Oh this is rich. Deutsche Bank, America's foreclosure king, predicts that by 2011 50% of US households will be "underwater" with their home mortgages, setting off a new wave of foreclosures. This while the German banking giant is forcing tens of thousands Americans out of their homes and dumping residential properties on the market at firesale prices, driving down home prices in several key regional markets. To make matters worse, the bank is apparently cashing in on underlying credit derivatives, and then forcing foreclosure sales, effectively engaging in illegal "double-dipping". The national home foreclosure crisis has set off a wave of suicides and other acts of violence.
Last week Deutsche Bank sparked a sell-off on Wall Street after issuing a bearish report on the condition of the US residential real estate market:
(Bloomberg) — Almost half of U.S. homeowners with a
mortgage are likely to owe more than their properties are worth
before the housing recession ends, Deutsche Bank AG said.The percentage of “underwater” loans may rise to 48
percent, or 25 million homes, as prices drop through the first
quarter of 2011, Karen Weaver and Ying Shen, analysts in New
York at Deutsche Bank, wrote in a report today.
Meanwhile Deutsche Bank is "dumping" properties at a record rate in certain markets, contributing to a meltdown of home prices and wrecking the tax foundation of communities:
Deutsche Bank has sold a slew of foreclosed homes in the North section
Miami-Dade County for bargain basement prices. Maybe what is happening
is that this bank is finally recognizing derivative losses to its
balance sheet, and writing off the underlying mortgages.
Multiply this effect by millions of homeowners
and you can see that the "green shoots" in the economy probably mean
that once the housing markets find a bottom, we will be bouncing there
for years while taxes go up and inflation increases. It is not a pretty
picture, but before blaming Obama; remember how we got here and who
profited from this misery.
Who profited from this misery? That's easy: "July 28, 2009: Deutsche Bank, Germany’s biggest bank, says second quarter profit rose 68%, beating estimates. Net income rose $1.55 billion,"
And it is not just in Miami-Dade where Deutsche Bank is driving down home prices. DB, along with Wells Fargo, has been the most active seller of foreclosed properties in Cleveland, Detroit, and California, as well as a major factor in the New York and Greater Boston markets.
Meanwhile, William Barnes, a foreclosure defense attorney, describes on his blog Deutsche Bank's illegal practice of "double-dipping":
Deutsche
Bank was also the subject of a recent ruling in a case in New York
where the Court denied Deutsche Bank’s Motion for Summary Judgment,
finding that a purported assignment from MERS to Deutsche Bank was
defective and that Deutsche Bank, with an invalid assignment of the
mortgage and note from MERS, lacked standing to foreclose. […]It appears
that Deutsche Bank may have done so to take advantage of one or more
“credit enhancements” inside of the securitized mortgage loan trust
which pay benefits upon declaration of default. These credit
enhancements are extremely complicated and multi-layered, and are
required by law in connection with the issuance and sale of the
mortgage-backed securities “backed” by the trust.
The
assignment of the mortgage and note to the securitized trust, which
were already in default well in advance of the assignment, would permit
Deutsche Bank to both realize a profit through payment of credit
enhancement benefits (which effect a pay down of the claimed “default”)
while simultaneously permitting Deutsche Bank to institute a
foreclosure, resulting in a “double dip” for Deutsche Bank. This is, of
course, illegal, but unless competent counsel raises the issue, it goes
unnoticed and Deutsche Bank, like so many other foreclosing parties,
winds up stealing the borrowers’ property and getting paid for doing
it.
If Deutsche Bank is profiting from a payout under a Credit Default Swap, there is a good chance the money is coming from the pockets of US taxpayers. Maybe some of this will come out in the ongoing US Senate investigation of the mortgage-market meltdown. But one thing is clear: the German press has done absolutely zero reporting on Deutsche Bank's role in the US home foreclosure avalanche.
