Tuesday, January 31, 2017

Fritz on steroids

From: John Sellers [mailto: jasellers123@gmail.com] 
Sent: Tuesday, January 31, 2017 2:27 PM
To: 'Tully, Stephen W.' <STully@hinshawlaw.com>
Subject: RE: John Kemper Subpoena

Mr. Tully
No confusion at all as I take it that this also constitutes a refusal of waiver of service by Mr. Rakusin. And yes, today’s date is indeed the 31st of January
With regards to our conversation on “defamation”, and so our memories do not dim:
  1. As I heard it, you had not yet read my email when we spoke but saw fit to reference “criminal enterprises”. I would suggest you consult a good criminal attorney to learn the nuances of that
  2. If you would like some expert witnesses on Enron, I can provide quite a few. As any lawsuit might involve me, I guess I would be wasting my time applying (???).
  3. I misspelt the name of the blog. Our correspondence is there at www.arizonahoa.blogspot.com
  4. Please check it out and use your efforts to mitigate any damages you feel might be appropriate. If you feel anything is truly defamatory, I would certainly want to know to correct it
  5. As to the “issues” you said I might have, I am under a bit of stress at the moment. We have a new puppy arriving on Thursday and our current attack dog is playing up a little bit. I think he knows somethings up
  6. Other “issues” I suppose could include ensuring that FirstService, with its banks, is complying with the Patriot Act, not running a shadow banking business, properly protecting ACH direct debit authorities from ISIS incursion, and it is not functioning as general partner via “substantive consolidation in bankruptcy” with the HOA’s it “manages”
  7. Please also confirm that FirstService did indeed receive the required 90-day minimum notice of a potential derivative suit which was faxed to Mr. Kemper
Please also let me know how much the witness fee of $12/day plus transport comes to for Mr. Kemper.
John Sellers
From: Tully, Stephen W. [mailto:STully@hinshawlaw.com]
Sent: Tuesday, January 31, 2017 2:03 PM
To: John Sellers (jasellers123@gmail.com) <jasellers123@gmail.com>
Subject: John Kemper Subpoena
Mr. Sellers, 
I have been authorized by Mr. Kemper to accept the service of your subpoena on his behalf.  I am not authorized to accept the subpoena of Mr. Rakusin.  So there is no confusion. The  date of the acceptance would be today January 31, 2017.  Please confirm your agreement.
Stephen W. Tully
Hinshaw & Culbertson LLP
From: John Sellers [mailto:jasellers123@gmail.com]
Sent: Tuesday, January 31, 2017 10:54 AM
To: STully@hinshawlaw.com
Cc: See below
Subject: Is First Service hiding out on the RESERVATION?

Mr. Tully
You have not returned my phone call of last night to see if you would agree a waiver of service on Mr. Kemper of First Service for an OAH Hearing. See attached. I would like to ask you one more time before we serve him at home. This we obviously prefer not to do. To avoid that, see our earlier fax confirmation of Jan 16, 2017 sent to Mr. Kemper & FirstService in-house risk management in Laguna Beach over 10 days ago requesting a waiver. No response was received. 
As you correctly point out in your letter attached, SRP is an independent sovereign nation, a deservedly proud one, and I certainly understand their need for that respect. Even though you may be TECHNICALLY within your rights, you are clearly using that to make service as Statutory Agent quite difficult. It's an appalling commercial decision.
As an international banker with considerable experience in cross border flows, I'm shocked at the ramifications of your actions. Not all of which will be obvious at first blush. I'm sure I've missed a few.
  1. FirstService manage 255 HOA's in the Phoenix/Scottsdale area. See attached. Mr. Kemper is statutory agent for all of those and they are reimbursed for that under their Management Agreement
  2. Is First Service seriously trying to use independent nation status to prevent legitimate service on all those HOA's?
  3. Is that the reason they're there?
  4. FirstService is a totally unlicensed firm. Yet we estimate they manage $100million HOA cash in Arizona alone. As much as $3billion nationally which dwarfs their own extremely modest cash
  5. See my analysis of them by clicking IS FIRST SERVICE REALLY A BANK?
  6. They have a negative tangible net worth with a lot of secured debt. They look like Enron on steroids and I have personal experience of that
  7. What happens if they "disappear"?
  8. Would Homeowners be allowed to cross over Pima Rd to collect records and bank details?
  9. How would the AG's Office investigate fraud which is rampant in HOA's

CAB (now Mutual of Omaha Bank) has a branch I believe on the reservation. They just emailed me two days ago bragging they have now amassed over $4billion of HOA deposits from their own recent publicity. That's 75% of all their deposits I think
See our LETTER YESTERDAY TO GOVERNOR DUCEY where they talk about this
  1. What happens if they run into trouble and need the odd $1billion as happened to then in 2008.?

