Here is How JPMorgan Posts $19B Annual Profit Despite Housing Hangover

MOST POPULAR ARTICLES

CLICK HERE TO GET COMBO TITLE AND SECURITIZATION REPORT

EDITOR’S ANALYSIS: You might ask how any bank could post such huge profits while the economy is in the toilet, Europe is falling apart and Asia is having problems. The answer lies — yes here it is again — in the level 2 yield spread premium they stole from investors. The way I add it up, the Banks collectively stole nearly 3 Trillion dollars from the investors before they even started funding loans out of investor money. According to some documentation that I received anonymously and a some documentation I received accidentally, that money was whisked off-shore through Bermuda, who asserted tax jurisdiction over the money and then waived the tax.

1. The yield spread premium was achieved through the use of smoke and mirrors, which is to say business as usual on Wall Street. By making loans at higher interest interest rates or higher stated interest rates on stated asset and subprime loans, Wall Street reduced the amount that was needed to fund loans — and pocketed the difference without telling investors or disclosing to borrowers as required by the Federal Truth in Lending Act. On the one hand they say they are lenders so they can foreclose, and on the other they say they are not subject to the TILA disclosure requirements.
   
2. The spread was enormous — each one as much as 100 times the yield spread premium that brokers were paid for steering hapless borrowers into more expensive loans.
3. In a frequent example, the investor was expecting a return of 5% based upon loans of only the highest quality which of course would carry an interest rate that was the lowest the market had to offer — at around 5% average. If that had actually been done, Wall Street wouldn’t have been interested because the fees were too low. Instead, the Wall Street Banks sought out loans that carried a stated interest rate of 10% — obviously to borrowers who were either less credit worthy than the borrowers that the investors were expecting or borrowers who were convinced they were less credit  worthy, or they were convinced that the loan in front of them was a better deal even though they qualified for a lower interest rate.
4. By doubling the interest rate the banks halved the principal funded by investors, pocketing the rest which they booked, for the most part as trading profits. They simply sold the 10% loan for the value of the 5% loan and doubled their money without using any of their own money to begin with.They kept the profit and didn’t report it while putting the investors at far greater risk than they were led to expect.
   
5. So now, when the recession is gripping the world, Banks are reporting higher profits because they are able to feed the off-shore off-balance sheet transactions back in as needed to maintain the appearance of profitability. It is a living lie.
6. Besides the obvious fact that these were ill-gotten gains from the past and not profits from current operations and the banks’ auditors will pay for this one day when shareholders wake up, there is a much more insidious and dangerous aspect to this shell game. If the law is applied as many scholars and writers, including myself, believe it should be, there is no doubt that the result would be a reversal of most foreclosures and an obligation that is unsecured or secured with some modified deal or settlement.
7. It is highly likely that the the most dreaded result would occur — homeowners would actually pay the full balance of their debts after deductions for payments by third parties and set-off for TILA and other lending violations.
8. This would result in a requirement of full accounting to the investors who would quickly find out that although the loans were paid in full, the amount they advanced was still not covered — because of the theft by the banks and reported as trading profits. It would also lead those who advanced money on the premise that the pools were insolvent to demand their money back because the loss they were covering in the insurance contract or contract for credit default swap never materialized — except for the intentional act of theft by the Banks.
   
9. The resulting effect would be unraveling and reversing a lot of the profit made by selling the loans multiple times through exotic instruments that obscured the fact that they were in essence just selling the same loan over and over again — as much as 40 times the original loan. The consequences are by no means assured, but it seems logical that the Tier 2 YSP would be required to be disgorged. And then, it is possible they would be required to disgorge the money they received from Federal Bailout, insurance, credit default swaps and other derivatives and credit enhancement tools.
10. Which means that loan you had that was $200,000 in principal is a liability to the Wall Street banks IF YOU PAY IT OFF — and that liability could be in excess of $8 million. When you reverse engineer the Wall Street process that led us into the mortgage meltdown and recession you see several things — false securitization, a fake default rate, fake losses, fraudulent foreclosures and a recession that only happened because the banks sucked the money out of the system. Just follow the money — everyone including government is a loser except the banks. The conclusion is inescapable.
    

Tags: bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, JPMorgan Chase, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND, yield spread premium
Posted in bubble, Corruption, Eviction, securities fraud |