Making Money Now

We see you out there — the future musicians of the world, pouring coffee, mixing drinks, designing websites for shifty moving companies, all the while dreaming of making it big: signing to a label, cutting a record, reaping the benefits that only a throng of gaping groupies can herald.

While not all of you will make the proverbial “Big Time” — we can’t all be Lady Gaga, nor should we strive to be — that doesn’t mean that you can’t reap some monetary benefits for your musical labor.

Jeff Price, founder of TuneCore, recently wrote on the company blog: “More musicians are making money off their music now at any point in history… Technology has made it possible for any artist to get distribution, to get discovered, to pursue his/her dreams with no company or person out there making the editorial decision that they are not allowed ‘in.’”

We would tend to agree (with the caveat that such openness has also led to a more crowded music scene, with more bands fighting for the public’s attention — but that’s a post for another day).

If you want to start seeing some payback for all your hard work, you don’t have to wait around for a label exec to catch your jazz flute set at the local coffee shop and catapult you to stardom. There are a ton of services out there that can help you make some cash, while also gaining exposure and experience.

class='blippr-nobr'>Mashableclass="blippr-nobr">Mashable spoke with folks from a quartet of such services in order to help you, the artist, devote more time to your lute than those lattes.

Note that none of the below are get-rich-quick schemes, so it might be wise to hang onto your day job — even if it is designing graphic tees for tiny dogs.

Go Into Show Business

Service: Jingle Punks

We know, we know, the moment a song makes it into the commercial, it’s an immediate sign that a band has “sold out.” But, c’mon, guys — do you really want your favorite drummer/banjo player/keytarist working in a taco trunk in order to survive? Yeah, thin may be in when it comes to the indie scene, but musicians need to eat, after all.

That’s why services like Jingle Punks can really be a boon to bands. Jingle Punks — which is basically the Pandoraclass="blippr-nobr">Pandora of music licensing services — focuses on providing filmmakers, TV networks, media companies and ad companies with music from up-and-coming bands. Band and Punks split the earnings 50/50.

“We work in a very smart but unsexy part of the music business,” says co-founder Jared Gutstadt. “Most artists tend to spend their time focusing on the old standards of how to ‘make it.’ They’re still thinking about record deals, pub deals, merch, touring. To really stand out and compete with this type of competition you need to be thinking about launching a music career in a much more unique way.”

Why Use This Service?

According to Gutstadt, “Music in film and television is a great way for artists to get the word out there. More importantly, you can generate money to help fund the growth of a band’s musical endeavors.”

In addition, the service makes use of the democratic nature of the web to get your music into the right hands. “In the past, the way people used to pitch music for media placements is that they would mail CDs off to as many music supes or producers they could,” Gutstadt says. “We have removed the giant pile of CDs on peoples’ desks and aggregated them into a user-friendly database organized in a dynamic way.”

What’s the ROI?

According to Gutstadt, money made runs the gamut. “It can be anywhere from $250 for a web placement all the way up to $30,000 for getting music in a commercial or motion picture,” he says. “, you make money over time through royalties paid out by BMI and ASCAP, who are able to track usage. I always tell artists its not a get-rich-quick scheme as much as it is a way to make some money over time off your hard work.”  

So Who has Succeeded?

“We work with an artist named Mike Del Rio (see above) and his music was used in a rebranding effort by the History Channel.  The channel has really embraced Mike and Jingle Punks and has a couple things in the pipeline that could do great things to really help launch Mike Del Rio’s career on a more mainstream level.  

“We also work with a really great band called I Love Monsters, and their music was placed in the season premiere of Entourage. This type of exposure can be great for an up-and-coming band.”

Collaborate

Service: Indaba Music

We’ve seen instances of bands forming partnerships through Twitter and the like, but wouldn’t it be easier for y’all to have everything in one place?

I mean, it’s enough of a hassle to get all your gear into a single taxi (can’t afford two) before a gig, why add 50 social media tools into the mix? That’s where services like Indaba Music — which is like the class='blippr-nobr'>LinkedInclass="blippr-nobr">LinkedIn of music — come in.

Indaba is a platform — boasting more than 500,000 musicians — that provides musically inclined folks with a place to build a profile, promote their tunes and collaborate with other musicians from around the world.

Why Use This Service?

According to co-founder Dan Zaccagnino, “There are many ways for musicians to make money using Indaba Music. The core of the platform is about collaboration, which can be just for fun, but can also generate income for musicians through work-for-hire sessions (where a musician is paid for his/her tracks) or collaborations where songwriters share in the ownership of the song.”

In addition, Indaba features a ton of contests that “give both amateur and professional musicians a chance to collaborate with world-famous artists and in the process win cash or possibly participate in future royalties if the winners’ material is released,” Zaccagnino says.

What’s the ROI?

“There are incredible opportunities to gain experience on Indaba because the community is full of everyone from amateurs eager to learn, to music educators, to Grammy Award winners,” Zaccagnino says.

“Members learn from one another through contacting and communicating with people online, having music peer reviewed in sessions and contests, learning from master-artists through our Artist-in-Residence programs, taking online video lessons, and much more.

“Education is a big priority for us and it’s been amazing to see that organically happen because musicians are interested in helping one another.”

So Who has Succeeded?

Zaccagnino cites the following examples:

Linkin Park + NoBrain (see above)

Indaba member NoBrain’s mix was included on Linkin Park’s album A Thousand Suns and got the opportunity to collaborate directly with Linkin Park front man, Mike Shinoda, through Indaba Music.

Rivers Cuomo Producer Sessions

Rivers Cuomo of Weezer started a few sessions on IndabaMusic.com and began working with members to produce rough demos that he had written with his wife.  Rivers used Indaba’s session platform to work collaboratively, utilizing the commenting system to engage musicians and achieve exactly what he envisioned.  The producers were also paid for their work.

David Minnick/PBS The Music Instinct

PBS ran a contest to source music for an upcoming show about music and the brain. It found the winner, David Minnick, to be so talented that it hired him to arrange music for another show.

Toshi Osawa and Pikes Peak Ringers – Yo-Yo Ma Collaboration Winners

Yo-Yo Ma was so impressed by the quality of musical collaborations that he picked two winners, an 18-piece hand bell choir from Denver and a speed-Metal guitarist from Canada. Yo-Yo invited them into the studio to record with him in a truly unique collaboration — both tracks were later released as bonus tracks to Yo-Yo Ma’s holiday album, Songs of Joy & Peace.

Partner Up

Service: YouTube’s Musicians Wanted Program

At last year’s SXSW, YouTubeclass="blippr-nobr">YouTube launched a partner program for up-and-coming musicians, and, just recently, the program went from U.S.-only to international.

If you have a YouTube channel, and you’re pumping out the music vids like an A-V nerd on a sugar high, you should apply for this program post haste. Basically, it allows you to make some extra cash by adding ads to your videos and garners you more exposure from YouTube with prime placement.

Why Use This Service?

It’s all about getting your name out there, and getting your music heard, right? So go where the people are. Every day, YouTube racks up more than 2 billion video views. That’s a lot of eyes. Still, every minute, the site sees 24 hours of video uploaded, which means your genius work could get lost in the shuffle. That’s why the partner program is a must — you get the YouTube stamp of approval, which brings more attention to your work.

What’s the ROI?

YouTube couldn’t tell us how much money you can earn from the program, but they did tell us that artists get the majority share of the revenue — not to mention access to those millions of viewers. You need to be consistent with your channel, though, and really focus on putting out lots of original content. So if you’re only down to make one vid, this might not be the option for you. In order to see ROI, you have to put in the time and effort.

So Who has Succeeded?

YouTube has helped launch the careers of score of performers — from Justin Bieber to Pomplamoose./> Kina Grannis is one such artist. “I joined YouTube three years ago when I was in a contest called Doritos Crash The Super Bowl,” Grannis told us. “I needed to get people to vote for me every day in order to get my music video played during the Super Bowl (which it did, woo!), so the hope was that by agreeing to post a new video every day, people, in exchange, would come back and vote daily. This run of putting up a video every day lasted about two months in total, and while it made me crazy and sleep deprived, it was also fun and exciting and very helpful in growing my viewers.

“Post with consistency if possible,” Grannis advises artists. “Be genuine, talk to your supporters, be grateful.”

If You Can’t Beat Them, Join Them

Service: BitTorrent Featured Artist Program

OK, we know what you’re thinking — you hear the word “BitTorrent” and you’re about ready to rage, am I right? File sharing is the monster under the bed for many an artist. It connotes theft, basically. Still, the model — when used correctly — can really be a boon to lesser-known artists.

We spoke to Trent Reznor — who is well-known for having released his music via torrent sites in the past — who told us: “I felt furious when the record I’d worked on for a year, that my heart and soul’s gone into, . I’m pissed off at people that are listening to it. I’m mad that they’re snubbing me — by what? By being excited about hearing my music? And that’s wrong. I shouldn’t be mad at these people. I should be glad that people are interested.”

“Easy for you to say, Trent Reznor,” you might scoff, “You’re already famous.” Well — there’s the rub, right? You’re not famous. And you want to be. Or, at the very least, you want someone other than your roommate to come to your gig — and perhaps buy a T-shirt or two. And how do you do that? By getting the attention of the masses, of course.

Last month, BitTorrent launched a Featured Artist pilot program in an effort to give musicians more exposure. Some likened such an endeavor to getting in bed with the devil, but when you really think about it, what’s the difference between applying for the program and putting your music on class='blippr-nobr'>MySpaceclass="blippr-nobr">MySpace or SoundCloud or any other music-sharing site? Well, that would be BitTorrent’s 80 million users.

We’re not saying that file sharing is totally copacetic or anything (there are a lot of pirates in them waters), but it’s not like BitTorrent is out to ruin your career, either. “In many ways, Trent Reznor’s work inspired a lot of our work,” says CEO Eric Klinker. “We really do want to riff on a lot of what he’s done. He’s in an experimentation phase, as are we.”

Why Use This Service?

“The Featured Artists pilot program encourages musicians and filmmakers to submit creative works for the chance to be spotlighted to millions of BitTorrent users around the world,” Klinker says. “For a lot of artists it is about creating a sustainable business model that will allow them to continue their creative works. So, we are interested in working with artists to experiment with various business models that play to the strengths of the class='blippr-nobr'>Internetclass="blippr-nobr">Internet while allowing them to tune into the distribution potential of BitTorrent to reach millions of consumers.”

What’s the ROI?

“In today’s digital age, the traditional model does not serve artists in the same way it used to, and instead forces them all down the same funnel where only a select few ultimately receive distribution,” Klinker says. “With BitTorrent’s Featured Artist Pilot Program, artists can tap into online communities and reach millions of people who might otherwise be inaccessible. These communities are powerful and provide intrinsic value for emerging artists trying to build a fan base. In doing so, these are fans that will invariably attend shows, purchase merchandise and become invested in future works.”/>  /> So Who has Succeeded?

Since the service just launched last month, there aren’t any featured artists yet, but the site has seen some success with the musician PAZ (see above), who has been working with BitTorrent.

“Most recently, in August 2010, BitTorrent released PAZ’s debut mix tape, Young Broke and Fameless,” Klinker says. “On the first day alone the release saw over 100,000 downloads, and as a result has increased his fan base and following.”

More Social Music Resources from Mashable:

- Top 10 Twitter Tips for Bands, By Bands/> - 5 Great Ways to Find Music That Suits Your Mood/> - 5 Free Ways to Identify that Song Stuck in Your Head/> - HOW TO: Turn Your Android Phone Into a Killer MP3 Player/> - 10 Amazing Musical Instrument iPhone Apps

Image courtesy of iStockphotoclass="blippr-nobr">iStockphoto, shulz

For more Entertainment coverage:

class="f-el">class="cov-twit">Follow Mashable Entertainmentclass="s-el">class="cov-rss">Subscribe to the Entertainment channelclass="f-el">class="cov-fb">Become a Fan on Facebookclass="s-el">class="cov-apple">Download our free apps for iPhone and iPad

George..Mr. Donohue of the chamber of commerce has announced that outsourcing is good for this country. Tonight on MSNBC Obelman who is following up on this every day indicated that the Chamber of comm. is meeting with foreign countries telling them that the republicans will be back in power and outsourcing is here to stay. He and K. Rove are pressing hard for this to happen and it has been said that when the reps get in they will pressure people if they want their bills signed, they must sign onfor outsourcing. I wish, George that you would follow up on this very serious situation. Today a radical anti abortion group issued a promo calling Pres. Obama the "Angel of Death" and the last few people that this radical group did that to was shot and killed..ie.e Dr. Tillman. We have some serious stuff going on here and no one is paying attention. Thank God for MSNBC as they are the only ones I hear mentioning it. Many of these pro life tea party people are also behind the fact that they will overturn Roe v Wade and other things we have fought for for the last 20 years i.e. eliminate min. wage. People are being fooled by this group thinking it is only about the deficit which has gone down if you check on it. Please George..look into some of this stuff..it is true and it scares me. Also check on the fact that many reps. are asking for stimulus like Scott Brown who campaigned that it did not produce jobs, he now want stimulus to create jobs in his state. Hypocracy in the first order.

Fox <b>News</b> Crew Gets Scolded At Democratic Meeting (VIDEO)

A Fox News camera crew showed up unannounced at a Democratic meeting in Wisconsin Monday, prompting a confrontation that eventually forced the show's producer into a rather startling admission: he understands why Democrats are wary of ...

ABC <b>News</b> airs big exposé on BMW N54 engine problems, lawsuits [w <b>...</b>

ABC News investigates BMW fuel pump problems – Click above to watch video after the jump ABC News has cottoned on to the story that BMW.

FAIR Blog » Blog Archive » Juan Williams, Fox <b>News</b> Liberal

It's not totally clear what he means by that, but Williams does a pretty good job as a Fox News Liberal-- i.e., someone willing to attack left-liberal groups and leaders while doing very little to promote an actual left-leaning ...

bench craft company complaints
bench craft company complaints

Fox <b>News</b> Crew Gets Scolded At Democratic Meeting (VIDEO)

A Fox News camera crew showed up unannounced at a Democratic meeting in Wisconsin Monday, prompting a confrontation that eventually forced the show's producer into a rather startling admission: he understands why Democrats are wary of ...