Our HOA at Vintage is still trying to recover $430,000 of cash from FirstService held at US Bank after they abruptly resigned some months ago after refusing to answer some simple banking questions. I would have no problem if that money were in the tribes hands. But it's in the hands of a private company on the reservation. FirstService is functioning as a shadow bank
  1. Could that money be safer in Panama or some other offshore bank Centre?
  2. Can you run a money management business on tribal lands?
  3. Under whose ambit would a bank operating in a sovereign nation be regulated?
  4. Would they be still subject to the Patriot Act?

I could go on but won't because, as much experience as I have in these matters with tax, exchange controls, I know there are ramifications I've missed
Kindly respond so we might avoid disturbing Mr Kemper at home

John Sellers
6231 East Mark Way, Unit 12
Cave Creek
Arizona 85331
Tel: 928 310 8220

Salt River Pima-Maricopa Indian Community
Sondra Acedo                    Court Administrator                                        Sondra.Acedo@srpmic-nsn.gov
Kierstin Anderson            Managing Attorney                                         Kierstin.Anderson@srpmic-nsn.gov        
Kent Andrews                   Assistant Community Manager                   Kent.Andrews@srpmic-nsn.gov
David Antone                    Tribal Council Member                                  David.Antone@srpmic-nsn.gov
Carla Banuelos                  Assistant Community Manager                   Carla.Banuelos@srpmic-nsn.gov              
Michael Dallas                   Tribal Council Member                                  Michael.Dallas@srpmic-nsn.gov
Brian Garza                         Assistant Court Administrator                     Brian.Garza@srpmic-nsn.gov    
Martin Harvier                   Vice President                                                   Martin.Harvier@srpmic-nsn.gov
Jenelle Howard                 Tribal Council Members                                Jenelle.Howard@srpmic-nsn.gov             
Lena Jackson                      Assistant Community Manager                   Lena.Jackson@srpmic-nsn.gov  
Archie Kashoya                 Tribal Council Member                                  Archie.Kashoya@srpmic-nsn.gov             
Thomas Largo                    Tribal Council Members                                Thomas.Largo@srpmic-nsn.gov
Ricardo Leonard               Tribal Council Member                                  Ricardo.Leonard@srpmic-nsn.gov           
Bryan Meyers                    Community Manager                                      Bryan.Meyers@srpmic-nsn.gov
Delbert Ray                         President                                                             Delbert.Ray@srpmic-nsn.gov    
Deanna Scabby                 Tribal Council Member                                  Deanna.Scabby@srpmic-nsn.gov             
Michael Shiel                     General Counsel                                               Michael.Shiel@srpmic-nsn.gov 
Lynelle Trujillo                   Court Executive Secretary                            Lynelle.Trujillo@srpmic-nsn.gov
Governors Office
Mike Laburdi                      Chief Counsel                                                    Governor Duceys Office
Governor's Office of Tribal Relations
Kristine FireThunder       Executive Director
Judith Lowe                        Commissioner
Louis Dettore                     Assistant Commissioner
Attorney Generals Office
Mark Brnovich                   Attorney General
City of Scottsdale
Brian Biesemeyer            Town Manager                                                  bbiesemeyer@scottsdaleaz.gov
Suzanne Klapp                   ViceMayor                                                          sklapp@scottsdaleaz.gov            
Virginia Korte                    Councilman                                                        vkorte@scottsdaleaz.gov            
Jim Lane                               Mayor                                                                   jlane@scottsdaleaz.gov
Kathy Littlefield                 Councilman                                                        klittlefield@scottsdaleaz.gov     
Linda Milhaven                 Councilman                                                        lmilhaven@scottsdaleaz.gov     
Guy Phillips                         Councilman                                                        gphillips@scottsdaleaz.gov         
David Smith                        Councilman                                                        dnsmith@scottsdaleaz.gov        
Brent Stockwell                 Town Manager                                                  bstockwell@scottsdaleaz.gov    
Bruce Washburn              Attorney                                                              bwashburn@scottsdaleaz.gov  
Michael Wright                 Attorney                                                              mwright@shermanhoward.com
From: Hoffmann, Trish [mailto:THoffmann@hinshawlaw.com]
Sent: Monday, January 30, 2017 4:13 PM
To: jasellers123@gmail.com
Cc: Tully, Stephen W. <STully@hinshawlaw.com>
Subject: Subpoena of John Kemper

Attached is a letter of today's date from Stephen Tully.  Please contact Mr. Tully at the direct dial number in the letter or at the email address above if you have any questions.

