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Dear Professor Black:
You wrote in "Bill Black’s Primer on the Fraud at the Heart of the Financial System," Firedoglake, posted by: David Dayen Friday February 4, 2011, "Now, you can ignore this fraud and questionable solvency, and barrel through designing a new mortgage finance system. You could even come up with some pot of money for the real victims of this crisis, those subject to illegal foreclosures and modification processes. But you still wouldn’t touch the fraud at the heart of the system."
This email touches the fraud at the heart of the system. Gereenspan was the only one who could order and approve changes in rules governing asset value, as determined by formal real estate appraisal practices. His authorization of the Scope of Work rule modification is the smoking gun.
In a nine month period, January 2008- November 2008, real estate values in
Foreclosure and short sales were counted as value in appraisals- and subsequently in county tax evaluations in apparent violation of Federal and State laws and regulations. Ms. Andrea Silverthorne, a friend, and an expert Realtor, having been in the business for 42 years, and who owned her own firm, was stung by the misappropriation of her equity and has sought redress filing the excerpted Appeal brief below. She took courses to be an appraiser in March of 2009 and learned that the trigger for arbitrary determination of value was this: The Appraisal Foundation Board provided a new guideline called the “Scope of Work Rule”; it empowered banks to appraise real property based on their risk of foreclosure in a given area with an interbank valuation done in lieu of an appraisal.
An interbank valuation can only be predicated on non ownership of the collateral note and mortgage by a Trust that operates under the auspices on the
The testimony in trial reveals her property is collateral for a Mortgage Backed Security; therefore, the sale should have followed Title XI FIRREA guidelines for fair market value, which does not allow the use of distress sales; to do otherwise would be securities fraud.
It is well established that the use of sales made under duress by a buyer who was obligated to sell can not be used for a determination of value by a tax assessor, or anyone else, in the State of
Legally then, despite the bank's machinations with its Scope of Work Rule, designed for its benefit over the property rights of American home owners, their insistence on use of duress sales violated the Florida Constitution, and because all residential mortgages contain RESPA language making them a federally related transaction for the life of the loan; therefore, all duress sales in the State of Florida used for valuation were also in violation of RESPA and
Hundreds of billions in real estate taxes based on the value before the use of distress sales were drained by the bank's use of duress sales on their interbank valuations leaving the State of
The County tax assessor has no way to know that the Eleventh Circuit Court did not compute ‘fair market value in accordance with the constitution. That is why Floridians are “under water” on their mortgages and
This brief provides the necessary and sufficient legal proof that, at least in
Please, use this in anyway you deem appropriate. It is likely the first and only such appeal presented before the Appellate in
"I have completed my research on the subject of devaluation of
Below is the text of a Certiorari Petition I filed that discusses Florida Constitutional law and the effect of the RESPA language in all mortgages. After I did this, I did more research and determined that it is not the courts that are in error because they do not order valuation of real estate for foreclosure sales.
The Courts are not getting a chance to do "just value" and or "market value," because banks are not asking for deficiency judgments. They are just taking properties back and - as in the Mass High Court Ibanez instance - in simultaneous transactions - selling them for ridiculously low amounts.
County governments do not count short sales, but they have always counted foreclosure sales because they assume banks do things right and had the value determined before sale. Otherwise they are acting totally outside the law given the RESPA language in mortgage documents, and all mortgages contain that language.
It is highly likely that the national financial industry will wait for the expiration of the statute of limitation concerning fraud and then begin to seek deficiency judgments since the courts will not have understood that such foreclosures were illegal distress sales that cannot be included in the county's assessment base.
There are many things you can fight over in an appraisal but the use of duress sales have never been among them for properties funded under RESPA provisions or in the State of Florida whose just value definition precludes them. They are not allowed and the devaluation of all the state's tax basis has been illegitimate and illegal.
The documents are:
Doc #1--Basis for the appeal,
A. Proper Valuation based on the
B. Petitioner’s Property Valuation Based on the Appraisal Guidelines
for a Mortgage Funded as a Federally Related Transaction.
Doc #2--Email exchange with
Doc #3--Andrea wrote Ellen Brown in November of 2009 explaining in detail the
USPAP changes that took place in 2006 and 2007 to effectuate the
never before seen depreciation in
Petitioner's Appeal is therefore predicated on the following arguments:
1. The Sale Itself Must be Overturned: In Addition to Due Process
Considerations of No Notice,
2. It Was a Grossly Inadequate Price: There Was a Mistake in the
and Federal Law for ‘Fair Market Value’ determination of
federally funded transactions.