ABC <b>News</b> airs big exposé on BMW N54 engine problems, lawsuits [w <b>...</b>

ABC News investigates BMW fuel pump problems – Click above to watch video after the jump ABC News has cottoned on to the story that BMW.

FAIR Blog » Blog Archive » Juan Williams, Fox <b>News</b> Liberal

It's not totally clear what he means by that, but Williams does a pretty good job as a Fox News Liberal-- i.e., someone willing to attack left-liberal groups and leaders while doing very little to promote an actual left-leaning ...

bench craft company complaints bench craft company complaints

We see you out there — the future musicians of the world, pouring coffee, mixing drinks, designing websites for shifty moving companies, all the while dreaming of making it big: signing to a label, cutting a record, reaping the benefits that only a throng of gaping groupies can herald.

While not all of you will make the proverbial “Big Time” — we can’t all be Lady Gaga, nor should we strive to be — that doesn’t mean that you can’t reap some monetary benefits for your musical labor.

Jeff Price, founder of TuneCore, recently wrote on the company blog: “More musicians are making money off their music now at any point in history… Technology has made it possible for any artist to get distribution, to get discovered, to pursue his/her dreams with no company or person out there making the editorial decision that they are not allowed ‘in.’”

We would tend to agree (with the caveat that such openness has also led to a more crowded music scene, with more bands fighting for the public’s attention — but that’s a post for another day).

If you want to start seeing some payback for all your hard work, you don’t have to wait around for a label exec to catch your jazz flute set at the local coffee shop and catapult you to stardom. There are a ton of services out there that can help you make some cash, while also gaining exposure and experience.

class='blippr-nobr'>Mashableclass="blippr-nobr">Mashable spoke with folks from a quartet of such services in order to help you, the artist, devote more time to your lute than those lattes.

Note that none of the below are get-rich-quick schemes, so it might be wise to hang onto your day job — even if it is designing graphic tees for tiny dogs.

Go Into Show Business

Service: Jingle Punks

We know, we know, the moment a song makes it into the commercial, it’s an immediate sign that a band has “sold out.” But, c’mon, guys — do you really want your favorite drummer/banjo player/keytarist working in a taco trunk in order to survive? Yeah, thin may be in when it comes to the indie scene, but musicians need to eat, after all.

That’s why services like Jingle Punks can really be a boon to bands. Jingle Punks — which is basically the Pandoraclass="blippr-nobr">Pandora of music licensing services — focuses on providing filmmakers, TV networks, media companies and ad companies with music from up-and-coming bands. Band and Punks split the earnings 50/50.

“We work in a very smart but unsexy part of the music business,” says co-founder Jared Gutstadt. “Most artists tend to spend their time focusing on the old standards of how to ‘make it.’ They’re still thinking about record deals, pub deals, merch, touring. To really stand out and compete with this type of competition you need to be thinking about launching a music career in a much more unique way.”

Why Use This Service?

According to Gutstadt, “Music in film and television is a great way for artists to get the word out there. More importantly, you can generate money to help fund the growth of a band’s musical endeavors.”

In addition, the service makes use of the democratic nature of the web to get your music into the right hands. “In the past, the way people used to pitch music for media placements is that they would mail CDs off to as many music supes or producers they could,” Gutstadt says. “We have removed the giant pile of CDs on peoples’ desks and aggregated them into a user-friendly database organized in a dynamic way.”

What’s the ROI?

According to Gutstadt, money made runs the gamut. “It can be anywhere from $250 for a web placement all the way up to $30,000 for getting music in a commercial or motion picture,” he says. “, you make money over time through royalties paid out by BMI and ASCAP, who are able to track usage. I always tell artists its not a get-rich-quick scheme as much as it is a way to make some money over time off your hard work.”  

So Who has Succeeded?

“We work with an artist named Mike Del Rio (see above) and his music was used in a rebranding effort by the History Channel.  The channel has really embraced Mike and Jingle Punks and has a couple things in the pipeline that could do great things to really help launch Mike Del Rio’s career on a more mainstream level.  

“We also work with a really great band called I Love Monsters, and their music was placed in the season premiere of Entourage. This type of exposure can be great for an up-and-coming band.”

Collaborate

Service: Indaba Music

We’ve seen instances of bands forming partnerships through Twitter and the like, but wouldn’t it be easier for y’all to have everything in one place?

I mean, it’s enough of a hassle to get all your gear into a single taxi (can’t afford two) before a gig, why add 50 social media tools into the mix? That’s where services like Indaba Music — which is like the class='blippr-nobr'>LinkedInclass="blippr-nobr">LinkedIn of music — come in.

Indaba is a platform — boasting more than 500,000 musicians — that provides musically inclined folks with a place to build a profile, promote their tunes and collaborate with other musicians from around the world.

Why Use This Service?

According to co-founder Dan Zaccagnino, “There are many ways for musicians to make money using Indaba Music. The core of the platform is about collaboration, which can be just for fun, but can also generate income for musicians through work-for-hire sessions (where a musician is paid for his/her tracks) or collaborations where songwriters share in the ownership of the song.”

In addition, Indaba features a ton of contests that “give both amateur and professional musicians a chance to collaborate with world-famous artists and in the process win cash or possibly participate in future royalties if the winners’ material is released,” Zaccagnino says.

What’s the ROI?

“There are incredible opportunities to gain experience on Indaba because the community is full of everyone from amateurs eager to learn, to music educators, to Grammy Award winners,” Zaccagnino says.

“Members learn from one another through contacting and communicating with people online, having music peer reviewed in sessions and contests, learning from master-artists through our Artist-in-Residence programs, taking online video lessons, and much more.

“Education is a big priority for us and it’s been amazing to see that organically happen because musicians are interested in helping one another.”

So Who has Succeeded?

Zaccagnino cites the following examples:

Linkin Park + NoBrain (see above)

Indaba member NoBrain’s mix was included on Linkin Park’s album A Thousand Suns and got the opportunity to collaborate directly with Linkin Park front man, Mike Shinoda, through Indaba Music.

Rivers Cuomo Producer Sessions

Rivers Cuomo of Weezer started a few sessions on IndabaMusic.com and began working with members to produce rough demos that he had written with his wife.  Rivers used Indaba’s session platform to work collaboratively, utilizing the commenting system to engage musicians and achieve exactly what he envisioned.  The producers were also paid for their work.

David Minnick/PBS The Music Instinct

PBS ran a contest to source music for an upcoming show about music and the brain. It found the winner, David Minnick, to be so talented that it hired him to arrange music for another show.

Toshi Osawa and Pikes Peak Ringers – Yo-Yo Ma Collaboration Winners

Yo-Yo Ma was so impressed by the quality of musical collaborations that he picked two winners, an 18-piece hand bell choir from Denver and a speed-Metal guitarist from Canada. Yo-Yo invited them into the studio to record with him in a truly unique collaboration — both tracks were later released as bonus tracks to Yo-Yo Ma’s holiday album, Songs of Joy & Peace.

Partner Up

Service: YouTube’s Musicians Wanted Program

At last year’s SXSW, YouTubeclass="blippr-nobr">YouTube launched a partner program for up-and-coming musicians, and, just recently, the program went from U.S.-only to international.

If you have a YouTube channel, and you’re pumping out the music vids like an A-V nerd on a sugar high, you should apply for this program post haste. Basically, it allows you to make some extra cash by adding ads to your videos and garners you more exposure from YouTube with prime placement.

Why Use This Service?

It’s all about getting your name out there, and getting your music heard, right? So go where the people are. Every day, YouTube racks up more than 2 billion video views. That’s a lot of eyes. Still, every minute, the site sees 24 hours of video uploaded, which means your genius work could get lost in the shuffle. That’s why the partner program is a must — you get the YouTube stamp of approval, which brings more attention to your work.

What’s the ROI?

YouTube couldn’t tell us how much money you can earn from the program, but they did tell us that artists get the majority share of the revenue — not to mention access to those millions of viewers. You need to be consistent with your channel, though, and really focus on putting out lots of original content. So if you’re only down to make one vid, this might not be the option for you. In order to see ROI, you have to put in the time and effort.

So Who has Succeeded?

YouTube has helped launch the careers of score of performers — from Justin Bieber to Pomplamoose./> Kina Grannis is one such artist. “I joined YouTube three years ago when I was in a contest called Doritos Crash The Super Bowl,” Grannis told us. “I needed to get people to vote for me every day in order to get my music video played during the Super Bowl (which it did, woo!), so the hope was that by agreeing to post a new video every day, people, in exchange, would come back and vote daily. This run of putting up a video every day lasted about two months in total, and while it made me crazy and sleep deprived, it was also fun and exciting and very helpful in growing my viewers.

“Post with consistency if possible,” Grannis advises artists. “Be genuine, talk to your supporters, be grateful.”

If You Can’t Beat Them, Join Them

Service: BitTorrent Featured Artist Program

OK, we know what you’re thinking — you hear the word “BitTorrent” and you’re about ready to rage, am I right? File sharing is the monster under the bed for many an artist. It connotes theft, basically. Still, the model — when used correctly — can really be a boon to lesser-known artists.

We spoke to Trent Reznor — who is well-known for having released his music via torrent sites in the past — who told us: “I felt furious when the record I’d worked on for a year, that my heart and soul’s gone into, . I’m pissed off at people that are listening to it. I’m mad that they’re snubbing me — by what? By being excited about hearing my music? And that’s wrong. I shouldn’t be mad at these people. I should be glad that people are interested.”

“Easy for you to say, Trent Reznor,” you might scoff, “You’re already famous.” Well — there’s the rub, right? You’re not famous. And you want to be. Or, at the very least, you want someone other than your roommate to come to your gig — and perhaps buy a T-shirt or two. And how do you do that? By getting the attention of the masses, of course.

Last month, BitTorrent launched a Featured Artist pilot program in an effort to give musicians more exposure. Some likened such an endeavor to getting in bed with the devil, but when you really think about it, what’s the difference between applying for the program and putting your music on class='blippr-nobr'>MySpaceclass="blippr-nobr">MySpace or SoundCloud or any other music-sharing site? Well, that would be BitTorrent’s 80 million users.

We’re not saying that file sharing is totally copacetic or anything (there are a lot of pirates in them waters), but it’s not like BitTorrent is out to ruin your career, either. “In many ways, Trent Reznor’s work inspired a lot of our work,” says CEO Eric Klinker. “We really do want to riff on a lot of what he’s done. He’s in an experimentation phase, as are we.”

Why Use This Service?

“The Featured Artists pilot program encourages musicians and filmmakers to submit creative works for the chance to be spotlighted to millions of BitTorrent users around the world,” Klinker says. “For a lot of artists it is about creating a sustainable business model that will allow them to continue their creative works. So, we are interested in working with artists to experiment with various business models that play to the strengths of the class='blippr-nobr'>Internetclass="blippr-nobr">Internet while allowing them to tune into the distribution potential of BitTorrent to reach millions of consumers.”

What’s the ROI?

“In today’s digital age, the traditional model does not serve artists in the same way it used to, and instead forces them all down the same funnel where only a select few ultimately receive distribution,” Klinker says. “With BitTorrent’s Featured Artist Pilot Program, artists can tap into online communities and reach millions of people who might otherwise be inaccessible. These communities are powerful and provide intrinsic value for emerging artists trying to build a fan base. In doing so, these are fans that will invariably attend shows, purchase merchandise and become invested in future works.”/>  /> So Who has Succeeded?

Since the service just launched last month, there aren’t any featured artists yet, but the site has seen some success with the musician PAZ (see above), who has been working with BitTorrent.

“Most recently, in August 2010, BitTorrent released PAZ’s debut mix tape, Young Broke and Fameless,” Klinker says. “On the first day alone the release saw over 100,000 downloads, and as a result has increased his fan base and following.”

More Social Music Resources from Mashable:

- Top 10 Twitter Tips for Bands, By Bands/> - 5 Great Ways to Find Music That Suits Your Mood/> - 5 Free Ways to Identify that Song Stuck in Your Head/> - HOW TO: Turn Your Android Phone Into a Killer MP3 Player/> - 10 Amazing Musical Instrument iPhone Apps

Image courtesy of iStockphotoclass="blippr-nobr">iStockphoto, shulz

For more Entertainment coverage:

class="f-el">class="cov-twit">Follow Mashable Entertainmentclass="s-el">class="cov-rss">Subscribe to the Entertainment channelclass="f-el">class="cov-fb">Become a Fan on Facebookclass="s-el">class="cov-apple">Download our free apps for iPhone and iPad

George..Mr. Donohue of the chamber of commerce has announced that outsourcing is good for this country. Tonight on MSNBC Obelman who is following up on this every day indicated that the Chamber of comm. is meeting with foreign countries telling them that the republicans will be back in power and outsourcing is here to stay. He and K. Rove are pressing hard for this to happen and it has been said that when the reps get in they will pressure people if they want their bills signed, they must sign onfor outsourcing. I wish, George that you would follow up on this very serious situation. Today a radical anti abortion group issued a promo calling Pres. Obama the "Angel of Death" and the last few people that this radical group did that to was shot and killed..ie.e Dr. Tillman. We have some serious stuff going on here and no one is paying attention. Thank God for MSNBC as they are the only ones I hear mentioning it. Many of these pro life tea party people are also behind the fact that they will overturn Roe v Wade and other things we have fought for for the last 20 years i.e. eliminate min. wage. People are being fooled by this group thinking it is only about the deficit which has gone down if you check on it. Please George..look into some of this stuff..it is true and it scares me. Also check on the fact that many reps. are asking for stimulus like Scott Brown who campaigned that it did not produce jobs, he now want stimulus to create jobs in his state. Hypocracy in the first order.

bench craft company complaints

Fox <b>News</b> Crew Gets Scolded At Democratic Meeting (VIDEO)

A Fox News camera crew showed up unannounced at a Democratic meeting in Wisconsin Monday, prompting a confrontation that eventually forced the show's producer into a rather startling admission: he understands why Democrats are wary of ...

ABC <b>News</b> airs big exposé on BMW N54 engine problems, lawsuits [w <b>...</b>

ABC News investigates BMW fuel pump problems – Click above to watch video after the jump ABC News has cottoned on to the story that BMW.