Trish Hoffmann
Hinshaw & Culbertson LLP
2375 East Camelback Road, Suite 750, Phoenix, AZ, 85016
Tel: 602-383-6006 | Fax: 602-631-4404
THoffmann@hinshawlaw.com | hinshawlaw.com

Hinshaw & Culbertson LLP is an Illinois registered limited liability partnership that has elected to be governed by the Illinois Uniform Partnership Act (1997).

The contents of this e-mail message and any attachments are intended solely for the addressee(s) named in this message. This communication is intended to be and to remain confidential and may be subject to applicable attorney/client and/or work product privileges. If you are not the intended recipient of this message, or if this message has been addressed to you in error, please immediately alert the sender by reply e-mail and then delete this message and its attachments. Do not deliver, distribute or copy this message and/or any attachments and if you are not the intended recipient, do not disclose the contents or take any action in reliance upon the information contained in this communication or any attachments.

Thursday, January 26, 2017

Email to Trestle Management re their support for regulating HOA Management Co's

From: John Sellers [mailto: jasellers123@gmail.com]
Sent: Wednesday, January 25, 2017 11:43 AM
To: Marc Vasquez <mvasquez@trestlemanagement.com>
Cc: jhancock@trestlemanagement.com; jbaska@trestlemanagement.com
Subject: Disclosure - A Dilemma

Our good friends at Carpenter continue to market the myth that an Administrative proceeding is a lawsuit. They will never give up on that, even when/if they are told by a Judge.
There are houses for sale and the seller has to make certain HOA disclosures as to lawsuits. See attached. Technically, because there are less than 50 units, that obligation falls to the seller. Which creates an awkward situation
The Board and the whole membership is on public record via the filings made by CHDB and their records denial on the Board behalf that there is a “lawsuit”. That message has been communicated far and wide by them.
Having to disclose an Administrative proceeding as a lawsuit is like having to disclose an animal complaint that is being adjudicated by the local animal control. We would disclose everything but not as a lawsuit
Also, case numbers mean something. Try going down to the local courthouse and enforce an ALJ’s Order. They won’t even accept it or recognize it.
Whether the $100,000 is insured by the FDIC is of course a material item in anybody’s book.
We hope to organize a conference call with the FDIC to discuss their already existing position in writing. You’re welcome to join as stated in the meeting.
Does Trestles position as stated in the meeting remain that you support regulation of Management Companies?
If so I’d like to quote you on that and there are some press members who’d love to talk to you.
John Sellers
Letter to Board Members laying out the facts on FDIC Insurance
From: John Sellers
Sent: Thursday, 19 January, 07:26
Subject: Elections
After your years of service on the (Redacted) Board, I’m sure from this week’s Board Meeting, people are thrilled you’re running again. I was also delighted to see in your candidacy statement that you consider looking after the Association assets seriously. Few Board members realize the burden as fiduciary that carries. I assume therefore you agree with taking no risks of any kind with our $100,000+ deposit with Mutual of Omaha.
Based on the FDIC EMAIL I gave to (Redacted) in the Meeting, the FDIC has unambiguously stated the requirement for FDIC insurance to flow through to us. Trestle must be named somehow as “fiduciaries” in the account documentation – not just agent. The ONLY reference to us as beneficial owners of that deposit in the whole PACKAGE given to me, so far, is where we appear as two names together on the bank statement. No mention of fiduciary. All the other documentation names Trestle as the customer. See attached
  1. Are we FDIC insured?
  2. Mutual is assuring us that our deposits are safe. See THEIR LETTER received yesterday attached. What is that indemnity worth if they go belly up and the FDIC insurance is not valid?
Thanks for service and look forward to your response
John Sellers


Click HERE for the link to the 11MB pdf file comprising the fully compiled list of Superior Court Cases in Arizona since 2007 involving HOA’s.  