A. Proper Valuation based on the Florida Constitution.
“In defining the term just valuation which is required by both the Florida constitution and the statutes, the courts have adopted the view that “fair market value” and “just valuation” are legally synonymous.”(51 A Fla.. Jur. 2d Taxation §985.).”(Appendix page 17)
“Fair market value” means the amount of money which a purchaser, willing not obligated to buy , would pay to a seller willing but not obligated to sell. ( Emphasis added.)
In the case of a foreclosure sale the mortgagor is entitled to the same evaluation doctrine in keeping with the Florida Constitution:
“The general rule is that standing alone mere inadequacy of price is not a ground for setting aside a judicial sale; but where inadequacy is gross and is shown to result from any mistake, accident, surprise or fraud, misconduct or irregularity upon the part of either the purchaser or other person connected with the sale, with resulting injustice to complaining party, equity will act to prevent wrong result.” Art v. T.A. Buchanan 190 So. 2d 575 (1966)
In order to determine that a value is just under the Florida Constitution's guidelines there is a formula (Fla. Stat. 193.011), and “ ‘[I]n arriving at a just valuation’ there should be taken into consideration seven factors: the present cash value of the property; its present use and the highest and best use to which it might be put in the near future; its location, size or quantity; the cost of the property and the present replacement value of improvements; the condition of the property; and the income it yields.” Walter v. Schuler., 176 So. 2d 81. (1965)
In the above mentioned case the Supreme Court of Florida described a “classic formula” for determination of just and fair market value and that is that both the purchaser and seller are “willing” but not “obligated” to buy. Id ( quoting Root v. Wood, 155
“The entry of a deficiency judgment following a foreclosure is left to the sound discretion of the trial judge. But the exercise of that discretion must be within the limits of proof and should not be arbitrary. Horne V Smith, 368 So. 2d 392 ( Fla. 1st DCA 1979). The exercise of that discretion allows inquiry into the reasonable and fair market value of the property. . . .” Savers Federal Savings & Loan v.
All three traditional approaches defined in the constitution of the State of
Petitioner’s property has been assessed by
It is charged with determining value of real property based on prescribed standards. While states are not obligated to adopt it, once they do, they must abide by it. It is overseen at the state level by the Appraisal Standards Committee, which is made up of the members of the Federal Financial Institution Examining Council (“FFIEC”).
Case law abides by the constitutional definition of ‘just value’ in the State of Florida, which has been judged by the Florida Supreme Court to be the same as ‘fair market value’ under the USPAP guidelines, basically what is called an arms length sale which is defined as a buyer willing but not obligated to sell to a seller willing not obligated to buy. ( Appendix page 17-20). The sales price at foreclosure was $42, 000.00; therefore the sale price violates petitioner’s rights under the Florida Constitution and should be set aside. St. Joe Paper Company v. Brown. 223 So.2d 375 (
Going further: Every sale in Petitioner's building was a duress sale, short sale before foreclosure, or sold on the court house steps apparently, without regard to ‘fair market value.’ The rule of law is that prior to sale the properties value at the date of the foreclosure sale must be determined and an appraisal done, based on the
No duress sales may be used.
No sale where the buyer had to sell may be used to establish that value.
The county tax assessor takes the sales made on the court house steps as value because they assume that the Court determined “fair market value according to the rules ( No duress sales may be factored in); therefore, petitioner has hereby demonstrated to the court how the tax base of the State of Florida was depleted by over 50% throwing the state budget into economic distress. It was perpetrated by the Circuit Courts and it violated the
It is well established that the use of sales made under duress by a buyer who was obligated to sell can not be used for a determination of value by a tax assessor or anyone else, including a bank trying to determine fair market or just value, which are the same in the State of
B. Petitioner’s Property Valuation Based on the Appraisal Guidelines for
a Mortgage Funded as a Federally Related Transaction.
Defendant’s mortgage contains the following language:
““RESPA” means the Real Estate Settlement Procedures Act (12 U.S.C. § 2601 et seq.) and its implementing regulation, Regulation X (24 C.F. R. part 3500), as they might be amended from time to time, or any additional or successor legislation or regulation that governs the same subject matter. As used in this Security Instrument “RESPA” refers to all requirements and restrictions that are imposed in regard to a “federally related mortgage loan,” even if the Loan does not qualify as a “federally related mortgage loan” under RESPA.”” 