FAIR Blog » Blog Archive » Juan Williams, Fox <b>News</b> Liberal

It's not totally clear what he means by that, but Williams does a pretty good job as a Fox News Liberal-- i.e., someone willing to attack left-liberal groups and leaders while doing very little to promote an actual left-leaning ...

bench craft company complaints bench craft company complaints

Fox <b>News</b> Crew Gets Scolded At Democratic Meeting (VIDEO)

A Fox News camera crew showed up unannounced at a Democratic meeting in Wisconsin Monday, prompting a confrontation that eventually forced the show's producer into a rather startling admission: he understands why Democrats are wary of ...

ABC <b>News</b> airs big exposé on BMW N54 engine problems, lawsuits [w <b>...</b>

ABC News investigates BMW fuel pump problems – Click above to watch video after the jump ABC News has cottoned on to the story that BMW.

FAIR Blog » Blog Archive » Juan Williams, Fox <b>News</b> Liberal

It's not totally clear what he means by that, but Williams does a pretty good job as a Fox News Liberal-- i.e., someone willing to attack left-liberal groups and leaders while doing very little to promote an actual left-leaning ...

bench craft company complaints bench craft company complaints

Fox <b>News</b> Crew Gets Scolded At Democratic Meeting (VIDEO)

A Fox News camera crew showed up unannounced at a Democratic meeting in Wisconsin Monday, prompting a confrontation that eventually forced the show's producer into a rather startling admission: he understands why Democrats are wary of ...

ABC <b>News</b> airs big exposé on BMW N54 engine problems, lawsuits [w <b>...</b>

ABC News investigates BMW fuel pump problems – Click above to watch video after the jump ABC News has cottoned on to the story that BMW.

FAIR Blog » Blog Archive » Juan Williams, Fox <b>News</b> Liberal

It's not totally clear what he means by that, but Williams does a pretty good job as a Fox News Liberal-- i.e., someone willing to attack left-liberal groups and leaders while doing very little to promote an actual left-leaning ...

bench craft company complaints bench craft company complaints

Im Making Money

This is the new line touted mostly by the conservative side– all these campaign donations are insignificant, making the absurd argument that we spend more each year on irrelevant and unrelated things like yogurt or halloween candy, that the cash spent on campaigns is of negligible effect on the election outcomes, and, finally, that the threat of foreign influence on our elections through these funding channels is also negligible. Nothing to see here, move along.

David Brooks spouted this exact same nonsense in his op-ed column in the NY Times earlier this week, replete with a host of imaginary numbers to cloud just how much is being spent on both sides then claiming that, in the end, all the cash shoveled into this mid-term election has no real influence on the outcome, going so far as to claim that these multimillion dollar donations are more for the ‘feel-good’ effect they offer the donors than for the spoils that would most assuredly come back to them once their chosen candidates are declared victorious.

I think it’s obscene the amount of money spent by both sides of the aisle during these elections and am troubled by the anonymous nature of so many of these donations, but for the life of me I can’t figure out how best to correct it without running afoul of the Bill of Rights. Free speech is free speech even if you’re not always happy with the outcome. If a corporation wants to support a candidate, I’m guessing it should be allowed to do so just as labor unions and other large organizations can.

I do think, however, that these corporate institutions should not be able to hide behind anonymity when making these donations. All donations by corporations should have the company’s tax identification number on the donation check. Since the Citizens United ruling judged these corporations as having the same rights as individuals, perhaps their donations should be capped at the same totals as individuals. If Proctor & Gamble wants to give to candidate X, allow them to donate at the same limits as Mr. Proctor N. Gamble.

Another, more drastic solution would be to rule that the First Amendment doesn’t apply and set a federally-funded limit for all candidates. Allow every candidate an equivalent amount of campaign funds and airtime for commercials, eliminate third-party advertising, and leave it at that. Otherwise, it will soon reach the point where the total spent during an election cycle meets or exceeds the GDP of third world countries.

Didn’t he once say he’d rather be a really good one-term president than a mediocre two-termer? Well, the chances of a “really good” first term are pretty much shot, so I guess now it’s mediocrity or bust. Shoot for the stars, champ!

President Obama signaled today that he will seek reelection and dismissed as “completely unfounded” reports that he might replace Vice President Joe Biden on his 2012 ticket with Secretary of State Hillary Rodham Clinton.

“Obviously, I haven’t made any formal decision” on reelection, the president told National Journal in an exclusive 45-minute interview, “but I feel like I’ve got a lot of work left to do.”

Told that his answer sounded like he was saying “yes,” Obama nodded, then broadly smiled. “Take it as you will,” he said, laughing.

Obama bluntly dismissed suggestions, first raised by author Bob Woodward, that he might replace Biden with Clinton for the 2012 race.

Lest you think he’s bluffing, Axelrod is already starting to inch away from The One’s stance against Democratic outside groups with anonymous donors spending big money on elections. The old rule: No outside groups, please. The soon-to-be new rule: Yes, outside groups, please, but kindly disclose your contributors. As I said a few days ago, surely no one (including Harry Reid) found Sharron Angle’s mammoth third-quarter fundraising haul as frightening as the White House did, simply because it’s an early sign of how much money the conservative base will cough up in 2012 to knock Obama out of office. Axelrod will need all hands on deck to keep up, notwithstanding The One’s already legendary fundraising powers from 2008. So here’s his signal to lefty PACs to get in the game.

Even so, will it be enough? Mickey Kaus:

What comments [about voters being "scared"] suggest isn’t just that Obama will get clobbered in the midterms. It suggests that after he gets clobbered he won’t be able to adjust and turn the setback into a longterm victory the way Bill Clinton did. Clinton reacted to his 1994 midterm loss by acknowledging his opponents’ strongest arguments and pursuing a balanced budget and welfare reform. Obama seems more inclined to just tough it out until the economy recovers and the scared, confused voters become unscared and see the light. Meanwhile, he’ll spend his time in a protective cocoon.

A few weeks ago a right-wing reporter told me that worried Dem congresspersons who met with Obama left their meetings more worried than when they went in. I discounted the gossip, but now it’s beginning to ring true. We thought he was a great salesman. He turned out to be a lousy salesman. We thought he was a great politician. Instead he makes elementary mistakes and doesn’t learn from them. He didn’t know “shovel-ready” from a hole in the ground, and then somehow thinks admitting this ignorance without apology will add to his appeal.

I’d still defend most of the decisions Obama’s made, especially on health care refom. I’d rather have him making those decisions than 85% of the likely Republican candidates. But for the first time, he’s looking like a one-termer, even if the jobs start to come back.

It’s hard to imagine any incumbent losing if unemployment is trending downwards, especially after a sustained economic crisis, and it’s hard to imagine The One being so stupid as to stay in his liberal cocoon knowing that it would put the center of the electorate in play for 2012. Peter Beinart predicted a few weeks ago that Obama will actually tack left after the election on the theory that presidents tend to revert to campaign form when they get in trouble, but of course to hear David Brooks or Peggy Noonan or Kathleen Parker or Christopher Buckley tell it, Obama wasn’t a hard leftist during the campaign at all. He was an omnicompetent post-partisan pragmatist, eager to solve America’s problems by trying whatever would work. If he does revert to form, that’s the form he’ll revert to — which means he’ll try to make whatever deals he can with the new GOP House to push some compromise legislation through to pander to centrists. And then, if he gets reelected, he’ll govern as an even harder-left liberal in his second term. Good luck in 2012, moderate voters!

Exit question: If you were a lefty president terrified that your base of young voters will stay home on election day, which show would you appear on a few nights before to plead with them to go to the polls? Bingo.

&quot;Xbox 2&quot; game WarDevil canned Xbox 360 <b>News</b> - Page 1 | Eurogamer.net

Read our Xbox 360 news of. ... "Xbox 2" game WarDevil canned Related content. Latest WarDevil: Unleash the Beast Within screenshots; News WarDevil trailer set for Tokyo ; News Digi-Guys shows off gorgeous Xbox 2 war game ...

Lujiazui Breakfast: <b>News</b> And Views About China Stocks (Oct. 26 <b>...</b>

Investors and traders in China's main financial district are talking about the following before the start of trade today: The dollar fell to a 15-year low against the yen yesterday, fueling speculation that major countries will continue ...

AMERICAblog <b>News</b>: MoveOn woman kicked &amp; stomped by &#39;Libertarian <b>...</b>

News and opinion about US politics from a liberal perspective.

bench craft company complaints
bench craft company complaints

&quot;Xbox 2&quot; game WarDevil canned Xbox 360 <b>News</b> - Page 1 | Eurogamer.net

Read our Xbox 360 news of. ... "Xbox 2" game WarDevil canned Related content. Latest WarDevil: Unleash the Beast Within screenshots; News WarDevil trailer set for Tokyo ; News Digi-Guys shows off gorgeous Xbox 2 war game ...

Lujiazui Breakfast: <b>News</b> And Views About China Stocks (Oct. 26 <b>...</b>

Investors and traders in China's main financial district are talking about the following before the start of trade today: The dollar fell to a 15-year low against the yen yesterday, fueling speculation that major countries will continue ...

AMERICAblog <b>News</b>: MoveOn woman kicked &amp; stomped by &#39;Libertarian <b>...</b>

News and opinion about US politics from a liberal perspective.

bench craft company complaints bench craft company complaints

This is the new line touted mostly by the conservative side– all these campaign donations are insignificant, making the absurd argument that we spend more each year on irrelevant and unrelated things like yogurt or halloween candy, that the cash spent on campaigns is of negligible effect on the election outcomes, and, finally, that the threat of foreign influence on our elections through these funding channels is also negligible. Nothing to see here, move along.

David Brooks spouted this exact same nonsense in his op-ed column in the NY Times earlier this week, replete with a host of imaginary numbers to cloud just how much is being spent on both sides then claiming that, in the end, all the cash shoveled into this mid-term election has no real influence on the outcome, going so far as to claim that these multimillion dollar donations are more for the ‘feel-good’ effect they offer the donors than for the spoils that would most assuredly come back to them once their chosen candidates are declared victorious.

I think it’s obscene the amount of money spent by both sides of the aisle during these elections and am troubled by the anonymous nature of so many of these donations, but for the life of me I can’t figure out how best to correct it without running afoul of the Bill of Rights. Free speech is free speech even if you’re not always happy with the outcome. If a corporation wants to support a candidate, I’m guessing it should be allowed to do so just as labor unions and other large organizations can.

I do think, however, that these corporate institutions should not be able to hide behind anonymity when making these donations. All donations by corporations should have the company’s tax identification number on the donation check. Since the Citizens United ruling judged these corporations as having the same rights as individuals, perhaps their donations should be capped at the same totals as individuals. If Proctor & Gamble wants to give to candidate X, allow them to donate at the same limits as Mr. Proctor N. Gamble.

Another, more drastic solution would be to rule that the First Amendment doesn’t apply and set a federally-funded limit for all candidates. Allow every candidate an equivalent amount of campaign funds and airtime for commercials, eliminate third-party advertising, and leave it at that. Otherwise, it will soon reach the point where the total spent during an election cycle meets or exceeds the GDP of third world countries.

Didn’t he once say he’d rather be a really good one-term president than a mediocre two-termer? Well, the chances of a “really good” first term are pretty much shot, so I guess now it’s mediocrity or bust. Shoot for the stars, champ!

President Obama signaled today that he will seek reelection and dismissed as “completely unfounded” reports that he might replace Vice President Joe Biden on his 2012 ticket with Secretary of State Hillary Rodham Clinton.

“Obviously, I haven’t made any formal decision” on reelection, the president told National Journal in an exclusive 45-minute interview, “but I feel like I’ve got a lot of work left to do.”

Told that his answer sounded like he was saying “yes,” Obama nodded, then broadly smiled. “Take it as you will,” he said, laughing.

Obama bluntly dismissed suggestions, first raised by author Bob Woodward, that he might replace Biden with Clinton for the 2012 race.

Lest you think he’s bluffing, Axelrod is already starting to inch away from The One’s stance against Democratic outside groups with anonymous donors spending big money on elections. The old rule: No outside groups, please. The soon-to-be new rule: Yes, outside groups, please, but kindly disclose your contributors. As I said a few days ago, surely no one (including Harry Reid) found Sharron Angle’s mammoth third-quarter fundraising haul as frightening as the White House did, simply because it’s an early sign of how much money the conservative base will cough up in 2012 to knock Obama out of office. Axelrod will need all hands on deck to keep up, notwithstanding The One’s already legendary fundraising powers from 2008. So here’s his signal to lefty PACs to get in the game.

Even so, will it be enough? Mickey Kaus:

What comments [about voters being "scared"] suggest isn’t just that Obama will get clobbered in the midterms. It suggests that after he gets clobbered he won’t be able to adjust and turn the setback into a longterm victory the way Bill Clinton did. Clinton reacted to his 1994 midterm loss by acknowledging his opponents’ strongest arguments and pursuing a balanced budget and welfare reform. Obama seems more inclined to just tough it out until the economy recovers and the scared, confused voters become unscared and see the light. Meanwhile, he’ll spend his time in a protective cocoon.

A few weeks ago a right-wing reporter told me that worried Dem congresspersons who met with Obama left their meetings more worried than when they went in. I discounted the gossip, but now it’s beginning to ring true. We thought he was a great salesman. He turned out to be a lousy salesman. We thought he was a great politician. Instead he makes elementary mistakes and doesn’t learn from them. He didn’t know “shovel-ready” from a hole in the ground, and then somehow thinks admitting this ignorance without apology will add to his appeal.

I’d still defend most of the decisions Obama’s made, especially on health care refom. I’d rather have him making those decisions than 85% of the likely Republican candidates. But for the first time, he’s looking like a one-termer, even if the jobs start to come back.

It’s hard to imagine any incumbent losing if unemployment is trending downwards, especially after a sustained economic crisis, and it’s hard to imagine The One being so stupid as to stay in his liberal cocoon knowing that it would put the center of the electorate in play for 2012. Peter Beinart predicted a few weeks ago that Obama will actually tack left after the election on the theory that presidents tend to revert to campaign form when they get in trouble, but of course to hear David Brooks or Peggy Noonan or Kathleen Parker or Christopher Buckley tell it, Obama wasn’t a hard leftist during the campaign at all. He was an omnicompetent post-partisan pragmatist, eager to solve America’s problems by trying whatever would work. If he does revert to form, that’s the form he’ll revert to — which means he’ll try to make whatever deals he can with the new GOP House to push some compromise legislation through to pander to centrists. And then, if he gets reelected, he’ll govern as an even harder-left liberal in his second term. Good luck in 2012, moderate voters!