At a mere $10,000 say per case …..
That’s $167million of legal fees

All duplications have been eliminated. Where in doubt, say a dispute with a landscaper not a homeowner, that was eliminated too. If a homeowners name does not appear, do not be surprised because cases were selected by doing an electronic sort in most cases by attorney name. As long as one of the attorneys was involved for the HOA, your case should be there.

We respectfully respect the attorneys involved to put up or shut up on these facts. Any errors will of course be corrected.

Source: Bulk data pursuant to Rule 123 from the three arms of Arizona Superior Court

Sunday, January 22, 2017

Comments to and reprint with credit to the New York Times - the next crisis?

See the article below with comments sent to the author

To: Julie (Creswell – New York Times).
I believe I've identified the next real estate crisis and your article is at the Nexus of that.
62 million homeowners live in HOAs. Those homeowners pay $75billion annually in dues. With $50billion of cash.
All those monies are handled and managed by a shadow banking system called totally unlicensed Management Companies. The biggest of which being FirstService which I believe having spotted the first Enron long before, is the next one. Plus, we have an industry ignoring the Patriot Act, abusing the ACH money transfer system raising the spectre of ISIS intrusion. There's more. FDIC insurance we believe is faulty. But the worst is where because of PUD riders in mortgages for HOAs, if FirstService disappeared, millions of homeowner’s current on mortgages could be in default.
Hers the Nexus with your article and it's common with subprime.
Whenever you get new mortgage provider entrants, they don't have the capacity to be gracious with "minor" defaults as their predecessors. Especially if interest rates rise incentivising them to force higher rates on borrowers.
Quicken Loans, the New Mortgage Machine
A Mortgage Lender Digs In Its Heels The New York Times
DETROIT — A low buzz fills the air as an army of mortgage bankers, perched below floating canopies in a kaleidoscope of vivid pinks, blues, purples and greens, works the phones, promising borrowers easy financing and low rates for home loans.
By the elevators, nobody blinks when an employee wearing a pink tutu bustles past. On any given day, a company mascot, Simon, a bespectacled mouse, goes on the hunt for “gouda,” or good ideas, from the work force.
A visit to the headquarters of Quicken Loans in downtown Detroit may seem like a trip to a place where “Glengarry Glen Ross” meets Seussville. But the whimsical, irreverent atmosphere sits atop a fast-growing business in a field — the selling of the American dream — that has changed drastically since an earlier generation of mortgage lenders propelled the economy to near collapse in 2008 by issuing risky and even fraudulent loans.
In the years since the crisis, many of the nation’s largest banks pulled back their mortgage-lending activities. Quicken Loans pushed in. Today, it is the second-largest retail mortgage lender, originating $96 billion in mortgages last year — an eightfold increase from 2008.
Privately held Quicken, like some of America’s largest banks before it, has also landed in regulators’ cross hairs. In a federal false-claims lawsuit filed in 2015, the Department of Justice charged that, among other things, the company misrepresented borrowers’ income or credit scores, or inflated appraisals, in order to qualify for Federal Housing Administration insurance. As a result, when those loans soured, the government says that taxpayers — not Quicken loans — suffered millions of dollars in losses.
Quicken Loans today is the F.H.A. insurance program’s largest participant.
Executives at Quicken Loans deny the charges, maintaining, among other things, that the government “cherry-picked” a small number of examples to build its case. In an aggressive move, the company pre-emptively sued the Department of Justice, demanding a blanket ruling that all of the loans it had originated met requirements and “pose no undue risks to the F.H.A. insurance fund.”
Quicken’s suit was dismissed. But it reflects the in-your-face style of Quicken Loans’ founder and chairman, Dan Gilbert, the billionaire who once publicly excoriated the N.B.A. superstar LeBron James for leaving the Cleveland Cavaliers, in which Mr. Gilbert has a majority stake. He also owns significant chunks of central Detroit, where Quicken Loans is based.
Mr. Gilbert, who founded the company in 1985, sold it to the business software company Intuit in 1999, before buying it back with other investors in 2002.
He is working to rectify the city’s downtrodden image with streetcars, upscale cafes and boutiques, and fiber-optic data, making him a hometown hero. Late last year, Quicken Loans won a motion to move the Department of Justice case to a federal courthouse roughly three blocks from its Detroit headquarters.