This statement in Defendant’s mortgage means that Defendant’s mortgage became and remains for the life of the loan “a federally related” mortgage at its closing, and therefore, any appraisal of the property must follow the FIRREA (12 U.S.C. 1818 1819 [“Seventh” and “Tenth”] and 3331-3352 § 323”definition of “Market Value.” See below FIRREA definition:
“Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date, and the passing of title from seller to buyer under conditions whereby: (Emphasis added)
(1) Buyer and seller are typically motivated;
(2) Both parties are well informed or well advised, and acting in what they consider their own best interests;
(3) A reasonable time is allowed for exposure in the open market;
(4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
(5) The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”
Almost all properties that have come before the Eleventh Circuit Court on foreclosure complaints meet this qualification. Terms such as “undue stimulus” and “typically motivated” mean no distress sales (sales made under duress), can be used in an appraisal under USPAP guidelines, no matter how many there are, or how far back they go. Defendant is an expert, licensed as a Realtor for 42 years and broker of her own multi office company for 12 years until her retirement in 2010. She also completed course work to become an appraiser.
Petitioner was around during the days of the Savings and Loan Scandal of the 1980,s. There were no short sales during that era; you could not sell the property before foreclosure for one penny less that the full loan amount and interest to the day of closing. The reason for this being that the
In the case of a private trust, they would have the same defense as
Included in Petitioner’s Appendix is a November 2009 letter to attorney and author Ellen H. Brown. It was written by the petitioner to her when the devaluation of American property values stood at 5 trillion dollars and counting, one year after the 40% fall in values occurring in a nine month period. It explains the changes that were made to the USPAP rules beginning in July 2006. The foundation provided a new guideline called the “Scope of Work Rule”; its intended use would later be revealed by the banks to appraise real property based on their risk of foreclosure in a given area with an interbank valuation done in lieu of an appraisal. An interbank valuation is predicated on non ownership of the collateral note and mortgage by a Trust that operates under the auspices on the
The RESPA language in petitioner mortgage to the best of her knowledge is contained in every residential Loan. The banks fund on HUD statements in order to allow them to sell the loans to the secondary market, which moves them along to securitization vehicles such as REITS, private Trusts and REMICs; therefore, an interbank valuation is never a legal determination of value in this instance, petitioner argues, because irrespective of the fact the loan was sold and securitized or not, the fact that it has been funded as a federally related transaction follows the loan for its lifetime; therefore, an appraisal under market value as defined by Title XI FIRREA would apply, i.e. every sale on the court house steps has violated this regulation.
Between the years 1988 and 1995
Petitioner views the changes as unconstitutional. The Appraisal Standards Foundation Board, by mandate from Congress, was to be a neutral determiner of value representing equally the banks and property owners. Petitioner believes that not only were the changes to the standards beginning in July 2006 unconstitutional; she believes because of the RESPA language in all residential mortgages, the changes did not matter when it came to determination of just and fair market value after the loan closed. Their use was prohibited once the loan was funded. You do not need to prove a loan was securitized; its funding under the RESPA language makes it a ‘federally related transaction’ for the life of the loan; the use of duress sales in the required formal appraisal can not be utilized.
Needless to say petitioner hopes for her and everyone’ else’s sake in the State of Florida, the Court will agree and stop sales of the Circuit Court that have violated the Florida and U.S. Constitution. The State of
If the court does not agree with the petitioner she will be happy to know that she was wrong. It’s a win- win opportunity for her. If petitioner is wrong them she can stop thinking her country is no longer a democracy.
Marie McConnel, a forensic analysis submitted an Amicus brief in favor of the Massachusetts High Court’s hearing on the lower
It is even sadder that: the sale was counted as value in the neighborhood it occupied further depleting the neighbor’s equity.
It has been reported that some clearing houses and banks in the State of
 §§ 192.042, 193.011,
 See Appendix page 19 for case law
 See Appendix Page
 http://query.nytimes.com/gst/fullpage.html?res=9C07E3D8113EF93BA25756C0A96E9C8B63&scp=67&sq=new jersey property&st=nyt&pagewanted=1
In a message dated
Dear Ms. Silverthorne:
Thank you for contacting the Office of Attorney General Martha Coakley regarding our efforts to address the foreclosure crisis. Your email has been forwarded to me for response.
On behalf of Attorney General Coakley, I want to thank you for making the office aware of this issue. The Attorney General's Office tracks messages like yours to identify developing trends in deceptive business practices which may prompt further action by the office in the future.
Thank you again for making us aware of this issue.