Exit question: If you were a lefty president terrified that your base of young voters will stay home on election day, which show would you appear on a few nights before to plead with them to go to the polls? Bingo.

bench craft company complaints

&quot;Xbox 2&quot; game WarDevil canned Xbox 360 <b>News</b> - Page 1 | Eurogamer.net

Read our Xbox 360 news of. ... "Xbox 2" game WarDevil canned Related content. Latest WarDevil: Unleash the Beast Within screenshots; News WarDevil trailer set for Tokyo ; News Digi-Guys shows off gorgeous Xbox 2 war game ...

Lujiazui Breakfast: <b>News</b> And Views About China Stocks (Oct. 26 <b>...</b>

Investors and traders in China's main financial district are talking about the following before the start of trade today: The dollar fell to a 15-year low against the yen yesterday, fueling speculation that major countries will continue ...

AMERICAblog <b>News</b>: MoveOn woman kicked &amp; stomped by &#39;Libertarian <b>...</b>

News and opinion about US politics from a liberal perspective.

bench craft company complaints bench craft company complaints

&quot;Xbox 2&quot; game WarDevil canned Xbox 360 <b>News</b> - Page 1 | Eurogamer.net

Read our Xbox 360 news of. ... "Xbox 2" game WarDevil canned Related content. Latest WarDevil: Unleash the Beast Within screenshots; News WarDevil trailer set for Tokyo ; News Digi-Guys shows off gorgeous Xbox 2 war game ...

Lujiazui Breakfast: <b>News</b> And Views About China Stocks (Oct. 26 <b>...</b>

Investors and traders in China's main financial district are talking about the following before the start of trade today: The dollar fell to a 15-year low against the yen yesterday, fueling speculation that major countries will continue ...

AMERICAblog <b>News</b>: MoveOn woman kicked &amp; stomped by &#39;Libertarian <b>...</b>

News and opinion about US politics from a liberal perspective.

bench craft company complaints bench craft company complaints

&quot;Xbox 2&quot; game WarDevil canned Xbox 360 <b>News</b> - Page 1 | Eurogamer.net

Read our Xbox 360 news of. ... "Xbox 2" game WarDevil canned Related content. Latest WarDevil: Unleash the Beast Within screenshots; News WarDevil trailer set for Tokyo ; News Digi-Guys shows off gorgeous Xbox 2 war game ...

Lujiazui Breakfast: <b>News</b> And Views About China Stocks (Oct. 26 <b>...</b>

Investors and traders in China's main financial district are talking about the following before the start of trade today: The dollar fell to a 15-year low against the yen yesterday, fueling speculation that major countries will continue ...

AMERICAblog <b>News</b>: MoveOn woman kicked &amp; stomped by &#39;Libertarian <b>...</b>

News and opinion about US politics from a liberal perspective.

bench craft company complaints bench craft company complaints

Companies Making Money

The power of hands-on learning is indisputable. But when it comes to investing your money in the stock market, however, making a beginner’s mistake can cost you more than just your self-esteem. Thankfully, the web makes it easy to practice with virtual money.

There are a multitude of online investment games like Investopedia and gnuTrade that play with virtual money, but not all of them are easy for beginners. Here are five of the best free (because you shouldn’t have to spend real money to play with fake money) online games for getting your feet wet.

1. Wall Street Survivor

Invest $100,000 in virtual cash via drop-down menu choices. A friendly cartoon version of stock guru Mark Brookshire helps you make your final decision by providing some rating numbers when you input a stock. These include a rating for survivor sentiment, fundamentals, technical and a Motley Fool class='blippr-nobr'>Ratingclass="blippr-nobr">Rating.

For additional help choosing stocks, the site has an impressive resource library that spans beginner, intermediate and advanced levels. Start with Investing 101 and consider taking advantage of the community forums if you have specific questions. Those who need a little help getting started can also choose to adapt one of the preset portfolios created by proven traders.

While the $100,000 competition is most popular, anybody on the site can create a contest. Prizes vary, but most often consist of competitive pride.

2. HowTheMarketWorks

Owned by the same company as Wall Street Survivor, this game is great for investors looking to gain experience with a new type of portfolio. In addition to stocks and indexes, there are options to experiment with Forex portfolios, penny stocks, mutual funds and short selling.

Beginners can execute market order-based trades in a “fun mode” without worrying about things like set hours, maximum number of trades per day, per stock and order expiration. A “realistic mode” amps up the complexity after they’ve mastered the beginner level.

Players can manage up to three stock portfolios and three Forex portfolios on the site at once. For each portfolio, they select a starting value between $100 and $500,000 and set how much virtual commission you are charged per trade.

The competition aspect is optional. General monthly contests give each player $25,000 as a virtual starting point. Other public contests include challenging restrictions like “short sells only” or “penny stocks only.” Users can create their own password-protected games as well, which is a feature that teachers find helpful for creating class competitions.

3. Young Money Stock Market Game

Young Money Magazine’s stock exchange game is easy to learn but also fairly realistic, which is a hard balance to strike.

Realistic aspects include a virtual commission that’s taken out of each trade, adhering to market hours and rules about how you can invest. Unlike many investing games, trades are made at a real-time price. Learning aspects include convenient help icons on key terms and an intuitive tabbed interface.

The site runs a monthly contest with a $100 (real) cash prize that goes to whoever gained the highest percentage. Players can also create their own contests or join other user-made contests.

4. MarketWatch Fantasy Earnings Trader Game

MarketWatch will run this mock stock market contest for a total of four weeks, awarding the winner of each week with an iPad. It’s on week three right now, but there’s still time to get in on the competition for week four.

You must have your selections picked before the week starts on Monday. The shares that you select are “purchased” at Monday’s open and will “sell” automatically at Friday’s close.

The catch is that all players can only use the 15 to 20 symbols selected for each week. The companies are selected by the game owner for companies that are projecting their earnings during each week. Lining up picks is easy — players simply drag the company’s logo to their trading card and designate if they want to sell short or go long.

Although there are some pros playing, this game is especially manageable for beginners due to the limited stock options for each week.

5. UpDown

Like Young Money’s game, UpDown has helpful icons that explain key terms for beginners. More comprehensive resources in the education center mercifully cover even the most basic of investing concepts.

Community features, like the opportunity to collaborate with a group and to see the most-bought and most-sold stocks, are also helpful for beginners. The “watch list” tool provides a convenient dashboard for monitoring potential picks.

UpDown sponsors a monthly contest that rewards players who beat the market with real cash.

More Business Resources from Mashable:

- 5 Lessons to Learn from Web Startups/> - 20 of the Best Resources to Get Your Startup Off the Ground/> - 5 Startup Tips From the Father of Gmail and FriendFeed/> - 6 Ways to Recruit Talent for Startups/> - 10 Essential Tips for Building Your Small Biz Team

Image courtesy of iStockphotoclass="blippr-nobr">iStockphoto, H-Gall

For more Business coverage:

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Justin Hartfield of WeedMaps is about as ballsy as entrepreneurs get. I mean that as a compliment. Not only is he building an online business that facilitates and profits off of the recreational use of marijuana– which let’s remember is still illegal in the United States– but he’s essentially rushing his small company out into the public markets, via an acquisition by the mostly-unknown but publicly-traded LC Luxuries Limited, which will build a new business around all things cannabis.

Between the anticipated closing of the deal, which will make WeedMaps essentially a publicly traded company on the Pink Sheets and California’s vote on a proposition to legalize marijuana, the next month will be huge for Hartfield– one way or another. Meanwhile revenues are soaring. WeedMaps was making $20,000 a month a year ago, made $300,000 in August and $400,000 in September– all off of just 50,000 registered users.

Obviously, the money-making potential is huge, but is there a greater moral issue here? Hartfield doesn’t see one. Hartfield was the guest on NBC’s Press:Here this week, where he discussed a unique dilemma in Silicon Valley: Having a $120 billion market to yourself in which no VCs want to invest. It’s a reality that’s driven him to this odd, back-door IPO.

It’s also helping make his company a cause. “We want to make buying a share in this company like buying a share in the legalization of marijuana cause,” he says. Hartfield — so unabashedly libertarian he could make Peter Thiel swoon– thinks markets are better ways of assessing public opinion than media or political polls. So, he argues, if people vote with their money for WeedMaps, it’ll be a proxy for how people feel about the practicality of legalization, which he sees as an inevitability. (Morality aside, I take issue with his certainty in this clip. Even in gung-ho California, some medical marijuana advocates oppose recreational legalization.)

But the deal is about more than just finding a way to go public. The new company will acquire and roll-up several smaller companies, likely also around the cannabis issue. Meanwhile, Hartfield is doing a weed/Web landgrab, taking nearly every business model that’s worked on the Web and building a weed version. His core site is like Yelp for weed, containing a database of more than 25,000 strains, where they can be found and reviews on dispensaries and headshops. He even offers an “elite” status.

The company has another site called WeedVote.com that helps get out the legalization vote, and the newly launched WeedMart.com is an online headship and he’s about to launch a new daily deals site for pot– that’s right, yet another Groupon clone, this time to get high. There’s also a feature called “Weed or Skin”– like Hot or Not but where you vote for scantily clad women or pictures of pot. I’m not kidding. While Hartfield isn’t the first to try to make money off of a vice, he revels in it more than most. “We don’t like to be hypocritical, and we don’t think there should be arbitrary differences between recreational and medicinal,” he says. This is clearly as much about the cause as it is about the company for him. Agree with his stance or not, you have to respect the conviction.

In the clip below, Hartfield talks about America’s “chronic fear of freedom” and the challenges he’s faced building this business. Go here for the full episode, which includes his rebuttal to medical marijuana advocates that say recreational legalization is bad for those who need the drug for medical reasons

Scripting <b>News</b>: Rule 1 of local blogs

Recent stories. Twitter links. My 40 most-recent Twitter links, ranked by number of clicks. My bike. People are always asking about my bike. A picture named bikesmall.jpg. Here's a picture. AFP news pic. Calendar ...

Colts <b>News</b>: COLTS <b>NEWS</b>

Austin Collie (thumb) and Antonio Johnson (knee) have undergone surgeries, the Colts announced Thursday.

World Rally Championship - <b>News</b> - SS5: Petter quickest - just

Post rally interview - Petter Solberg � Petter Solberg interview. Related News. SS2: Petter the pace-setter � Solberg aims to reign in Spain � Solberg continues charge for third in WRC � Rally Radio - Listen Live ...

eric seiger eric seiger

The power of hands-on learning is indisputable. But when it comes to investing your money in the stock market, however, making a beginner’s mistake can cost you more than just your self-esteem. Thankfully, the web makes it easy to practice with virtual money.

There are a multitude of online investment games like Investopedia and gnuTrade that play with virtual money, but not all of them are easy for beginners. Here are five of the best free (because you shouldn’t have to spend real money to play with fake money) online games for getting your feet wet.

1. Wall Street Survivor

Invest $100,000 in virtual cash via drop-down menu choices. A friendly cartoon version of stock guru Mark Brookshire helps you make your final decision by providing some rating numbers when you input a stock. These include a rating for survivor sentiment, fundamentals, technical and a Motley Fool class='blippr-nobr'>Ratingclass="blippr-nobr">Rating.

For additional help choosing stocks, the site has an impressive resource library that spans beginner, intermediate and advanced levels. Start with Investing 101 and consider taking advantage of the community forums if you have specific questions. Those who need a little help getting started can also choose to adapt one of the preset portfolios created by proven traders.

While the $100,000 competition is most popular, anybody on the site can create a contest. Prizes vary, but most often consist of competitive pride.

2. HowTheMarketWorks

Owned by the same company as Wall Street Survivor, this game is great for investors looking to gain experience with a new type of portfolio. In addition to stocks and indexes, there are options to experiment with Forex portfolios, penny stocks, mutual funds and short selling.

Beginners can execute market order-based trades in a “fun mode” without worrying about things like set hours, maximum number of trades per day, per stock and order expiration. A “realistic mode” amps up the complexity after they’ve mastered the beginner level.

Players can manage up to three stock portfolios and three Forex portfolios on the site at once. For each portfolio, they select a starting value between $100 and $500,000 and set how much virtual commission you are charged per trade.

The competition aspect is optional. General monthly contests give each player $25,000 as a virtual starting point. Other public contests include challenging restrictions like “short sells only” or “penny stocks only.” Users can create their own password-protected games as well, which is a feature that teachers find helpful for creating class competitions.

3. Young Money Stock Market Game

Young Money Magazine’s stock exchange game is easy to learn but also fairly realistic, which is a hard balance to strike.

Realistic aspects include a virtual commission that’s taken out of each trade, adhering to market hours and rules about how you can invest. Unlike many investing games, trades are made at a real-time price. Learning aspects include convenient help icons on key terms and an intuitive tabbed interface.

The site runs a monthly contest with a $100 (real) cash prize that goes to whoever gained the highest percentage. Players can also create their own contests or join other user-made contests.

4. MarketWatch Fantasy Earnings Trader Game

MarketWatch will run this mock stock market contest for a total of four weeks, awarding the winner of each week with an iPad. It’s on week three right now, but there’s still time to get in on the competition for week four.

You must have your selections picked before the week starts on Monday. The shares that you select are “purchased” at Monday’s open and will “sell” automatically at Friday’s close.

The catch is that all players can only use the 15 to 20 symbols selected for each week. The companies are selected by the game owner for companies that are projecting their earnings during each week. Lining up picks is easy — players simply drag the company’s logo to their trading card and designate if they want to sell short or go long.

Although there are some pros playing, this game is especially manageable for beginners due to the limited stock options for each week.

5. UpDown

Like Young Money’s game, UpDown has helpful icons that explain key terms for beginners. More comprehensive resources in the education center mercifully cover even the most basic of investing concepts.

Community features, like the opportunity to collaborate with a group and to see the most-bought and most-sold stocks, are also helpful for beginners. The “watch list” tool provides a convenient dashboard for monitoring potential picks.

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Justin Hartfield of WeedMaps is about as ballsy as entrepreneurs get. I mean that as a compliment. Not only is he building an online business that facilitates and profits off of the recreational use of marijuana– which let’s remember is still illegal in the United States– but he’s essentially rushing his small company out into the public markets, via an acquisition by the mostly-unknown but publicly-traded LC Luxuries Limited, which will build a new business around all things cannabis.