Sitting on the edge of a chair in his office, the Motor City’s skyline a steel gray in the late-afternoon November sun, Mr. Gilbert said that his company has been unfairly targeted. “You want to know what this case is about?” he said. “Somebody probably put up a whiteboard and said, ‘Here are the 10 largest F.H.A. lenders, now go and collect settlements from them, regardless of whether they did anything wrong.’”
In court documents, Quicken argues it has the lowest default rates in the F.H.A. program. It projects the government will reap $5.7 billion in net profits from the insurance premiums for loans made from 2007 to 2013, after paying out any claims.
A spokesman for the Department of Housing and Urban Development, which is home to the F.H.A. program at the center of the case against Quicken, declined to speak about the lawsuit.
Late last year, Donald J. Trump named a former Quicken Loans lobbyist, Shawn Krause, to his H.U.D. transition team. A Trump spokeswoman did not respond to an email asking about potential conflicts of interest. In an emailed statement, Quicken Loans said the fact that Ms. Krause had come from the largest F.H.A. lender in the country “bodes well for the positive impact she has, and will, make on H.U.D.”
In the years since the financial crisis, Quicken has emerged as a leader in the nation’s shadow-banking system, a network of nonbank financial institutions that has gained significant ground against its more heavily regulated bank counterparts in providing home loans to Americans. Increased regulation and decreased profits sent the nation’s banks packing.
Nonbanks, like Quicken, have filled that gap. Today, Quicken is the nation’s second-largest retail residential mortgage lender, behind Wells Fargo, but ahead of banking giants like J. P. Morgan, Bank of America and Citigroup, according to Mortgage Daily.
Considered by many to be a visionary leader, Mr. Gilbert often strikes a pugnacious stance. When Mr. James, the N.B.A. star, announced he was leaving the Cleveland Cavaliers in 2010 to join the Miami Heat, Mr. Gilbert — who not only has a majority stake in the Cavaliers, but also operates Quicken Loans Arena, where they play — penned a public tirade against the “cowardly betrayal,” in a letter written in the typeface Comic Sans.
Mr. James is again playing for the Cavaliers. A call to his agent seeking comment was not returned.
The year before, Mr. Gilbert got into an altercation at a bar mitzvah, punching a former colleague, David Hall, in the head before he was escorted out by security, according to interviews conducted by the Birmingham Police Department in Michigan. In police documents, Mr. Gilbert’s lawyer said Mr. Hall filed the complaint in order to pressure Mr. Gilbert into paying $2 million to buy out Mr. Hall’s investments in Mr. Gilbert’s companies. The Birmingham city attorney ultimately denied a warrant in the case on the grounds that the charges were not “supported by probable cause.”
Mr. Hall did not return an email seeking comment. In an email statement, a Quicken Loans spokesman said Mr. Gilbert “defended himself in a minor confrontation that was instigated by a former employee who was the aggressor.”

On a more trifling scale, after sending text messages about this article to a reporter at The New York Times but not receiving a response — Mr. Gilbert was texting her landline number by accident — he followed up with an email accusing the reporter of disconnecting her mobile phone to avoid him. The phone “likely is one of your temporary numbers that you deploy for the surreptitious work that you do,” he wrote.
When alerted to the misunderstanding, Mr. Gilbert apologized “for any of it that was caused on my end.”
When Mr. Gilbert was asked in an email if he “often strikes a ‘combative stance’ or ‘frequently attacks his critics,’” a Quicken Loans spokesman responded in an email, “It’s interesting that when someone with as long and successful career as Mr. Gilbert is forced to defend his integrity and honor from old and/or insignificant already rehashed incidents and accusations from a media source as credible as The NY Times, you would imply that doing such is ‘frequently attacking’ his critics.”
These days, Mr. Gilbert appears to be itching for a fight with the Justice Department. In court filings, Quicken argued that the three-year government investigation was based on 55 “cherry-picked” loans out of nearly 250,000.
Quicken also argued that a longstanding F.H.A. process to resolve loans that did not meet its requirements, through either the repurchase of the loan or by indemnifying F.H.A. from any losses, was retroactively discontinued for Quicken.
Since 2011, Mr. Gilbert has spent more than $2.2 billion on downtown Detroit, buying up 95 decrepit properties and rehabilitating them in an effort to lure new tenants. Nike opened a store there last year. The New York burger chain Shake Shack is coming in 2017, as is the sports retailer Under Armour. Mr. Gilbert also notes that he has leased space downtown to several local minority-owned start-up businesses.
That sort of presence makes downtown Detroit today seem a bit like a company town, a sort of Quickenville. That’s because Quicken Loans is just one of more than 100 closely knit companies that is owned or controlled by Mr. Gilbert with a footprint in the area. Through his commercial real estate properties, Mr. Gilbert can decide which tenants fit into his vision for downtown Detroit, and which don’t.
Rocket Fiber, an idea developed by three former Quicken Loans technology employees and financially backed by Mr. Gilbert, has brought high-speed internet to downtown Detroit. For a $15 million donation, Quicken received the naming rights for the QLine, a streetcar that is expected to start running through downtown Detroit this spring. Mr. Gilbert sits on the board of the streetcar project.
Lines of bicycles in downtown Detroit are available free for all employees of Mr. Gilbert’s companies. And visitors can bet at the tables at Jack Detroit Casino-Hotel Greektown, a gambling venture controlled by Mr. Gilbert.
The Quicken Loans family also includes one of the largest title companies in the United States, an appraisal firm, a call center and In-House Realty, which says on its website that it is the “preferred real estate partner” of Quicken Loans.

