Category Archives: deflation

FBI Mortgage Fraud Task Force – Implications for Real Estate Property Appraisers in Florida

The FBI provided insight into the breadth and depth of mortgage fraud crimes perpetrated against the United States and its citizens, Florida being first and foremost on the list. Current mortgage fraud projections, issues, and hot spots in the troubled U.S. economy have enormous implications to the banking industry and real estate property appraisers in particular.

[b]Mid-State Appraisals founder Paul Davis is a trusted and reputable property appraiser[/b] frequently called upon by Central Florida’s banks, homeowners, and real estate investors to assess property values. A builder for over 20 years and also a real estate broker, Paul Davis brings a wealth of knowledge to the table as an appraiser.

A combined effort between banks and real estate property appraisers is needed to adequately identify, prevent, report, and thwart mortgage fraud activity. The FBI’s Financial Crimes Criminal Investigative Division (CID) and Financial Crimes Intelligence Unit are aggressively and cooperatively reporting the latest developments and pertinent data to empower the nationwide mortgage fraud task force.

As mortgage fraud crimes escalate, the burden on federal law enforcement increases. With the anticipated upsurge in mortgage fraud cases, the FBI employed additional strategies to proactively address the crime problem. The FBI works with the Department of Justice (DOJ)-Mortgage Fraud Working Group on a number of mortgage fraud related issues, including the creation and finalization of standard loss valuation criteria associated with mortgage fraud violations, and assisting the banking industry with the construction of a centralized repository of mortgage-related documentation.

The valuation criteria and mortgage related documentation is where real estate property appraisers and their appraisals provided lenders are going to increasingly be monitored and regulated in the near future.

Currently the FBI has mortgage fraud working groups or task forces in 32 field divisions across the country. The FBI divisions stationed in Florida are based out of Miami and Tampa. Moreoever the FBI continues to encourage the use of undercover operations as an effective technique to address mortgage fraud.

The recent stock market crashes across global markets have strongly affirmed, mortgage fraud if not dealt with has the potential to cripple the American economy and all foreign economies closely connected to it. Suspicious Activity Reports (SARs) from financial institutions indicate an increase in mortgage fraud. SARs increased 31-percent to 46,717 during Fiscal Year (FY) 2007. The total dollar loss attributed to mortgage fraud is unknown. However, 7 percent of SARs filed during FY 2007 indicated a specific dollar loss, which totaled more than $813 million.

Subprime mortgage issues remain a key factor in influencing mortgage fraud directly and indirectly. The subprime share of outstanding loans has more than a doubled since 2003 putting a greater share of loans at higher risk of failure. Additionally, during 2007 there were more than 2.2 million foreclosure filings reported on approximately 1.29 million properties nationally, up 75 percent from 2006. The declining housing market affects many in the mortgage industry who are paid by commission. The FBI says during declining markets, mortgage fraud perpetrators may take advantage of industry personnel attempting to generate loans to maintain current standards of living.

Many of the key industry personnel often involved are real estate property appraisers valuing the homes and properties prior to bankers signing off on loans.

Data from law enforcement and industry sources identify the states most affected by mortgage fraud during 2007 and indicated that the top 10 mortgage fraud states for 2007 were Florida, Georgia, Michigan, California, Illinois, Ohio, Texas, New York, Colorado, and Minnesota.

The downward trend in the housing market provides an ideal climate for mortgage fraud perpetrators to employ a myriad of schemes suitable to a down market. Several of these schemes have emerged with the potential to spread as the recent rise in foreclosures, depressed housing prices, and decreased demand place pressure on lenders, builders, and home sellers. Emerging and re-emerging schemes for 2007 included builder-bailouts, seller assistance, short sales, foreclosure rescue, and identity thefts exploiting home equity lines of credit.

Fraudulent practices have become dreadfully systemic within the mortgage industry, as unrestrained mortgage fraud has bankrupted some of the best and longtime solid financial institutions. If the FBI fails to quickly regulate, enforce, and imprison fraudulent professionals within the banking and real estate industry, expect to see the dollar tank along with the U.S. economy. After which consumers will only be able to buy gold, Euros, or China’s Yuan to protect their life savings and investments.