Between the anticipated closing of the deal, which will make WeedMaps essentially a publicly traded company on the Pink Sheets and California’s vote on a proposition to legalize marijuana, the next month will be huge for Hartfield– one way or another. Meanwhile revenues are soaring. WeedMaps was making $20,000 a month a year ago, made $300,000 in August and $400,000 in September– all off of just 50,000 registered users.

Obviously, the money-making potential is huge, but is there a greater moral issue here? Hartfield doesn’t see one. Hartfield was the guest on NBC’s Press:Here this week, where he discussed a unique dilemma in Silicon Valley: Having a $120 billion market to yourself in which no VCs want to invest. It’s a reality that’s driven him to this odd, back-door IPO.

It’s also helping make his company a cause. “We want to make buying a share in this company like buying a share in the legalization of marijuana cause,” he says. Hartfield — so unabashedly libertarian he could make Peter Thiel swoon– thinks markets are better ways of assessing public opinion than media or political polls. So, he argues, if people vote with their money for WeedMaps, it’ll be a proxy for how people feel about the practicality of legalization, which he sees as an inevitability. (Morality aside, I take issue with his certainty in this clip. Even in gung-ho California, some medical marijuana advocates oppose recreational legalization.)

But the deal is about more than just finding a way to go public. The new company will acquire and roll-up several smaller companies, likely also around the cannabis issue. Meanwhile, Hartfield is doing a weed/Web landgrab, taking nearly every business model that’s worked on the Web and building a weed version. His core site is like Yelp for weed, containing a database of more than 25,000 strains, where they can be found and reviews on dispensaries and headshops. He even offers an “elite” status.

The company has another site called WeedVote.com that helps get out the legalization vote, and the newly launched WeedMart.com is an online headship and he’s about to launch a new daily deals site for pot– that’s right, yet another Groupon clone, this time to get high. There’s also a feature called “Weed or Skin”– like Hot or Not but where you vote for scantily clad women or pictures of pot. I’m not kidding. While Hartfield isn’t the first to try to make money off of a vice, he revels in it more than most. “We don’t like to be hypocritical, and we don’t think there should be arbitrary differences between recreational and medicinal,” he says. This is clearly as much about the cause as it is about the company for him. Agree with his stance or not, you have to respect the conviction.

In the clip below, Hartfield talks about America’s “chronic fear of freedom” and the challenges he’s faced building this business. Go here for the full episode, which includes his rebuttal to medical marijuana advocates that say recreational legalization is bad for those who need the drug for medical reasons

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foreclosure investing

Accounts of abuse, ignoring procedural law and gross incompetence are now legion. For instance, one Florida homeowner who didn't even have a mortgage was foreclosed by Bank of America (BAC). Only after a local newspaper began investigating the case did the bank move to sort out what could be viewed as an illegal "taking" of real property.

In another case, Deutsche Bank National Trust filed to foreclose even though it had sold the mortgage to Goldman Sachs, meaning it had no legal right to foreclose. One judge found that roughly half (46 out of 104) of the foreclosure motions filed in his court were so full of errors that he refused to approve them.

Many commentators have already dismantled the bank/mortgage servicers' claims that the legal issues are all just trivial technicalities. It's hardly trivial that documents filed in court are the foundation of our legal system. A signed affidavit is legally equivalent to providing live testimony in court. If an affidavit is untrue, that's the same as lying in court, which is a crime called perjury.

Yet the current system is filled with "robo-signers" who electronically signed up to 10,000 foreclosure filing a month, making a legal claim of their accuracy. Furthermore, though attorneys are prohibited from making a material misrepresentation to the court, it's clear that such misrepresentations of fact (such as who actually owns the mortgage) are widespread in foreclosure proceedings.

3. The system of slicing up mortgages into pieces and then bundling the pieces into securities is structurally flawed.

In essence, the widespread "packaging" of hundreds of mortgages into mortgage-backed securities (MBS) marketed by Wall Street investment banks has bypassed the property rights laws that underpin ownership and transfer of home loans and deeds.

In the pre-MBS days, a bank would originate a home mortgage and then hold the loan as an asset, collecting the interest and principal payments from the homeowner. But Wall Street banks divided the payments that go toward interest and loan principal into "tranches," or slices, which were assembled by risk and rate of return into pools of mortgages that were then sold as a single security.

With the mortgages divided into pieces that were then bundled into securities that were bought and sold numerous times, the ownership of the underlying mortgage and home often became muddled. This is how two different companies can end up filing foreclosure documents on the same house.

Add in the large number of securitized home equity loans that piggyback on first mortgages and derivative securities such as collateralized debt obligations (CDOs), and you get a nightmarish mishmash of "senior tranches" and multiple claims on the same property.

Stripped of complexity, the issue is straightforward: Every time these securities changed hands, the various claims on the underlying house should have been transferred as well. In many cases, they weren't. In some cases, foreclosures have been allowed even when the original mortgage has been lost.

If you don't need the original document to take someone's home, then exactly what rule of law is at work in America?

4. The nation's system for recording mortgages is woefully inadequate to the task of tracking home loans that have been sliced and diced into tranches and traded freely as securities.

To enable a smooth trading system of these MBS, the banking/mortgage industry set up a privately owned loan-tracking service known as the Mortgage Electronic Registration System (MERS) in 1997. The registry acts a sort of legal proxy of ownership, thereby eliminating the need to record changes in property ownership in the traditional manner, i.e. in local land records.

MERS records loan assignments electronically. It doesn't own the mortgages it registeres, but it's listed in public records as a nominee for the actual owner of the loan or as the original mortgage holder.

Assigning ownership of mortgages to this registry saved the industry a bundle. MERS was estimated to have saved the mortgage industry an $1 billion in its first decade of existence. Some 60 million loans are registered to MERS.

5. Outright foreclosure fraud is now systemic. This includes forged signatures, falsified mortgage numbers, false claims of ownership, false claims that the paperwork has been properly reviewed and document fabrication.

Indeed, for a price, you can have any missing document you might need to file a foreclosure motion "recreated" or "created" out of thin air.

Now that this systemic reliance on falsified documents, forged signatures and myriad "shortcuts" (such as not having the original mortgage) has been revealed, several lenders have halted foreclosures and evictions. Some have stopped proceedings in the 23 states that require a judge's approval, while others such as Bank of America have halted foreclosures in all 50 states.

In response to a public outcry about these widespread abuses, the attorneys general of 40 states are pooling resources to investigate the mortgage and foreclosure industries. One state AG has already filed suit against a leading mortgage servicer, alleging fraud in foreclosures processed by the firm. Ohio Attorney General Richard Cordray said the fraud was the "tip of an iceberg of industrywide abuse of the foreclosure process" and is asking for civil penalties of up to $25,000 for each violation of consumer laws.

Freezing the U.S. Real Estate Market

This systemic breakdown of the procedural laws intended to protect property rights may well have far-reaching consequences beyond lawsuits by public agencies and by individuals who have been harmed or defrauded.

Flawed foreclosure documents mean sales of foreclosed home are in limbo: How can any future owner obtain title insurance when the ownership of the mortgage and thus the integrity of the foreclosure itself is in question?

If millions of foreclosed homes cannot be sold with unambiguously clear titles, then that will effectively freeze a significant portion of the American real estate market. After all, about a third of all home sales involve residences in default or foreclosure.

Fannie Mae has been pulling foreclosed homes off the market, scotching signed deals and removing properties from inventory of unsold homes. Homeowners already in the foreclosure process are now wondering if the foreclosure-fraud debacle can delay or even cancel their impending eviction.

Indeed, the widespread fraud and blatant flouting of the law by politically powerful lenders is eroding many Americans' belief in the fairness of the financial and legal systems. As a result, some are asking why they should continue following the rules when lenders and mortgage servicers evade and abuse the law with impunity.

How Does the U.S. Solve Its Real Estate Crisis?

Stories about middle-class homeowners ensnared in what's either fraud or misrepresentation, depending on one's interpretation, now include a troubling subtext: Some of these once rock-solid citizens are refusing to comply with the demands of lenders.

Some high-visibility commentators are characterizing the foreclosure and MBS debacle as "the biggest fraud in the history of the capital markets." Hyperbole, or simply the truth few dare to state?

While that can be debated, what cannot be debated is the massive loss of trust in the foundations of property rights and rule of law that has occurred. Also not debatable is the impact this loss of trust is having on the housing market, large sections of which are effectively locked.

If distressed mortgages cannot be foreclosed and impaired debts can't be liquidated via auctions or sales on the open market, then how does the U.S. unburden itself of the overhang of housing supply and uncollectible mortgages? It cannot do so with this cloud hanging over the housing and mortgage markets. That will have serious consequences for banks that aren't collecting mortgage payments, for servicers facing massive lawsuits and, eventually, for the value of housing in a market stuffed with a "shadow inventory" of distressed or defaulted homes that can't be sold.

Could the foreclosure mess end up stalling the economic recovery? Perhaps the answer can be found by rephrasing the question: How can an economy be healthy if its mortgage, banking and housing markets are in a state of profound financial and legal disruption?

Note: This is a long post, so I have bifurcated it - placing part two with the heavy graphics and the financial stuff on by blog. The intro and legal theory suggested by readers is here in part one. I would suggest one read it in its entirety before dismissing any one part of it, though.

 

Is it possible for the US Government to choose to forgive mortgage
debt? Sounds outrageous? Read on for the legal theory behind this claim
and let me know what you think? I thought it was little esoteric as
well, but as I looked deeper… Well, I’ll let you be the judge.

A lot of attention accrued to Representative Grayson’s calling out of
foreclosure fraud, and for good reason. The story is absolutely
amazing, and kudos to a member of congress that defends his
constituency.

It’s not as if other entities have failed to take notice. ZeroHedge has its usual witty commentary regarding the possibility of foreclosure transactions potentially being unwound due to fraudulent foreclosure activity. The NYT
ran an article stating that Fitch will look into lowering the credit
rating of companies that participated in the submission of inappropriate
foreclosure paperwork, which apparently seems to include an awful lot
of companies. It goes on to state (as excerpted by Zerohedge):

Fitch Ratings said that Wednesday
it was asking mortgage companies about their internal processes for
executing foreclosure affidavits. If it finds the processes lacking,
Fitch will consider downgrading the company’s rating.

The agency also said if the
issue is widespread, the resulting delays and extra costs to
foreclose could increase losses related to residential mortgage-backed
securities.

Here’s the twist. A lawyer who happens to have
followed my writings over the years has suggested that most are missing
the big picture in focusing on fraudulent foreclosure documents. He
contends (and I’m paraphrasing here, these are not my words, per se) “that
since the U.S. has ownership interest in many (if not most) delinquent
and distressed mortgages, this fact will be counted as policy in
litigation. As a consequence it matters A LOT if you can
say that your client has a Fifth Amendment Due Process right (or third
party beneficiary Federal common law right) to a HAMP modification
which is in FACT a minimization of the risk of default (not that flaky
31% number) BECAUSE, among other things, the U.S. has no economic
incentive to foreclose”. Now, I am no lawyer and thus the legal
issues are beyond my domain, but I must admit I found the theory
interesting. So, I’ve decided to crowdsource this one in anticipation
that some of the more astute legal minds can shed some light on the
validity of the theory. I’ll supply the financial stuff in this post,
and I’ll rely on the legal eagles to peer review the theory.

This all stemmed from a chart and “what if”
scenario I post on the 23rd of September in which showed the increasing
decline in recoveries from gross charge-offs from banks.

As a matter of fact, things are so
bad that I believe banks will have a perverse incentive to actually
walk away. Now wouldn’t that be something??? Next, we take a look into
the home builder that makes more money doing distressed investing
than it does building and selling homes.

The legal argument from the BoomBustBlogger in question is as follows:

 

Things are
moving pretty fast now, especially since so many states are moving to
ban home foreclosures, and since your comments on the lack of economic
incentive to foreclose is coming to the fore. It’s becoming
a question of, Hey Uncle Sam, what is your policy?  This may result in
actions to quiet title, against the banks and the United States. The basis will be that in fact, the United States has forgiven home mortgage indebtedness. Your own observation of the economics of foreclosure is part of the mix. But the entire argument that the U.S., has in FACT (no matter what it CLAIMS) forgiven home mortgage indebtedness, is this:

Through its

1. ownership
stake in banks (creating Fifth Amendment Due Process rights to what is
in FACT–not the arbitrary 31%–minimization of the risk of housing loss:
see Huxtable v. Geithner Order on this (not the Order to Dismiss, sounds
like a settlement was reached since Huxtable filed no opposition); 2.
contracts with servicers (creating third party contract rights in
borrowers–see Marques v. Wells Fargo); 3. mortgage principal reduction; 4. adjustments to gross income for principal reduction; and 5. loss of economic incentive to foreclose,

the United States has in fact forgiven home mortgage indebtedness.

And here is more on the topic…

 

The
big divide in the United States District Courts, with regard to HAMP,
is the language of HAMP which seems to give the Government discretion as
to whether to modify or not.  Here is typical language from a court
decision saying there is no right to a modification:

“Notably, the statute provides that loans may be modified “where
appropriate” – a phrase that limits the Secretary’s obligation and
evinces a Congressional intent to afford discretion in the decision
whether to modify loans in certain circumstances.”

The way
to defeat this (as was done in Huxtable v. Geithner, before the case was
settled or abandoned) is to show FACTS which demonstrate that the
Government is actually enforcing a different policy.  In that case, it
doesn’t matter what the enabling language says, what decides the policy
is what the government is DOING.  What OTHER facts show that the
Government is pursuing this different policy?  That is where your
observation comes in.

One of
those facts is the factual conclusions the government ITSELF has come
to.  What has it really concluded in the secret, back rooms?

This is
why I was interested in your analysis of the returns on taking title to
defaulting properties (the link being the Government ownership stake in
these properties).  If the Government ITSELF has decided there is no
further economic incentive to foreclose, then its policy can ONLY be to
prevent foreclosures, because economics shows no facts in favor of going
forward with foreclosing and taking title.  Government policy must be
based on facts–if it is not, then the policy is simply prejudice, and
the courts will not uphold factless prejudice.  It’s a matter of
determining what policy the Government is pursuing, as a process of
eliminating all  those policy options for which there is no factual
basis.  Weeding out one prejudice after another.  One such prejudice, I
submit, is the idea that there is an economic incentive for the
Government NOT to grant HAMP modification.  If there is no economic
incentive to foreclose, then this supposed economic incentive is
revealed to be a prejudice, and unenforceable.  A right to HAMP
modification follows as a matter of elimination of other options.