Mr. Gilbert, who was busted in college for running a football betting ring (the charges were dismissed and his record was expunged), plays on a big stage. Back in 2010, he guaranteed that the Cavaliers would win the N.B.A. championship before LeBron James would. They didn’t, but the team, led by Mr. James, did win the title last year, and this season’s team has the highest payroll in the league.
With Quicken Loans, Mr. Gilbert has built a game-changing company in the once-staid mortgage-lending industry.
Former executives describe Quicken Loans as a technology company that sells mortgages. But the heart that keeps Quicken’s blood moving is the 3,500 mortgage bankers who work its phones. Many new employees come in with little to no background in financial services. One employee joined after delivering pizzas to the Quicken Loans office and becoming interested in working there.
Entry-level employees typically make hundreds of calls a day, trying to get potential customers on the phone. Not unlike the assembly lines that put together cars in Detroit, the call is immediately handed off to a licensed mortgage banker, who completes the loan application, then quickly passes it to processing so that he or she can focus on the next loan application.
Mr. Gilbert said clients are able to close more quickly on loans when specialists focus on each stage of the loan process. He and other Quicken executives note that the company has repeatedly made Fortune magazine’s list of Best Places to Work For and has earned top marks in J. D. Power client satisfaction surveys.
Quicken defines its culture and philosophy through a number of so-called “isms,” created and curated over the years by Mr. Gilbert: “Yes before no.” “A penny saved is a penny.” “We eat our own dog food.”
At the same time, several former employees and executives in interviews described a demanding work environment, with staff members expected to work long hours and weekends to hit targets. In recent years, Quicken and its affiliated companies have faced at least four lawsuits filed by former mortgage bankers seeking overtime.
Quicken won one of the overtime cases, but court documents indicate others were directed into settlement negotiations. An email to the various plaintiffs’ lawyers was not returned.
And in early 2016, a National Labor Relations Board judge ruled that Quicken and five of its related companies issued an employee handbook with rules that violated workers’ right to engage in various activities, including union-related ones. Quicken has appealed the ruling, calling the policies “common, rational and sensible.”
When asked about criticisms of the work environment, Mr. Gilbert and other executives defended the company, noting that mortgage bankers work an average of 44 hours per week and are compensated well. It is possible for team members, Mr. Gilbert said, to earn over $85,000 in their second year, more than double the median household income for Wayne County, Mich.
Quicken Loans’ growing role in parts of the mortgage market may make it a lightning rod for critics.
Proponents say that nonbanks like Quicken or PennyMac in California — which was started by former executives of Countrywide, the mortgage machine in Southern California that was a hotbed of toxic mortgages in the 2008 crisis — are filling an important void. They argue that they serve people with low to moderate incomes or lower credit scores whom the big banks shun. The big banks, they say, focus instead on so-called jumbo mortgages, or mortgages of more than $424,100, the maximum amount that can be backed by government-sponsored enterprises like Fannie Mae and Freddie Mac.
“The large banks want to go after the higher-end business,” said Guy D. Cecala, the chief executive and publisher of Inside Mortgage Finance.
Thanks to low interest rates, home sales are booming and the mortgage market was expected to top $2 trillion in originations in 2016. That’s a far cry from the frothy height of $3.8 trillion that was hit in 2003.
Moreover, many other parts of the mortgage machine that were in place leading up to the financial crisis have been dismantled.
Still, critics say today’s shadow banks, by focusing on the riskier end of the mortgage market, may be revving up the same parts of the engine that resulted in defaults and foreclosures in the past. Nonbanks, which are typically less capitalized and may have more difficulty reimbursing the government for bad loans, now dominate F.H.A.-insured mortgage loans, according to data from the American Enterprise Institute’s International Center on Housing Risk.
In September 2012, banks originated 65 percent of the purchase-mortgage loans insured by the F.H.A., according to the data. Today, that number has more than flipped: Nonbanks originate 73 percent of the loans, with banks’ share dropping to 18 percent.
The figures are more spectacular for refinanced mortgages, where nonbanks now make up 93 percent of loans.
“The market has moved to the nonbanks because the nonbanks’ appetite for risk is much higher,” said Edward J. Pinto, a director of the Center on Housing Risk. He has argued that the F.H.A. is not only failing to help low-income communities with its programs, but is actually weakening them with imprudent loans.
Mr. Gilbert disputed any “false narrative” that claims Quicken faces less regulatory scrutiny, is lightly capitalized or makes risky loans. He said that the average credit score of a Quicken borrower is one of the highest in the nation; that the parent company’s assets “are larger than that of 93 percent of all F.D.I.C.-insured depositories”; and that the company is regulated by 50 states, multiple municipalities and numerous federal agencies. Quicken Loans is privately held, and it is unclear what its assets are worth.
In an email response to follow-up questions, Mr. Gilbert added, “Quicken Loans underwriting and production is one of the highest, if not the highest, quality production in the entire country.”