Real estate property appraisers therefore may be the last line of defense to maintain accountability and accuracy before straw buyers succeed in excessively borrowing beyond the market value of a property’s worth and thereby jeopardize the security of loans throughout the banking industry.

Real estate property appraisers must like never before show due diligence when representing their fiduciaries the banks and report to legal authorities any manipulative and coercive attempts by lenders and borrowers to adjust property valuations they sign off on in their appraisal reports.

[b]Mid-State Appraisals founder Paul Davis is a trusted and reputable property appraiser frequently called upon by Central Florida’s banks, homeowners, and real estate investors to assess property values. A builder for over 20 years and also a real estate broker, Paul Davis brings a wealth of knowledge to the table as an appraiser.[/b]


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Foreign Currency Exchange Swap Lines – What Central Banks are Whispering?

In response to continued strains in short-term funding markets, Central Banks across the world have coordinated actions to significantly expand the capacity to provide U.S. dollar liquidity. Central banks publicly commit to continue to work together closely and say they are prepared to take appropriate steps as needed to address funding pressures.

This should serve to drive up the value of the dollar on the short-term (for a month or so) until fear and panic eventually take hold and Central Banks one by one begin dumping dollars.

That being said, there are some short-term possible gains for those who invest in the dollar and substantial long-term gains for those who sell dollars while they are high and opt to invest and protect their savings in strong currencies such as the Euro and Chinese yuan. Of course a safe haven for consumers and investors with less intestinal fortitude would be gold.

The U.S. Federal Reserve announced several initiatives to support financial stability and to maintain a stable flow of credit to the economy during this period of significant strain in global markets.

The Fed commits to continue to adapt these liquidity facilities as necessary and will keep them in place as long as circumstances require.

Actions by the Federal Reserve include:  (1) an increase in the size of the 84-day maturity Term Auction Facility (TAF) auctions to $75 billion per auction from $25 billion beginning with the October 6 auction, (2) two forward TAF auctions totaling $150 billion that will be conducted in November to provide term funding over year-end, and (3) an increase in swap authorization limits with the Bank of Canada, Bank of England, Bank of Japan, Danmarks Nationalbank (National Bank of Denmark), European Central Bank (ECB), Norges Bank (Bank of Norway), Reserve Bank of Australia, Sveriges Riksbank (Bank of Sweden), and Swiss National Bank to a total of $620 billion, from $290 billion previously.

These steps are being undertaken in an attempt to mitigate pressures evident in the term funding markets both in the United States and abroad.  The Federal Reserve’s actions are desiring to reassure financial market participants that financing will be available against good collateral, which they hope will lessen concerns about funding and rollover risk.

84-Day Maturity TAF Auctions
The increase to $75 billion per auction will triple the supply of 84-day maturity credit to $225 billion from $75 billion.  TAF credit at the 28-day maturity will remain at $75 billion.  The total amount of TAF credit available in the 28-day and 84-day auction cycles will double to $300 billion from $150 billion.

Foreign Exchange Swap Lines
The Federal Open Market Committee (FOMC) has authorized a $330 billion expansion of its temporary reciprocal currency arrangements (swap lines).  This increased capacity will be available to provide funding for U.S. dollar liquidity operations by the other central banks.  The FOMC has authorized increases in all of the temporary swap facilities with other central banks.  These larger facilities will now support the provision of U.S. dollar liquidity in amounts of up to $30 billion by the Bank of Canada, $80 billion by the Bank of England, $120 billion by the Bank of Japan, $15 billion by Danmarks Nationalbank, $240 billion by the ECB, $15 billion by the Norges Bank, $30 billion by the Reserve Bank of Australia, $30 billion by the Sveriges Riksbank, and $60 billion by the Swiss National Bank.  As a result of these actions, the total size of outstanding swap lines is $620 billion.

All of the temporary reciprocal swap facilities have been authorized through April 30, 2009.

Dollar funding rates abroad have been elevated relative to dollar funding rates available in the United States, reflecting a structural dollar funding shortfall outside of the United States.  The increase in the amount of foreign exchange swap authorization limits will enable many central banks to increase the amount of dollar funding that they can provide in their home markets.  This should help to improve the distribution of dollar liquidity around the globe. Whether the value of the dollar holds on the long term against inflation and deflation however is highly unlikely.

