of the scheme itself. A subsequent Freedom of Information Act request by ML-Implode has revealed that approximately $100 billion in SFDPA-tainted loans were originated into HUD. It is unknown the total amount outstanding at this time, but the FHA continues to pay out claims on defaulted SFDPA loans as if they were valid and free of fraud. More details and updates are available at Ml-implode.com

Ellen Brown: Cheney Was Right About Deficits

Ben Bernanke’s Rare Press Conference, Says Modest Recovery Underway

FT: Press Conference Goal: MAKE NO NEWS

The press conference by Federal Reserve chairman Ben Bernanke was historic. No Fed chair – a position labelled the second most powerful in America – has given a scheduled conference before.

About 60 reporters gathered in the Fed’s building at 2.15pm in Washington, eager to pose questions that they have been storing up through years of sitting through Mr Bernanke’s congressional testimony.

In immediate terms, the press conference was a success. Mr Bernanke smoothly answered relevant questions without departing far from the Fed’s script or comments that it has made in the past.

“BB is Brilliantly Boring,” said one hedge fund manager. Given the innovation of the press conferences, “The last thing Ben Bernanke wants to do today is make news,” said Diane Swonk, chief economist at Mesirow Financial in Chicago.

The purpose of the press conferences is to let Mr Bernanke explain the Fed’s policy decision and its forecasts. It turned out to be an occasion on which some explanation was necessary.

RT reported on a dubious claim.

Federal Reserve Chairman Ben Bernanke spoke to the press today during an undeniably dire time for the American economy. During that very speech, the US dollar hit a three year low and gas prices rose yet again. Should Americans be concerned? Absolutely, says Gerald Celente, director at the Trends Research Institute. While Bernake may have taken to the press, Celente says Ben’s “jive talk” shouldn’t be trusted as he devalues the dollar and distastes the economy.

Our President’s Day

President Obama named David H. Petraeus the director of the C.I.A., and Leon E. Panetta the defense secretary…The Washington Post reports that this means that the CIA will likely be militarized further, assuming control of the war on Pakistan,

Trumping Trump: Obama releases his Birth Certificate, evidence that he was born and not created in a lab. (Now there is a demand that the Donald release his tax returns.)

WP: ‘Birthers’ unlikely appeased

President Obama’s effort to quell enduring suspicion about his place of birth “raises far more questions than it answers,” says one of the leading figures in the “birther”controversy.

Craig Waits comments in letter to this blog: “In June 2008, Republican Presidential hopefuls began talking about the existence of a videotape in which Michelle Obama gave a racial inflammatory speech, railing against “Whitey,” Republican bloggers and commentators would confidently promise to release the tape in a day or two, and told the media to sit tight. Of course, the tape never appeared, never existed, but to this day, if you type Michelle Obama Whitey Tape into any search engine, you’ll find the same crowd talking of the tape as if it were undisputed fact.

And today, pundits assure us that, since Obama has released his long-form birth certificate, the so-called “birther controversy” can now be laid to rest. I disagree. Such a claim assumes that Republican Presidential candidates are interested in facts… that’s a huge assumption. Just ask John McCain, who lost a crucial presidential primary in the year 2000, because the Bush people spread rumors that the McCain’s adopted daughter was really the product of a tryst between McCain and an Indonesian woman. John McCain learned the hard way that Republican national campaigns are dominated by liars of the first order. That being the case, you can expect the baseless “birther” controversy to be in the news for a long time.

Andy Borowitz’s take: Obama Reveals Unsuccessful Run for President of Kenya, Disqualified by U.S. Birth Certificate

WASHINGTON (The Borowitz Report) — In a stunning announcement that took even political insiders by surprise, President Barack Obama revealed today that he ran for President of Kenya in 2005 but was disqualified when a birth certificate surfaced showing he was born in the United States.
At a press conference at the White House, Mr. Obama spoke for the first time about his little-known unsuccessful foray into Kenyan politics: “Like every American boy or girl, I grew up with the dream of someday becoming President of Kenya.”

But soon after he entered the race, political opponents began spreading rumors that he was not “a real Kenyan,” the President said, and foiled his bid by disseminating copies of his authentic American birth certificate.

CLG: Storms knock out 3 TVA nuclear reactors –Units among 23 U.S. reactors similar in design to Fukushima Daiichi nuclear plant

Severe storms and tornadoes moving through the U.S. Southeast dealt a severe blow to the Tennessee Valley Authority on Wednesday, causing three nuclear reactors in Alabama to shut and knocking out 11 high-voltage power lines, the utility and regulators said. All three units at TVA’s 3,274-megawatt Browns Ferry nuclear plant in Alabama tripped about 5:30 EDT (2230 GMT) after losing outside power to the plant, a spokesman for the U.S. Nuclear Regulatory Commission said. The Browns Ferry units are among 23 U.S. reactors that are similar in design to the crippled Fukushima Daiichi nuclear plant in Japan where backup generators were swept away in the tsunami that followed the massive earthquake on March 11.