Saturday, January 7, 2017

Have you ever been "SLAPPED" by your HOA?

Whilst HOA transparency issues are vital, the Bill of Rights, including the “right to petition government”, contains FUNDAMENTAL RIGHTS emanating from the Magna Carta in 1215 when King John chopped off the heads of complainers. If these fundamental rights are suspended for the 60 million citizens living in HOA’s, the game is over.
One of the most common complaints from homeowners is of lawyers writing threatening letters, and filing injunctions, when HOA members have the temerity to write, email, or even contact their Board Members and/or fellow members asking questions.  To see examples, click HERE
Our proposed legislative fix – extend Arizona’s anti-SLAPP statute to homeowners petitioning their Board members.
But what on earth is anti-SLAPP?
SLAPP is an acronym standing for Strategic Litigation Against Public Participation. So, when you stand up at your Town Council to complain about a developer, or file a complaint with government, you are exercising your rights of Public Participation. If they sue you for doing that, they are trying to “chill your constitutional rights”.
Many states, starting with California, enacted anti-SLAPP statutes. In the interests of full disclosure, we won the first anti-SLAPP suit in California based on the “right to petition”. We’d complained to the Contractors Licensing Board about a crooked contractor. He sued us, was “SLAPPED” down, and eventually was three jurors short of punitive damages, in addition to a $1.3mm fraud judgment. Click HERE for details of that case.
If you believe you have been hit with a SLAPP suit, you must quickly file a Motion to Strike their suit. Many of the bad guys don’t realize they’re doing this. BUT, with anti-SLAPP, the court must clear its calendar to hear your Motion to Strike, all discovery stops, and a hearing occurs quickly. Usually within 45 days. If you are successful, the award of attorney’s fees is mandatory and a suit for malicious law suits can follow with painful results for the bad guys. None of this being dragged out for years by lawyers operating with other people’s money.
To learn more about Arizona's anti-SLAPP statute click HERE You can also get an independent view by clicking HERE. Also, check out the following video by clicking HERE  - a radio interview of me by Andy Ostrowski.
Although we have other legislative proposals, I believe nothing will tip the scales of justice more than this one bill. So, what are the reasons you should support it?
  • Arizona politicians intuitively support this, seeing HOA’s as a level of government below municipal. Just listen to one debate on HB2609 - The Harper Amendment
  • Even CAI via their long-standing lobbyist, Kevin DeMenna, agrees HOAs are a form of subsidiary government. Click HERE to watch his prior testimony acknowledging this. What’s good for the goose is good for the gander.
  • Don't get distracted that HOAs are corporations so can't be dealt with as governments. Much of US federal, state and local government is conducted through municipal and other corporations, especially for borrowings. 
  • Legal practitioners, insurers and others will behave differently. The improved ability to recover attorney’s fees under the statute, by GOOD attorneys, and quickly, eventually by malicious law suit damages, will encourage them to the HOA industry.  Whereas now, they can only work for those who can afford to lose. And when you hire attorneys, you get what you pay for. If you're forced to pay peanuts. You get monkeys. And the monkeys rule the roost now feeding off HOA moneys.
  • Good attorneys might work on a contingency basis for low income groups and it should attract the ACLU.
The exact details are below:
Folder 118 Title: Petition Right; condominiums; planned communities (Sponsor: Senator David Farnsworth)
This change seeks to establish ANTI- SLAPP protections (Strategic Litigation against Public Participation) to members of HOAs. Association members should be able to petition and question their local association boards without fear of intimidation and law suits simply for speaking their opinions or questioning their board.
Click HERE for the text of our proposed amendment