That is
where you come in.  It would greatly help if, on your site, you would
give an estimate of the month/year on which the data clearly show that
the economic incentive to foreclose is ZERO.  Once it became clear that
the U.S. had no further economic incentive to foreclose, it would be
very clear that the U.S. has in FACT forgiven home mortgage debt.  That
is what zero incentive to foreclose, means.  It means that, in FACT, the
debt has been forgiven.

I get
the feeling that, privately, the U.S. is racing ahead based on this
knowledge.  I would not be at all surprised to see Obama simply ban home
foreclosures nationwide. 
But we are still in limbo, because there is still this notion that
robo-affidavits are the only problem with foreclosure documents, and
once that is “cleared up” it’s full speed ahead with foreclosures.

That
is certainly not the case, and people need to realize that that is not
the case.  Above all, their lawyers need more ammo, and the best ammo
would be a detailed examination of the rapidly declining economic
incentive to foreclose.

By the
way, if you assume that the Government already knows we are fast
approaching zero incentive to take title, what signs tell you that the
Government is already acting on the idea that there is zero incentive to
take title?  That is, what actions of the U.S. Government tell you that
it has in FACT forgiven home mortgage debt, that it has ALREADY written
it all off as a loss, and is now acting in the AFTERMATH of that
writeoff.  Because I think that’s where we are.  The United States is
ahead of ALL of us on this.  They know how bad.  What I’m asking you is,
where is evidence that they know there is nothing to be gained from
foreclosure, and have moved ahead and have IMPLEMENTED that conclusion?

So if you
could deal with that in some big public way, that would be best… That
would attract the attention of every lawyer, judge and investor in the
country–it would immediately resolve every legal question surrounding
home foreclosures, and it would provide an opportunity to get more of
the truth into court cases.  Even from the analysis you provided on
9/23, it is clear to me that it’s game over for home mortgages.  They
are simply not a part of the economy any more–they’re social policy and
the U.S. is dealing with them as social policy: but what IS the
Government’s new policy?  Well, what do the FACTS show it is?

Since you’re not a lawyer, you greatly underestimate the importance of this observation. When the United States has a stake in a matter, facts relating to that matter are imputed to it as United States POLICY.

Well, he’s right. I am not a lawyer. Actually
far from it, but it does appear he is on to some creative legal theory. I
invite any and all competent legal type to weigh in on this. There is
even more on this topic, which at first sounds a bit far fetched, but
actually congeals into a cogent argument as you read on…

It is a BIG mistake to read this as just a matter of cleaning up a few documents. These phony affidavits [as referenced above]
were part of an effort to hide bad debt on banks’ books. It is also
hiding something else, which is that the United States has forgiven home
mortgage indebtedness. Look:

1. ownership
stake in banks (creating Fifth Amendment Due Process rights to what is
in FACT–not the arbitrary 31%–minimization of the risk of housing
loss(on this prong, please see online the Huxtable v. Geithner Order
(not the Order to Dismiss–sounds like a settlement was reached since
Huxtable filed no opposition). The reasoning of Huxtable is sound and is
pretty generally accepted now. There IS a Fifth Amendment Due Process
right based on U.S. ownership of banks, and this Due Process right is a
right to a modification based on what is in FACT the minimization of
risk of default–this means that the 31% is simply the Government’s
assertion on this point–it is LITIGABLE;

2. contracts
with servicers (creating the same rights as above, but on a third party
beneficiary theory–see Marques v. Wells Fargo–online). The reasoning of
Judge Lorenz is also sound and is simply another basis for claiming a
factual minimization of the risk of default, rather than simply
accepting the Government’s 31%. Again, the 31% is going to be litigated.
People have to get used to that–it’s not off limits anymore;

3. mortgage principal reduction through HAMP;

4. adjustments to gross income for principal reduction through HAMP; and

5. loss of
economic incentive to foreclose (this is Reggie Middleton’s analysis on
his blog). The Middleton analysis is new (it’s at www.boombustblog.com, the September 23 story on housing prices). The return/chargeoff is rapidly hitting 0.

Litigants in
HAMP will certainly have the right to civil discovery as to what the
United States has concluded with respect to the economics of
foreclosure.

It will
probably turn out to be just what the facts show: that the policy is in
FACT to minimize the risk of default because there is no economic
incentive to foreclose.

Of course this
seems impossible, unacceptable, blah blah blah. But if the economic
facts bear it out, then the economic facts bear it out and you just have
to wrap your head around it. What will happen next/is happening now:

1. litigants
will sue to quiet title (among other causes of action such as fraud,
conspiracy, Civil Rights violations, etc., naming Tiny Tim, the IRS
commissioner and the United States, among others); and

2. the U.S. is
scrambling right now to decide what to do if people who have a gazillion
dollars and are sitting in a house which is soaring in value,
nevertheless decide to simply stop paying on their mortgages.

Of course, the
first instinct of Uncle Sam will be some sort of coercion. When that
fails in court, the next gambit will be to try to provide some incentive
to people to keep paying those damned mortgages. Who knows how this
will end?

In any event,
it’s Reggie Middleton’s analysis which broke the back of this. Indeed,
I’m sure his analysis was already made in the dark of night at the
Treasury Department.

robert shumake detroit

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Accounts of abuse, ignoring procedural law and gross incompetence are now legion. For instance, one Florida homeowner who didn't even have a mortgage was foreclosed by Bank of America (BAC). Only after a local newspaper began investigating the case did the bank move to sort out what could be viewed as an illegal "taking" of real property.

In another case, Deutsche Bank National Trust filed to foreclose even though it had sold the mortgage to Goldman Sachs, meaning it had no legal right to foreclose. One judge found that roughly half (46 out of 104) of the foreclosure motions filed in his court were so full of errors that he refused to approve them.

Many commentators have already dismantled the bank/mortgage servicers' claims that the legal issues are all just trivial technicalities. It's hardly trivial that documents filed in court are the foundation of our legal system. A signed affidavit is legally equivalent to providing live testimony in court. If an affidavit is untrue, that's the same as lying in court, which is a crime called perjury.

Yet the current system is filled with "robo-signers" who electronically signed up to 10,000 foreclosure filing a month, making a legal claim of their accuracy. Furthermore, though attorneys are prohibited from making a material misrepresentation to the court, it's clear that such misrepresentations of fact (such as who actually owns the mortgage) are widespread in foreclosure proceedings.

3. The system of slicing up mortgages into pieces and then bundling the pieces into securities is structurally flawed.

In essence, the widespread "packaging" of hundreds of mortgages into mortgage-backed securities (MBS) marketed by Wall Street investment banks has bypassed the property rights laws that underpin ownership and transfer of home loans and deeds.

In the pre-MBS days, a bank would originate a home mortgage and then hold the loan as an asset, collecting the interest and principal payments from the homeowner. But Wall Street banks divided the payments that go toward interest and loan principal into "tranches," or slices, which were assembled by risk and rate of return into pools of mortgages that were then sold as a single security.

With the mortgages divided into pieces that were then bundled into securities that were bought and sold numerous times, the ownership of the underlying mortgage and home often became muddled. This is how two different companies can end up filing foreclosure documents on the same house.

Add in the large number of securitized home equity loans that piggyback on first mortgages and derivative securities such as collateralized debt obligations (CDOs), and you get a nightmarish mishmash of "senior tranches" and multiple claims on the same property.

Stripped of complexity, the issue is straightforward: Every time these securities changed hands, the various claims on the underlying house should have been transferred as well. In many cases, they weren't. In some cases, foreclosures have been allowed even when the original mortgage has been lost.

If you don't need the original document to take someone's home, then exactly what rule of law is at work in America?

4. The nation's system for recording mortgages is woefully inadequate to the task of tracking home loans that have been sliced and diced into tranches and traded freely as securities.

To enable a smooth trading system of these MBS, the banking/mortgage industry set up a privately owned loan-tracking service known as the Mortgage Electronic Registration System (MERS) in 1997. The registry acts a sort of legal proxy of ownership, thereby eliminating the need to record changes in property ownership in the traditional manner, i.e. in local land records.

MERS records loan assignments electronically. It doesn't own the mortgages it registeres, but it's listed in public records as a nominee for the actual owner of the loan or as the original mortgage holder.

Assigning ownership of mortgages to this registry saved the industry a bundle. MERS was estimated to have saved the mortgage industry an $1 billion in its first decade of existence. Some 60 million loans are registered to MERS.

5. Outright foreclosure fraud is now systemic. This includes forged signatures, falsified mortgage numbers, false claims of ownership, false claims that the paperwork has been properly reviewed and document fabrication.

Indeed, for a price, you can have any missing document you might need to file a foreclosure motion "recreated" or "created" out of thin air.

Now that this systemic reliance on falsified documents, forged signatures and myriad "shortcuts" (such as not having the original mortgage) has been revealed, several lenders have halted foreclosures and evictions. Some have stopped proceedings in the 23 states that require a judge's approval, while others such as Bank of America have halted foreclosures in all 50 states.

In response to a public outcry about these widespread abuses, the attorneys general of 40 states are pooling resources to investigate the mortgage and foreclosure industries. One state AG has already filed suit against a leading mortgage servicer, alleging fraud in foreclosures processed by the firm. Ohio Attorney General Richard Cordray said the fraud was the "tip of an iceberg of industrywide abuse of the foreclosure process" and is asking for civil penalties of up to $25,000 for each violation of consumer laws.

Freezing the U.S. Real Estate Market

This systemic breakdown of the procedural laws intended to protect property rights may well have far-reaching consequences beyond lawsuits by public agencies and by individuals who have been harmed or defrauded.

Flawed foreclosure documents mean sales of foreclosed home are in limbo: How can any future owner obtain title insurance when the ownership of the mortgage and thus the integrity of the foreclosure itself is in question?

If millions of foreclosed homes cannot be sold with unambiguously clear titles, then that will effectively freeze a significant portion of the American real estate market. After all, about a third of all home sales involve residences in default or foreclosure.

Fannie Mae has been pulling foreclosed homes off the market, scotching signed deals and removing properties from inventory of unsold homes. Homeowners already in the foreclosure process are now wondering if the foreclosure-fraud debacle can delay or even cancel their impending eviction.

Indeed, the widespread fraud and blatant flouting of the law by politically powerful lenders is eroding many Americans' belief in the fairness of the financial and legal systems. As a result, some are asking why they should continue following the rules when lenders and mortgage servicers evade and abuse the law with impunity.

How Does the U.S. Solve Its Real Estate Crisis?

Stories about middle-class homeowners ensnared in what's either fraud or misrepresentation, depending on one's interpretation, now include a troubling subtext: Some of these once rock-solid citizens are refusing to comply with the demands of lenders.

Some high-visibility commentators are characterizing the foreclosure and MBS debacle as "the biggest fraud in the history of the capital markets." Hyperbole, or simply the truth few dare to state?

While that can be debated, what cannot be debated is the massive loss of trust in the foundations of property rights and rule of law that has occurred. Also not debatable is the impact this loss of trust is having on the housing market, large sections of which are effectively locked.

If distressed mortgages cannot be foreclosed and impaired debts can't be liquidated via auctions or sales on the open market, then how does the U.S. unburden itself of the overhang of housing supply and uncollectible mortgages? It cannot do so with this cloud hanging over the housing and mortgage markets. That will have serious consequences for banks that aren't collecting mortgage payments, for servicers facing massive lawsuits and, eventually, for the value of housing in a market stuffed with a "shadow inventory" of distressed or defaulted homes that can't be sold.

Could the foreclosure mess end up stalling the economic recovery? Perhaps the answer can be found by rephrasing the question: How can an economy be healthy if its mortgage, banking and housing markets are in a state of profound financial and legal disruption?

Note: This is a long post, so I have bifurcated it - placing part two with the heavy graphics and the financial stuff on by blog. The intro and legal theory suggested by readers is here in part one. I would suggest one read it in its entirety before dismissing any one part of it, though.

 

Is it possible for the US Government to choose to forgive mortgage
debt? Sounds outrageous? Read on for the legal theory behind this claim
and let me know what you think? I thought it was little esoteric as
well, but as I looked deeper… Well, I’ll let you be the judge.

A lot of attention accrued to Representative Grayson’s calling out of
foreclosure fraud, and for good reason. The story is absolutely
amazing, and kudos to a member of congress that defends his
constituency.

It’s not as if other entities have failed to take notice. ZeroHedge has its usual witty commentary regarding the possibility of foreclosure transactions potentially being unwound due to fraudulent foreclosure activity. The NYT
ran an article stating that Fitch will look into lowering the credit
rating of companies that participated in the submission of inappropriate
foreclosure paperwork, which apparently seems to include an awful lot
of companies. It goes on to state (as excerpted by Zerohedge):

Fitch Ratings said that Wednesday
it was asking mortgage companies about their internal processes for
executing foreclosure affidavits. If it finds the processes lacking,
Fitch will consider downgrading the company’s rating.

The agency also said if the
issue is widespread, the resulting delays and extra costs to
foreclose could increase losses related to residential mortgage-backed
securities.

Here’s the twist. A lawyer who happens to have
followed my writings over the years has suggested that most are missing
the big picture in focusing on fraudulent foreclosure documents. He
contends (and I’m paraphrasing here, these are not my words, per se) “that
since the U.S. has ownership interest in many (if not most) delinquent
and distressed mortgages, this fact will be counted as policy in
litigation. As a consequence it matters A LOT if you can
say that your client has a Fifth Amendment Due Process right (or third
party beneficiary Federal common law right) to a HAMP modification
which is in FACT a minimization of the risk of default (not that flaky
31% number) BECAUSE, among other things, the U.S. has no economic
incentive to foreclose”. Now, I am no lawyer and thus the legal
issues are beyond my domain, but I must admit I found the theory
interesting. So, I’ve decided to crowdsource this one in anticipation
that some of the more astute legal minds can shed some light on the
validity of the theory. I’ll supply the financial stuff in this post,
and I’ll rely on the legal eagles to peer review the theory.