Constituent Services Coordinator
Office of the Attorney General Martha Coakley
From: Andthorne@aol.com [mailto:Andthorne@aol.com]
To: Email Correspondence (AGO)
Subject: Pres Obama's Mortgage reduction plan and its tie to foreclosure practice
AG Martha Coakley:
On February 2, 2012, just after Obama announced his home mortgage reduction plan, the
You cannot lower the loan amount. Both organizations have the right to foreclose, but must foreclose; they cannot re assign it back to the originating bank; the loan must remain static within the holding trust, and short sales are illegal.
It matters not that a portion of the loan is forgiven for the home owner
to stay in his or her home, or if the home owner gets his loan lowered
so someone else can pay cash for it. It's illegal.
The president is doing the right thing. The banks broke the law and devalued American property owners' equity - in total -5 trillion dollars, because the inter bank valuations on distress properties brought everyone's property values down.
I gave you the REIT statutes 856-859. the REMIC statutes are 860a-860g
Read them yourself. The devaluation of
The state of
It is time to investigate the unprecedented drop in property values from January 2008 to November 2008. In
And someone needs to investigate the reason why that event might have benefited banks.
Thank you for your previous reply from your public liaison. I usually get no acknowledgement at all when address the bad behavior of banks. This not only effected
I have taken longer than expected to get you this letter on property devaluation, because I wanted to take the time to review my appraisal course work. I took a Thanksgiving holiday respite to accomplish just that.
As a reminder, my personal history is that of a thirty-eight year licensed Realtor, who was active and handled the sale of REO properties, during the period of time commonly referred to as “The Savings and Loan Scandal,” of the mid to late eighties.
In February of 2008, I began to notice appraisers were using duress sales to determine market value, and when I questioned the tactic as going outside the bounds of property valuation as it had always existed, I was told that the appraiser was addressing the bank’s risk management. Bank risk management was a term that I was familiar with; however, prior to the time I began to question appraisers use of duress sales as a valuation that could be counted, bank risk management only was defined in terms of the borrower’s credit credentials and the condition of the property. Now I was told it had been expanded to the likelihood of foreclosure and duress sales in the area.
Doubting the veracity of the appraiser’s statement I sent an email to a well known head of an appraisal firm asking him if appraisal standards had changed; you never could count duress sales in an appraisal before; the county even coded them differently and did not count them toward their assessments. His answer in the copy of the email I have previously sent you did not address my question, and I left it at that.
The year 2008 also brought a new term into my real estate lexicon and that was the word short sale. Deed in lieu of foreclosure or a sale of a property, while in the process of foreclosure, was a scenario I had dealt with, including during the days when we dealt with the Resolution Trust Company, but you were never allowed to sell below the loan value and even had to pay a per diem interest until the day of closing. The reason the sales price could not go below the loan amount- I was told- was that the
As the 2008 year progressed, my curiosity as to the legal mechanism of selling a property to an investor- when the bank would not adjust the loan value for the home owner- for so much less than the loan value, whether before or after foreclosure, and then counting it as value against a future arm’s length sale, continued to grow, but I did nothing to investigate what was transpiring until I opened my Miami Herald newspaper to see a graph on South Florida property values. The graph showed a leveling off of values in 2005, slight dips down and then up as 2008 approached. The first quarter of 2008 showed a substantial increase in value, and then the line went straight down like lemmings off a cliff.
I got on my computer and visited www.appraisalfoundation.org and found that appraisal standards had indeed changed. You may visit this site to see any of the information I will discuss. It was created and authorized by Congress in 1987 and was a direct result of a desire to standardize the appraisal practice in light of the fall out from the S&L Scandal
“Statements on Appraisal Standards (
Appraisal Foundation and are specifically for the purpose of clarification,
interpretation, explanation, or elaboration of the Uniform Standards of
Professional Appraisal Practice (USPAP). Statements have the full weight of a
Standards Rule . . . .” (The bolding on the last sentence was added by me.). This
took the requirement to follow regulation down more than a few pegs. The title
of Statement 10 was: Assignments for Use by a Federally Insured Depository
Institution in a Federally Related Transaction.
“The ASB issues guidelines in the form of Advisory Opinions, USPAP frequently Asked Questions (FAQ) (This is a new feature instituted by the AFB in 2008 to be redone every two years.), and monthly questions and responses. These communications do not establish new Standards or interpret existing Standards and are not a part of USPAP. They illustrate the applicability of standards in specific situation and offer advice from the ASB for the resolution of appraisal issues and problems.” (Again, the bolding was added by me).