See also our overall package of LEGISLATIVE PROPOSALS 2017

Monday, January 2, 2017

Open letter to US Bank, Western Alliance & Mutual of Omaha Bank - a few words matter to the FDIC

The Chairmen & Board of Directors of
US Bank
Mutual of Omaha Insurance
Western Alliance Bank

Ladies & Gentlemen
I’m an Arizona HOA member but I’ve been a banker much longer than that. Click HERE. I can even remember when banks offered toasters to acquire deposits because, without them, as even Goldman Sachs found out, you can’t survive. In my experience, there’s only two ways to build your account deposit base:
  • Buy them by acquisition – not so easy and expensive
  • Offer toasters, bricks and mortar, advertising, higher rates - hard work and expensive
You can also do it on the cheap, short term, as Wells Fargo did but, at least in their case, they were opening accounts for people they knew already.
From basic banking documentation obtained from numerous HOA’s, your three banks, and others, have invented a new way of doing it on the cheap through wholesale harvesting of HOA deposits using HOA Management Companies. This already cost the FDIC $1bn in two banks in Arizona you know well in 2008. Not only are these Management Companies not licensed, their basic skill sets are managing landscaping contracts. Most of their staff would not know a debit or credit from a pretzel.
Bottom line:
  • You are ignoring the fundamental “know your client provisions” of the Patriot Act. With few exceptions, you have no idea who the ultimate depositor is. They could be drug dealers or worse. I think I’ve figured out how you justify it, but it reminds me of Enron & Arthur Anderson.
  • Direct Debit Authorities are flying around like confetti putting the ACH at risk.
  • HOA’s and the Management Companies are impossibly intermingled. If of them goes bankrupt, it would be an unholy mess. I’m involved in a live case where we may find out. Click HERE
  • The FDIC it appears has been very clear. Click HERE. Unless the bank account documentation reflects the words that Management Companies are acting as fiduciaries for an HOA, the FDIC insurance does not flow through to the deposit. Shades of Keating et al. And of course, if they did put those magic words in, Management Companies would find it impossible to escape regulation as the quasi shadow banks that companies like FirstService are really functioning as. Click HERE if you can find those magic words or even the name of an HOA on the bank account details there.
I could be wrong of course, not for the first time. But when I see people running for the hills – see ATTACHED from Mutual of Omaha and FirstService ATTACHED - to me that’s a sure sign they’ve been caught with their hands in the cookie jar.
My challenge to you:
  • Come onto our blog at www.arizonahoa.blogspot.com and explain why we are wrong. I’ll be the first to apologize.
  • Alternatively, we have at least two administrative hearing coming up noticed by the Arizona Dept of Real Estate as explained below. Please ensure we get the best of your best to testify.
AZDRE Petitions scheduled at the OAH per subpoena applications below:
AZDRE Pending Petition
John Sellers
Dennis Charlton, Arizona Department of Financial Institutions
Martin J. Gruenberg, FDIC Chairman,
Thomas J. Curry, U.S Comptroller of the Currency
Richard Cordray, Director, Consumer Financial Protection Bureau
John C. Williams, President and CEO, Federal Reserve Bank of San Francisco
Senator Elizabeth Warren
Industry Participants