Treasury plans for debt showdown

Treasury Secretary Timothy F. Geithner has tools at his disposal to conserve cash and stave off default.

Boston Globe, House votes to restrict union, Measure would curb bargaining on health care

Via Portside: House lawmakers voted overwhelmingly last night to strip police officers, teachers, and other municipal employees of most of their rights to bargain over health care, saying the change would save millions of dollars for financially strapped cities and towns.

Patrick Bond, ZNET, Behind the Trashing of the Gameen Bank in Bangladesh

THE ROYAL FARCE

Ian Jack in Newsweek: Nearly a third of the world’s population will watch Prince William marry Kate Middleton in Westminster Abbey on April 29, or so reports in the British press predicting a television audience of more than 2 billion would have us believe. The souvenir tea towels have been printed, the mugs glazed, and a national holiday declared. For a whole day, Britain will play the game the world loves us for: royal Lilliput.

Ã¢â‚¬Â¦. The country is facing the biggest squeeze in living standards since the 1920s. Government budgets have been slashed in every direction. This year hundreds of thousands of public-sector workers will get the sack, while inflation, tax increases, and a steep reduction in welfare benefits will eat into the household incomes of nearly everyone else. A whole range of public institutions, from military airfields to public libraries, are closing or being sold off. What remains of the British Navy has been deprived of its last aircraft carrier (the HMS Ark Royal, now for sale on the Ministry of Defence’s version of eBay).

NY TImes: Hamas and Fatah Sign Unity Pact in Palestine, Israel Opposes Deal

BASIC: Iranian officials allege new virus attack; mark latest plans for nuclear program

Iranian officials announced on April 25 that another virus has attacked government computers. The commander of Iran’s civil defense organization, Gholam Reza Jalali, referred to the attack as an “espionage virus” which officials have named “Stars.” He said that the virus was still under investigation and there was no specific mention of whether nuclear facilities were targeted. The alleged cyber attack comes not long after Iranian officials recently and publicly pointed to Israeli and U.S. collaboration with Siemens, as being behind the Stuxnet virus that attacked Iran’s nuclear program computers last year.

As part of National Nuclear Technology Day observances around April 9, Iranian officials touted and defended their country’s nuclear accomplishments from this past year, all despite a tightening sanctions regime and the Stuxnet virus

Portside: Mumia Wins One: Mumia Abu-Jamal’s Death Sentence KO’d

PHILADELPHIA, PA: The jury that sentenced black activist Mumia Abu-Jamal to death for the murder of a white Philadelphia police officer was wrongly instructed, a U.S. appeals court said.

The court ordered the state of Pennsylvania to hold a new sentencing hearing within 180 days or to sentence Abu-Jamal to life imprisonment. The three-judge panel upheld the findings of a district court judge and an appellate decision in 2008.

War is a Crime, Obama Denies Healthcare to Vermont

MEDIA

Keith Is Coming Back

San Jose Mercury News: “The voice will be silenced no more. Current TV has announced that its new show with Keith Olbermann will debut on June 20 at 8 p.m. The show, to be called ‘Countdown With Keith Olbermann,’ marks the return to the airwaves for Olbermann, one of journalism’s most provocative and outspoken voices and hero of the liberal left. Olbermann’s decision to join Current was announced in February, shortly after he had a not-so-amicable parting with MSNBC.”

Sixteen journalists detained, missing in Libya

Sixteen journalists covering the conflict in Libya are reported missing or detained by authorities in the North African country.

Glenn Greenwald: US Still After Wikileaks, The Latest

Index on Censorship: Al Jazeera Camerman Held At Gitmo To Try To Discredit Network

The latest batch of revelations from WikiLeaks, a trove of more than 700 files on prisoners held at Guantanamo Bay in the US War on Terror, confirms that an Al Jazeera cameraman was detained for years in part for information he could provide about the television network and its contacts with Osama bin Laden.

The 11-page cable identifies Sami al-Haj, a Sudanese national, as being a member of al-Qaida, as well as a member of the Taliban leadership “who acted as a money courier and propagandist for the al-Qaida network under the cover of his employment with the Union Beverage Company (UBC) and al-Jazeera media.”

The document describes al-Haj’s own account of his travel throughout the Middle East and Central Asia as a journalist for Al Jazeera, at several points trying to gain access to cover events in Chechnya at the request of the network. He was detained in December of 2001 by Pakistan while on his way to report in Afghanistan. The leaked document adds that, in talking with interrogators, al-Haj was “careful not to implicate himself as a member of an extremist organization, or to have had any dealings with extremists beyond performing interviews as a journalist.”

Apple Says: We Don’t Track

Shelly Palmer: “Apple has finally responded to accusations that its iPhone’s are tracking user data, denying any claims. While no location information is tracked, Apple does store Wi-Fi and cell tower data information to provide local results for maps and apps. A future software update will encrypt the file and reduce its size.”

Typo Patrol. Several readers found a typo in my piece on Wall Street. Should be rein in–not rain in. Of course.

Comments and stories are welcome. If you live in New York, Mediachannel is looking for a few interns. Write: Dissector@mediachannel.org

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