This all stemmed from a chart and “what if”
scenario I post on the 23rd of September in which showed the increasing
decline in recoveries from gross charge-offs from banks.

As a matter of fact, things are so
bad that I believe banks will have a perverse incentive to actually
walk away. Now wouldn’t that be something??? Next, we take a look into
the home builder that makes more money doing distressed investing
than it does building and selling homes.

The legal argument from the BoomBustBlogger in question is as follows:

 

Things are
moving pretty fast now, especially since so many states are moving to
ban home foreclosures, and since your comments on the lack of economic
incentive to foreclose is coming to the fore. It’s becoming
a question of, Hey Uncle Sam, what is your policy?  This may result in
actions to quiet title, against the banks and the United States. The basis will be that in fact, the United States has forgiven home mortgage indebtedness. Your own observation of the economics of foreclosure is part of the mix. But the entire argument that the U.S., has in FACT (no matter what it CLAIMS) forgiven home mortgage indebtedness, is this:

Through its

1. ownership
stake in banks (creating Fifth Amendment Due Process rights to what is
in FACT–not the arbitrary 31%–minimization of the risk of housing loss:
see Huxtable v. Geithner Order on this (not the Order to Dismiss, sounds
like a settlement was reached since Huxtable filed no opposition); 2.
contracts with servicers (creating third party contract rights in
borrowers–see Marques v. Wells Fargo); 3. mortgage principal reduction; 4. adjustments to gross income for principal reduction; and 5. loss of economic incentive to foreclose,

the United States has in fact forgiven home mortgage indebtedness.

And here is more on the topic…

 

The
big divide in the United States District Courts, with regard to HAMP,
is the language of HAMP which seems to give the Government discretion as
to whether to modify or not.  Here is typical language from a court
decision saying there is no right to a modification:

“Notably, the statute provides that loans may be modified “where
appropriate” – a phrase that limits the Secretary’s obligation and
evinces a Congressional intent to afford discretion in the decision
whether to modify loans in certain circumstances.”

The way
to defeat this (as was done in Huxtable v. Geithner, before the case was
settled or abandoned) is to show FACTS which demonstrate that the
Government is actually enforcing a different policy.  In that case, it
doesn’t matter what the enabling language says, what decides the policy
is what the government is DOING.  What OTHER facts show that the
Government is pursuing this different policy?  That is where your
observation comes in.

One of
those facts is the factual conclusions the government ITSELF has come
to.  What has it really concluded in the secret, back rooms?

This is
why I was interested in your analysis of the returns on taking title to
defaulting properties (the link being the Government ownership stake in
these properties).  If the Government ITSELF has decided there is no
further economic incentive to foreclose, then its policy can ONLY be to
prevent foreclosures, because economics shows no facts in favor of going
forward with foreclosing and taking title.  Government policy must be
based on facts–if it is not, then the policy is simply prejudice, and
the courts will not uphold factless prejudice.  It’s a matter of
determining what policy the Government is pursuing, as a process of
eliminating all  those policy options for which there is no factual
basis.  Weeding out one prejudice after another.  One such prejudice, I
submit, is the idea that there is an economic incentive for the
Government NOT to grant HAMP modification.  If there is no economic
incentive to foreclose, then this supposed economic incentive is
revealed to be a prejudice, and unenforceable.  A right to HAMP
modification follows as a matter of elimination of other options.

That is
where you come in.  It would greatly help if, on your site, you would
give an estimate of the month/year on which the data clearly show that
the economic incentive to foreclose is ZERO.  Once it became clear that
the U.S. had no further economic incentive to foreclose, it would be
very clear that the U.S. has in FACT forgiven home mortgage debt.  That
is what zero incentive to foreclose, means.  It means that, in FACT, the
debt has been forgiven.

I get
the feeling that, privately, the U.S. is racing ahead based on this
knowledge.  I would not be at all surprised to see Obama simply ban home
foreclosures nationwide. 
But we are still in limbo, because there is still this notion that
robo-affidavits are the only problem with foreclosure documents, and
once that is “cleared up” it’s full speed ahead with foreclosures.

That
is certainly not the case, and people need to realize that that is not
the case.  Above all, their lawyers need more ammo, and the best ammo
would be a detailed examination of the rapidly declining economic
incentive to foreclose.

By the
way, if you assume that the Government already knows we are fast
approaching zero incentive to take title, what signs tell you that the
Government is already acting on the idea that there is zero incentive to
take title?  That is, what actions of the U.S. Government tell you that
it has in FACT forgiven home mortgage debt, that it has ALREADY written
it all off as a loss, and is now acting in the AFTERMATH of that
writeoff.  Because I think that’s where we are.  The United States is
ahead of ALL of us on this.  They know how bad.  What I’m asking you is,
where is evidence that they know there is nothing to be gained from
foreclosure, and have moved ahead and have IMPLEMENTED that conclusion?

So if you
could deal with that in some big public way, that would be best… That
would attract the attention of every lawyer, judge and investor in the
country–it would immediately resolve every legal question surrounding
home foreclosures, and it would provide an opportunity to get more of
the truth into court cases.  Even from the analysis you provided on
9/23, it is clear to me that it’s game over for home mortgages.  They
are simply not a part of the economy any more–they’re social policy and
the U.S. is dealing with them as social policy: but what IS the
Government’s new policy?  Well, what do the FACTS show it is?

Since you’re not a lawyer, you greatly underestimate the importance of this observation. When the United States has a stake in a matter, facts relating to that matter are imputed to it as United States POLICY.

Well, he’s right. I am not a lawyer. Actually
far from it, but it does appear he is on to some creative legal theory. I
invite any and all competent legal type to weigh in on this. There is
even more on this topic, which at first sounds a bit far fetched, but
actually congeals into a cogent argument as you read on…

It is a BIG mistake to read this as just a matter of cleaning up a few documents. These phony affidavits [as referenced above]
were part of an effort to hide bad debt on banks’ books. It is also
hiding something else, which is that the United States has forgiven home
mortgage indebtedness. Look:

1. ownership
stake in banks (creating Fifth Amendment Due Process rights to what is
in FACT–not the arbitrary 31%–minimization of the risk of housing
loss(on this prong, please see online the Huxtable v. Geithner Order
(not the Order to Dismiss–sounds like a settlement was reached since
Huxtable filed no opposition). The reasoning of Huxtable is sound and is
pretty generally accepted now. There IS a Fifth Amendment Due Process
right based on U.S. ownership of banks, and this Due Process right is a
right to a modification based on what is in FACT the minimization of
risk of default–this means that the 31% is simply the Government’s
assertion on this point–it is LITIGABLE;

2. contracts
with servicers (creating the same rights as above, but on a third party
beneficiary theory–see Marques v. Wells Fargo–online). The reasoning of
Judge Lorenz is also sound and is simply another basis for claiming a
factual minimization of the risk of default, rather than simply
accepting the Government’s 31%. Again, the 31% is going to be litigated.
People have to get used to that–it’s not off limits anymore;

3. mortgage principal reduction through HAMP;

4. adjustments to gross income for principal reduction through HAMP; and

5. loss of
economic incentive to foreclose (this is Reggie Middleton’s analysis on
his blog). The Middleton analysis is new (it’s at www.boombustblog.com, the September 23 story on housing prices). The return/chargeoff is rapidly hitting 0.

Litigants in
HAMP will certainly have the right to civil discovery as to what the
United States has concluded with respect to the economics of
foreclosure.

It will
probably turn out to be just what the facts show: that the policy is in
FACT to minimize the risk of default because there is no economic
incentive to foreclose.

Of course this
seems impossible, unacceptable, blah blah blah. But if the economic
facts bear it out, then the economic facts bear it out and you just have
to wrap your head around it. What will happen next/is happening now:

1. litigants
will sue to quiet title (among other causes of action such as fraud,
conspiracy, Civil Rights violations, etc., naming Tiny Tim, the IRS
commissioner and the United States, among others); and

2. the U.S. is
scrambling right now to decide what to do if people who have a gazillion
dollars and are sitting in a house which is soaring in value,
nevertheless decide to simply stop paying on their mortgages.

Of course, the
first instinct of Uncle Sam will be some sort of coercion. When that
fails in court, the next gambit will be to try to provide some incentive
to people to keep paying those damned mortgages. Who knows how this
will end?

In any event,
it’s Reggie Middleton’s analysis which broke the back of this. Indeed,
I’m sure his analysis was already made in the dark of night at the
Treasury Department.

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Accounts of abuse, ignoring procedural law and gross incompetence are now legion. For instance, one Florida homeowner who didn't even have a mortgage was foreclosed by Bank of America (BAC). Only after a local newspaper began investigating the case did the bank move to sort out what could be viewed as an illegal "taking" of real property.

In another case, Deutsche Bank National Trust filed to foreclose even though it had sold the mortgage to Goldman Sachs, meaning it had no legal right to foreclose. One judge found that roughly half (46 out of 104) of the foreclosure motions filed in his court were so full of errors that he refused to approve them.

Many commentators have already dismantled the bank/mortgage servicers' claims that the legal issues are all just trivial technicalities. It's hardly trivial that documents filed in court are the foundation of our legal system. A signed affidavit is legally equivalent to providing live testimony in court. If an affidavit is untrue, that's the same as lying in court, which is a crime called perjury.

Yet the current system is filled with "robo-signers" who electronically signed up to 10,000 foreclosure filing a month, making a legal claim of their accuracy. Furthermore, though attorneys are prohibited from making a material misrepresentation to the court, it's clear that such misrepresentations of fact (such as who actually owns the mortgage) are widespread in foreclosure proceedings.

3. The system of slicing up mortgages into pieces and then bundling the pieces into securities is structurally flawed.

In essence, the widespread "packaging" of hundreds of mortgages into mortgage-backed securities (MBS) marketed by Wall Street investment banks has bypassed the property rights laws that underpin ownership and transfer of home loans and deeds.

In the pre-MBS days, a bank would originate a home mortgage and then hold the loan as an asset, collecting the interest and principal payments from the homeowner. But Wall Street banks divided the payments that go toward interest and loan principal into "tranches," or slices, which were assembled by risk and rate of return into pools of mortgages that were then sold as a single security.

With the mortgages divided into pieces that were then bundled into securities that were bought and sold numerous times, the ownership of the underlying mortgage and home often became muddled. This is how two different companies can end up filing foreclosure documents on the same house.

Add in the large number of securitized home equity loans that piggyback on first mortgages and derivative securities such as collateralized debt obligations (CDOs), and you get a nightmarish mishmash of "senior tranches" and multiple claims on the same property.

Stripped of complexity, the issue is straightforward: Every time these securities changed hands, the various claims on the underlying house should have been transferred as well. In many cases, they weren't. In some cases, foreclosures have been allowed even when the original mortgage has been lost.

If you don't need the original document to take someone's home, then exactly what rule of law is at work in America?

4. The nation's system for recording mortgages is woefully inadequate to the task of tracking home loans that have been sliced and diced into tranches and traded freely as securities.

To enable a smooth trading system of these MBS, the banking/mortgage industry set up a privately owned loan-tracking service known as the Mortgage Electronic Registration System (MERS) in 1997. The registry acts a sort of legal proxy of ownership, thereby eliminating the need to record changes in property ownership in the traditional manner, i.e. in local land records.

MERS records loan assignments electronically. It doesn't own the mortgages it registeres, but it's listed in public records as a nominee for the actual owner of the loan or as the original mortgage holder.

Assigning ownership of mortgages to this registry saved the industry a bundle. MERS was estimated to have saved the mortgage industry an $1 billion in its first decade of existence. Some 60 million loans are registered to MERS.

5. Outright foreclosure fraud is now systemic. This includes forged signatures, falsified mortgage numbers, false claims of ownership, false claims that the paperwork has been properly reviewed and document fabrication.

Indeed, for a price, you can have any missing document you might need to file a foreclosure motion "recreated" or "created" out of thin air.

Now that this systemic reliance on falsified documents, forged signatures and myriad "shortcuts" (such as not having the original mortgage) has been revealed, several lenders have halted foreclosures and evictions. Some have stopped proceedings in the 23 states that require a judge's approval, while others such as Bank of America have halted foreclosures in all 50 states.

In response to a public outcry about these widespread abuses, the attorneys general of 40 states are pooling resources to investigate the mortgage and foreclosure industries. One state AG has already filed suit against a leading mortgage servicer, alleging fraud in foreclosures processed by the firm. Ohio Attorney General Richard Cordray said the fraud was the "tip of an iceberg of industrywide abuse of the foreclosure process" and is asking for civil penalties of up to $25,000 for each violation of consumer laws.

Freezing the U.S. Real Estate Market

This systemic breakdown of the procedural laws intended to protect property rights may well have far-reaching consequences beyond lawsuits by public agencies and by individuals who have been harmed or defrauded.

Flawed foreclosure documents mean sales of foreclosed home are in limbo: How can any future owner obtain title insurance when the ownership of the mortgage and thus the integrity of the foreclosure itself is in question?

If millions of foreclosed homes cannot be sold with unambiguously clear titles, then that will effectively freeze a significant portion of the American real estate market. After all, about a third of all home sales involve residences in default or foreclosure.

Fannie Mae has been pulling foreclosed homes off the market, scotching signed deals and removing properties from inventory of unsold homes. Homeowners already in the foreclosure process are now wondering if the foreclosure-fraud debacle can delay or even cancel their impending eviction.

Indeed, the widespread fraud and blatant flouting of the law by politically powerful lenders is eroding many Americans' belief in the fairness of the financial and legal systems. As a result, some are asking why they should continue following the rules when lenders and mortgage servicers evade and abuse the law with impunity.

How Does the U.S. Solve Its Real Estate Crisis?

Stories about middle-class homeowners ensnared in what's either fraud or misrepresentation, depending on one's interpretation, now include a troubling subtext: Some of these once rock-solid citizens are refusing to comply with the demands of lenders.

Some high-visibility commentators are characterizing the foreclosure and MBS debacle as "the biggest fraud in the history of the capital markets." Hyperbole, or simply the truth few dare to state?

While that can be debated, what cannot be debated is the massive loss of trust in the foundations of property rights and rule of law that has occurred. Also not debatable is the impact this loss of trust is having on the housing market, large sections of which are effectively locked.