That being said, there are some short-term possible gains for those who invest in the dollar and substantial long-term gains for those who sell dollars while they are high and opt to invest and protect their savings in strong currencies such as the Euro and Chinese yuan. A more cautious and safe route for consumers and investors is also found in the safe haven of gold.

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IMF warns of financial meltdown – Eurozone Strengthens, U.S. Dollar Weakens

The IMF warns that the global financial system is on the brink of a massive meltdown, while France and Germany push ahead with a pan-European crisis response to try to prevent the worst global downturn in decades.

What can one do in such perilous times other than buy gold and invest your savings in Euros before the dollar becomes obsolete.

At a joint news conference, French President Nicolas Sarkozy and German Chancellor Angela Merkel said they had “prepared a certain number of decisions” to present at a Sunday meeting of European leaders as they work feverishly to restore blocked credit markets to working order.

International Monetary Fund stressed that time was running short after leading industrialized nations failed to agree on concrete measures to end the crisis at a meeting on Friday.

“Intensifying solvency concerns about a number of the largest U.S.-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown,” IMF chief Dominique Strauss-Kahn said.

Low levels of confidence in America’s financial system has caused widespread panic to swiftly sweep through global markets, driving stocks to a five-year low on Friday and prompting banks to protectively hoard cash. That has devastatingly choked off lending to businesses and households, threatening to turn a global economic recession into a dangerously deep depression for perhaps years. Many across America are losing their homes, as is now the case in Australia.

An emergency meeting of euro zone leaders on Sunday will discuss a bank rescue package, taking a British initiative to guarantee lending between banks as a reference point, a source close to the French presidency said.

France’s Sarkozy said euro zone countries were working on a joint solution, but declined to provide specifics. He planned to meet with British Prime Minister Gordon Brown shortly before Sunday’s euro zone gathering.


Britain’s rescue plan, launched last week, makes available 50 billion pounds ($86 billion) of taxpayers’ money for injection into its banks and, crucially, calls for underwriting interbank lending, which has all but frozen around the globe.

The world’s richest nations vowed on Friday to take all necessary steps to unfreeze credit markets and ensure banks can raise money but they offered no real specifics on a collective course of action to avert the recession threat. Hence can anyone be sure when so much is promised, but so little usually done in America?

In a surprisingly brief statement after a 3-1/2 hour meeting, the G7 — the United States, Britain, Canada, France, Germany, Italy and Japan — stopped short of backing the British interbank lending guarantee, something many on Wall Street saw as vital to end growing market panic.

Kenneth Rogoff, a Harvard University professor and former IMF chief economist, said the G7 would have been better served adopting some version of the British plan so that banks would feel confident enough to loosen their grip on lending.

“Saying that they’ll take all steps necessary leaves hanging the question of whether they know what is best and necessary,” he told Reuters. “It was a signature moment for the G7. I think markets are going to be very disappointed.”

European Central Bank President Jean-Claude Trichet said markets needed time to digest a series of dramatic steps taken by world central banks in recent days, including pouring billions of dollars into financial markets and lowering interest rates in the broadest coordinated cut on record.

There are signs the U.S. economy is credit-starved and deteriorating fast. American auto makers have been hammered by the credit crunch. GM and Chrysler, two struggling auto makers, are considering a merger to secure cash and cut expenses.

Financial weekly Barron’s reported that GM was preparing to approach the U.S. Federal Reserve about borrowing money directly from the central bank. Many wonder just how many companies and banks the central bank in the United States can bail out before going bankrupt itself?

Some speculate the FDIC insuring American banks deposits will declare bankruptcy next.

What can one do in such perilous times other than buy gold and invest your savings in Euros before the dollar becomes obsolete.

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Before the Dollar Dies – Protect Your Savings, Deflation Nightmare

Put your money in Euros or gold.

The death of the dollar is imminent. Before the greenback has its final heart attack, get ahead of the next catastrophe on Wall Street.

Paul F Davis – worldwide speaker, author, and prophet

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