This last change would combine with the other changes I have described and a 2006 change to the Foundation’s Preamble to set up the devaluation of trillions of dollars in American property value, and this is how they did it.
In the USPAP explanation of the logic for the elimination of Statement 10, therefore watering down the mandate for following the appraisal rules of the governing document in Federally Related Transactions, FIRREA, they said:
“The Statement (10), did not distinguish between laws (such as FIRREA, regulations and guidelines, such as the Interagency Appraisal and Evaluation Guidelines), resulting in confusion for both Appraisers and users of Appraisal services.
An interagency relationship would be a bank and its secondary lender. If there is no new loan they can ask for an “Evaluation” rather than an Appraisal. As so long as the agency requesting the “Evaluation does not request an opinion of value, the Appraiser can do a valuation service which then does not come under USPAP guidelines, or any other legal appraisal parameter or law, and if told by the bank that their intended use was their risk management, specifically the risk of foreclosure in the area, he could do it with the appraisal standard changes. Statement10 focused on the FIRREA definition of market value. What would have been needed to follow if Statement 10 had not been standing in its way?
I have enclosed another graph of the power set up on the appraisal process. The first graph I sent you delineated the Appraisal Subcommittees controls and influences over the Foundation, the Appraisal Standards Board, and implementation of USPAP in the states. It included HUD, but if you look at this second graph of what authority stands above the first; it is the same members of the Appraisal Subcommittee, sans HUD. By law, FIRREA, to be precise, the Federal Reserve and the other members included by law in the chart have the complete authority to monitor and direct the Foundation and the Standards Board exactly how to conduct and structure appraisal practice.
The reason Statement10 elimination freed up the appraiser was:
FIRREA was created at the same time as the Foundation and it dictated that a specific definition of value be used in all Federal transactions: the legal definition of market value pursuant to Title XI of the Financial Institutions Reform, Recovery and Enforcement ACT (FIRREA,) of 1989 for a Federally Funded Transaction follows.
“Market value means the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:
This definition rules out all duress sales being counted as market value, as they are defined in Appraisal practice as non arm’s length made under haste and duress.
I have attached the latest version of the Interagency Appraisal and Evaluations Rules. There was one more thing necessary to make sure that American property values could be lowered to a point the federally related loans could be dumped at any cost. USPAP appraisal Standard I demands that all three types of value, Market Value, Cost Replacement, and the Income Value be ascertained before a decision on the best one to be used could be made, and the previous Fannie Mae Appraisal form had a place to state those values; they were removed. I have one property valued at 260 thousand dollars, when I bought it that is being offered on a short sale at 45 thousand, a price very close to land value and tens of times below what replacement cost would be. There was an obvious meeting of the minds of the organizations that controlled the role of property value and its determination, before the extent of the fraud and double selling of loans became know to the public. The
Real estate was the tinsel strength of the nation; as the appraisal practices course work states, unlike the stock market, it is not readably liquid, and is called an inefficient asset. When the market dies there are no buyers to take the market down. Real estate does not go down in value; it only stagnates in line with demand and also in line with declining preference of a neighborhood, given a house is kept up physically from depreciation.
This is easily provable by historically tracing property valuation county by county, nation wide, sans foreclosures which do not count.
I have given you facts, but if I were to venture a guess and theory as to why the Federal Reserve, et al, had to prepare for massive and rapid property devaluation, I would say the clue could be found in the fact that Colonial Bank was found to have sold their loans twice. I would venture to guess that prior to the credit crash of 2008, it was discovered that there were many more securities then there were loans to collateralize them, and they had to find a way to rescue the foreign investors’ dollar, so the American tax payer bailed out criminals and then suffered further, while their property got hocked at 10 cents on the dollars to cover the rest, and yes, this would mean that the REITS were kept silent on the missing collateral by a promise to do so.
If you have any questions or need any further substantiation, please do not hesitate to ask.
#1 The U.S. as an autonomous fiat currency issuer cannot go broke in that currency.
#2 The Federal Government is not dependent upon taxation or borrowing to spend.
#3 The Federal Government must issue dollars/currency before it taxes or borrows.
#4 The Federal Government does not depend upon foreign governments to finance its expenditures.
#5 We cannot burden our grandchildren with todays debt. Our grandhildren will consume all they produce.
#6 In all national accounting, imports are savings and exports are costs.
#7 The Federal Government's deficit is equal, to the penny, to the private sector's net financial assets.
Modern Monetary Theory--Federal Taxes Don't Pay For Anything