If distressed mortgages cannot be foreclosed and impaired debts can't be liquidated via auctions or sales on the open market, then how does the U.S. unburden itself of the overhang of housing supply and uncollectible mortgages? It cannot do so with this cloud hanging over the housing and mortgage markets. That will have serious consequences for banks that aren't collecting mortgage payments, for servicers facing massive lawsuits and, eventually, for the value of housing in a market stuffed with a "shadow inventory" of distressed or defaulted homes that can't be sold.

Could the foreclosure mess end up stalling the economic recovery? Perhaps the answer can be found by rephrasing the question: How can an economy be healthy if its mortgage, banking and housing markets are in a state of profound financial and legal disruption?

Note: This is a long post, so I have bifurcated it - placing part two with the heavy graphics and the financial stuff on by blog. The intro and legal theory suggested by readers is here in part one. I would suggest one read it in its entirety before dismissing any one part of it, though.

 

Is it possible for the US Government to choose to forgive mortgage
debt? Sounds outrageous? Read on for the legal theory behind this claim
and let me know what you think? I thought it was little esoteric as
well, but as I looked deeper… Well, I’ll let you be the judge.

A lot of attention accrued to Representative Grayson’s calling out of
foreclosure fraud, and for good reason. The story is absolutely
amazing, and kudos to a member of congress that defends his
constituency.

It’s not as if other entities have failed to take notice. ZeroHedge has its usual witty commentary regarding the possibility of foreclosure transactions potentially being unwound due to fraudulent foreclosure activity. The NYT
ran an article stating that Fitch will look into lowering the credit
rating of companies that participated in the submission of inappropriate
foreclosure paperwork, which apparently seems to include an awful lot
of companies. It goes on to state (as excerpted by Zerohedge):

Fitch Ratings said that Wednesday
it was asking mortgage companies about their internal processes for
executing foreclosure affidavits. If it finds the processes lacking,
Fitch will consider downgrading the company’s rating.

The agency also said if the
issue is widespread, the resulting delays and extra costs to
foreclose could increase losses related to residential mortgage-backed
securities.

Here’s the twist. A lawyer who happens to have
followed my writings over the years has suggested that most are missing
the big picture in focusing on fraudulent foreclosure documents. He
contends (and I’m paraphrasing here, these are not my words, per se) “that
since the U.S. has ownership interest in many (if not most) delinquent
and distressed mortgages, this fact will be counted as policy in
litigation. As a consequence it matters A LOT if you can
say that your client has a Fifth Amendment Due Process right (or third
party beneficiary Federal common law right) to a HAMP modification
which is in FACT a minimization of the risk of default (not that flaky
31% number) BECAUSE, among other things, the U.S. has no economic
incentive to foreclose”. Now, I am no lawyer and thus the legal
issues are beyond my domain, but I must admit I found the theory
interesting. So, I’ve decided to crowdsource this one in anticipation
that some of the more astute legal minds can shed some light on the
validity of the theory. I’ll supply the financial stuff in this post,
and I’ll rely on the legal eagles to peer review the theory.

This all stemmed from a chart and “what if”
scenario I post on the 23rd of September in which showed the increasing
decline in recoveries from gross charge-offs from banks.

As a matter of fact, things are so
bad that I believe banks will have a perverse incentive to actually
walk away. Now wouldn’t that be something??? Next, we take a look into
the home builder that makes more money doing distressed investing
than it does building and selling homes.

The legal argument from the BoomBustBlogger in question is as follows:

 

Things are
moving pretty fast now, especially since so many states are moving to
ban home foreclosures, and since your comments on the lack of economic
incentive to foreclose is coming to the fore. It’s becoming
a question of, Hey Uncle Sam, what is your policy?  This may result in
actions to quiet title, against the banks and the United States. The basis will be that in fact, the United States has forgiven home mortgage indebtedness. Your own observation of the economics of foreclosure is part of the mix. But the entire argument that the U.S., has in FACT (no matter what it CLAIMS) forgiven home mortgage indebtedness, is this:

Through its

1. ownership
stake in banks (creating Fifth Amendment Due Process rights to what is
in FACT–not the arbitrary 31%–minimization of the risk of housing loss:
see Huxtable v. Geithner Order on this (not the Order to Dismiss, sounds
like a settlement was reached since Huxtable filed no opposition); 2.
contracts with servicers (creating third party contract rights in
borrowers–see Marques v. Wells Fargo); 3. mortgage principal reduction; 4. adjustments to gross income for principal reduction; and 5. loss of economic incentive to foreclose,

the United States has in fact forgiven home mortgage indebtedness.

And here is more on the topic…

 

The
big divide in the United States District Courts, with regard to HAMP,
is the language of HAMP which seems to give the Government discretion as
to whether to modify or not.  Here is typical language from a court
decision saying there is no right to a modification:

“Notably, the statute provides that loans may be modified “where
appropriate” – a phrase that limits the Secretary’s obligation and
evinces a Congressional intent to afford discretion in the decision
whether to modify loans in certain circumstances.”

The way
to defeat this (as was done in Huxtable v. Geithner, before the case was
settled or abandoned) is to show FACTS which demonstrate that the
Government is actually enforcing a different policy.  In that case, it
doesn’t matter what the enabling language says, what decides the policy
is what the government is DOING.  What OTHER facts show that the
Government is pursuing this different policy?  That is where your
observation comes in.

One of
those facts is the factual conclusions the government ITSELF has come
to.  What has it really concluded in the secret, back rooms?

This is
why I was interested in your analysis of the returns on taking title to
defaulting properties (the link being the Government ownership stake in
these properties).  If the Government ITSELF has decided there is no
further economic incentive to foreclose, then its policy can ONLY be to
prevent foreclosures, because economics shows no facts in favor of going
forward with foreclosing and taking title.  Government policy must be
based on facts–if it is not, then the policy is simply prejudice, and
the courts will not uphold factless prejudice.  It’s a matter of
determining what policy the Government is pursuing, as a process of
eliminating all  those policy options for which there is no factual
basis.  Weeding out one prejudice after another.  One such prejudice, I
submit, is the idea that there is an economic incentive for the
Government NOT to grant HAMP modification.  If there is no economic
incentive to foreclose, then this supposed economic incentive is
revealed to be a prejudice, and unenforceable.  A right to HAMP
modification follows as a matter of elimination of other options.

That is
where you come in.  It would greatly help if, on your site, you would
give an estimate of the month/year on which the data clearly show that
the economic incentive to foreclose is ZERO.  Once it became clear that
the U.S. had no further economic incentive to foreclose, it would be
very clear that the U.S. has in FACT forgiven home mortgage debt.  That
is what zero incentive to foreclose, means.  It means that, in FACT, the
debt has been forgiven.

I get
the feeling that, privately, the U.S. is racing ahead based on this
knowledge.  I would not be at all surprised to see Obama simply ban home
foreclosures nationwide. 
But we are still in limbo, because there is still this notion that
robo-affidavits are the only problem with foreclosure documents, and
once that is “cleared up” it’s full speed ahead with foreclosures.

That
is certainly not the case, and people need to realize that that is not
the case.  Above all, their lawyers need more ammo, and the best ammo
would be a detailed examination of the rapidly declining economic
incentive to foreclose.

By the
way, if you assume that the Government already knows we are fast
approaching zero incentive to take title, what signs tell you that the
Government is already acting on the idea that there is zero incentive to
take title?  That is, what actions of the U.S. Government tell you that
it has in FACT forgiven home mortgage debt, that it has ALREADY written
it all off as a loss, and is now acting in the AFTERMATH of that
writeoff.  Because I think that’s where we are.  The United States is
ahead of ALL of us on this.  They know how bad.  What I’m asking you is,
where is evidence that they know there is nothing to be gained from
foreclosure, and have moved ahead and have IMPLEMENTED that conclusion?

So if you
could deal with that in some big public way, that would be best… That
would attract the attention of every lawyer, judge and investor in the
country–it would immediately resolve every legal question surrounding
home foreclosures, and it would provide an opportunity to get more of
the truth into court cases.  Even from the analysis you provided on
9/23, it is clear to me that it’s game over for home mortgages.  They
are simply not a part of the economy any more–they’re social policy and
the U.S. is dealing with them as social policy: but what IS the
Government’s new policy?  Well, what do the FACTS show it is?

Since you’re not a lawyer, you greatly underestimate the importance of this observation. When the United States has a stake in a matter, facts relating to that matter are imputed to it as United States POLICY.

Well, he’s right. I am not a lawyer. Actually
far from it, but it does appear he is on to some creative legal theory. I
invite any and all competent legal type to weigh in on this. There is
even more on this topic, which at first sounds a bit far fetched, but
actually congeals into a cogent argument as you read on…

It is a BIG mistake to read this as just a matter of cleaning up a few documents. These phony affidavits [as referenced above]
were part of an effort to hide bad debt on banks’ books. It is also
hiding something else, which is that the United States has forgiven home
mortgage indebtedness. Look:

1. ownership
stake in banks (creating Fifth Amendment Due Process rights to what is
in FACT–not the arbitrary 31%–minimization of the risk of housing
loss(on this prong, please see online the Huxtable v. Geithner Order
(not the Order to Dismiss–sounds like a settlement was reached since
Huxtable filed no opposition). The reasoning of Huxtable is sound and is
pretty generally accepted now. There IS a Fifth Amendment Due Process
right based on U.S. ownership of banks, and this Due Process right is a
right to a modification based on what is in FACT the minimization of
risk of default–this means that the 31% is simply the Government’s
assertion on this point–it is LITIGABLE;

2. contracts
with servicers (creating the same rights as above, but on a third party
beneficiary theory–see Marques v. Wells Fargo–online). The reasoning of
Judge Lorenz is also sound and is simply another basis for claiming a
factual minimization of the risk of default, rather than simply
accepting the Government’s 31%. Again, the 31% is going to be litigated.
People have to get used to that–it’s not off limits anymore;

3. mortgage principal reduction through HAMP;

4. adjustments to gross income for principal reduction through HAMP; and

5. loss of
economic incentive to foreclose (this is Reggie Middleton’s analysis on
his blog). The Middleton analysis is new (it’s at www.boombustblog.com, the September 23 story on housing prices). The return/chargeoff is rapidly hitting 0.

Litigants in
HAMP will certainly have the right to civil discovery as to what the
United States has concluded with respect to the economics of
foreclosure.

It will
probably turn out to be just what the facts show: that the policy is in
FACT to minimize the risk of default because there is no economic
incentive to foreclose.

Of course this
seems impossible, unacceptable, blah blah blah. But if the economic
facts bear it out, then the economic facts bear it out and you just have
to wrap your head around it. What will happen next/is happening now:

1. litigants
will sue to quiet title (among other causes of action such as fraud,
conspiracy, Civil Rights violations, etc., naming Tiny Tim, the IRS
commissioner and the United States, among others); and

2. the U.S. is
scrambling right now to decide what to do if people who have a gazillion
dollars and are sitting in a house which is soaring in value,
nevertheless decide to simply stop paying on their mortgages.

Of course, the
first instinct of Uncle Sam will be some sort of coercion. When that
fails in court, the next gambit will be to try to provide some incentive
to people to keep paying those damned mortgages. Who knows how this
will end?

In any event,
it’s Reggie Middleton’s analysis which broke the back of this. Indeed,
I’m sure his analysis was already made in the dark of night at the
Treasury Department.

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If your thinking about purchasing a foreclosed property there is a lot to take into consideration before you put your plans into motion. Due to the mortgage crisis, there are plenty of properties that are available, but there are different stages of foreclosure and the more you know, the better you can make an informed and rational investment.

Let's start by looking at the different stages of foreclosure:

Pre-foreclosure - during this time, although the homeowner still owns the home, they are 90 days late on their mortgage payments, and have received a notice from their lender that if the payments that are in arrears are not paid they will face foreclosure proceedings. In order to prevent ruining their credit and/or losing any equity they have in the home, the homeowner will be extremely motivated to sell quickly for a good price. In some instances, their lender may agree to a short sale in which the lender agrees to accept less than what is actually owed on the existing mortgage. It is important to remember that if the homeowner owes more than the property is worth ( often seen when a homeowner acquired the Pay Option Arm) the bank may not entertain offers that are below the fair market value of the home. It is not a bad idea to search public records, at the county recorder's office. You will be able to find out who is on title, if a notice of foreclosure has been filed, if there is more than one mortgage, and if there are any other liens on the property. This will give you an idea on what type of offer to make. Keep in mind that a lender will not agree to a short sale unless the homeowner has no equity and are unable to repay the difference between the sales price and the existing loans. Very often the sellers need to provide a letter of hardship. Make sure you have your financing in place, it is a good idea to provide a commitment letter from your lender to the seller's lender, this way, they know you are serious and have the funds available to move quickly. It's not a bad idea to include in your offer the right to a home inspection and make your offer contingent on the results of it. You want to know if there is something wrong with the home before you are obligated to buy it.

Buying a home at auction- if you're not an experienced investor, this is the one you might want to stay away from. Although when a home is sold at auction, the bidding starts low ( the balance of the existing mortgage) the bidders are the ones that decide what the property is worth and very often there are big discounts. You may be biting off more than you can chew. Unlike pre-foreclosures and REO's, you probably will not have the opportunity to research the property. Very often, investors get a list of properties only a week or two before the auction, and have little to no time to research the title, and more times then not, you cannot inspect the property. Because of this, you are unaware of any damage and the extent and you may also be held responsible for existing liens on the property that you are not aware of. ( including other unpaid mortgages and unpaid real estate taxes) Clearly, this is not the choice if you are new to real estate investing, or are a first time home buyer looking to get "such a deal" on your first home.

REO - or real estate owned property by a bank or lender. If the home is not sold on the auction block, the bank will hire a local realtor to put it on the market. When buying a REO, you may h ave the upper hand. Banks want to unload the home and get as much money they can. A good tip to remember is that the longer the home is on the market, the bank will be more willing to negotiate a price with you. Before you make an offer on a REO, have your financing in place, and, make your offer contingent on the results of an inspection report and an attorney review of the purchase agreement ( where applicable). Banks will take you more seriously when they know that they can recoup some money, because banks don't like to own property, having your financing in place will put you in the drivers' seat and make it easier to persuade the bank to pay for closing costs and repairs that may be needed


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