The Market Ticker
Commentary on The Capital Markets

You're fixing to get a turkey in Florida folks...

Remember the robo-signers, those mortgage loan automatons who authenticated thousands of foreclosure documents over the years without verifying the information they were swearing to?

Well, they’re back, in a manner of speaking, at least in Florida. Their dubious documents are being used to hound former borrowers years after their homes went into foreclosure.

Robo-signer redux, as it might be called, has come about because of an aggressive pursuit of former borrowers by debt collectors hired byFannie Mae, the mortgage finance giant. What Fannie is trying to recoup from these borrowers is the difference between what the borrowers owed on the mortgages when they were foreclosed and the amount Fannie received when it resold the properties.

This is not egregious because a deficiency judgement is wrong in some way (it's not, although you can escape one through bankruptcy if you have nothing, which is why they're only filed if you have assets worth trying to attack) it's egregious because those robo-foreclosures were fraudulent in the first instance.

This is not about whether you did (or didn't) pay the mortgage.  It's about whether the lender followed the law when they foreclosed (they did not in the case of robosigned documents) and now, having served up the ignobility of ripping off the buyers of the securities (by representing that the loan quality in them was of a certain grade when it was not), destroying or falsifying documents (that would have proved the original scam) so as to prevent that discovery and then falsifying new documents so as to eject you from your house (after being unable to present the real ones as they either never existed or were intentionally destroyed to cover up the previous fraud) now they want to pursue you for a debt they cannot perfect the chain of ownership on!

The courts should (but won't) reject these sorts of claims out-of-hand as there is no valid documentary evidence of the indebtedness that can be traced back to the alleged original funding source -- it was destroyed or fabricated!

Without that a deficiency judgment attempt should fail -- but it appears, at least in Florida, it is not.

Where are the honest judges who will toss these suits and sanction those who file them?

View this entry with comments (registration required to post)
 

View this entry with comments (registration required to post)
 

An update to my post on the bust of Silk Road 2, because there apparently are some folks who read my article and recently emailed me trying to claim that there's some magical incantation that I didn't know about (and was attempting to pin the entire thing on an unencrypted laptop.)

Since it's a slow news day and I'm bored let me respond to the handful of emails I received over the last few weeks on this topic:  If you're too stupid to read for content you definitely shouldn't be doing drug deals (or anything else illegal) on the Internet.  You will get caught.

As for how Forbes had an interesting article on it at the time that I didn't cite for a simple reason -- I wrote about this attack vector back in May of 2013 based on my own work over the previous several years including an examination of the code itself.  This is what I said at the time (yes, the link is aged off and you can't read the whole article, so I won't bother linking it):

Tor.  Tor is a package comprising what is known as the "Onion Router" that encrypts traffic and routes it through multiple computers all over the globe, and is used for web surfing.  It sounds good, but there are risks associated with it.  

First, because of the multiple encryption steps (one for each "hop" the traffic takes) it materially slows down your browsing.  In addition in order to actually conceal who you are it is absolutely necessary that you not sign into a web site or otherwise transmit a set of credentials.  Next, you are trusting strangers, some of who may not be trustworthy.  In particular if there is a "strategic" compromise of nodes on the Tor network you could find yourself being monitored anyway while believing you're "safe." This is a fairly significant risk if you're worried about governments; if you're worried about common cybercriminals, not so much.  Because the network (by natural process) routes the most traffic through the highest bandwidth nodes and bandwidth costs money (and thus there aren't very many high-bandwidth nodes) the number of actual nodes that have to be compromised before the odds are your traffic is no longer secure is relatively low.

In short Tor might be useful but it is not a panacea.  If you're trying to hide from the owner of a web site who is not savvy to what you're up to it will probably work.  If you're trying to hide from a government and it's a backwoods tin-pot dictator, you might be successful.  If you're trying to hide from the NSA, good luck.

Read that second paragraph very, very carefully.

As if that wasn't enough a few months later we knew that this attack vector not only worked but was actively exploited; I wrote about that on 9-12-2013 as well when a kiddie porn ring apparently got nailed through exactly this sort of attack.

Obviously Mr. Silk Road 2 didn't read either of those articles or he didn't understand the implications of them.  If I can trace packet flow I can determine the exit point and unfortunately to prohibit unencrypted traffic from flowing to such a "hidden" point it must be coincident with the terminus.  Determining that a given machine is the terminus of such a "hidden" site is not difficult at all if I can compromise a sufficient number of nodes in the middle as part of a confederacy because simple traffic analysis (without having to decrypt the payload!) will allow me to determine in a relatively short period of time (for a busy site this might only take minutes) exactly which node probably holds the hidden service.

Let's say I have 500 "nodes" in this theoretical "encrypted" network.  Of them 20 or 30 have very high bandwidth connections compared to the others, and thus will bear the lions share of the traffic.  If I compromise half of those, say a mere 15 hosts, I can then, using a known set of computers I control, start connecting to the so-called "hidden" service and through nothing more than analysis of the traffic pattern I intentionally generate I can determine with a high degree of reliability where the terminus likely is.  If I then go further and start tampering with the packets in transit through those 15 machines once I develop a hypothesis I can prove my guess is correct without having to actually be able to decrypt the traffic itself!

Once I know where that terminus is ordinary government means (e.g. go kick in the door with a warrant in-hand) work perfectly well and you are

smiley

Now who has the money to put up a bunch of high-bandwidth "encrypted" servers and task a few bright folks to do this sort of thing when they get sufficiently motivated?  Gee, that'd be The Feds and their counterparts in other countries, right?

Uh huh.

Go read the last paragraph of that quoted passage again.  The FBI broke "Tor" because you don't need to break the encryption to be able to find the terminus of a communication and once you know where a communication path is ending up you don't need anything more-fancy than an old-fashioned warrant.

As I have repeatedly said for years despite people's claims to the contrary Tor does not secure your traffic against governments provided they're sufficiently interested in whatever you're up to -- and it never has.

View this entry with comments (registration required to post)
 

http://www.youtube.com/watch?v=gWuEZWHuu-w&feature=youtu.be

View this entry with comments (registration required to post)
 

Hoh hoh hoh... have a turkey with this during the coming week...

As many as 30,000 lost emails from Lois Lerner -- the ex-IRS official at the center of the agency's targeting scandal -- have been recovered by federal investigators.

The IRS has already turned over thousands of Lerner emails to congressional investigators but has said the remainder are gone forever because Lerner’s hard-drive crashed in 2011. And in June, agency Commissioner John Koskinen told Congress that back-up tapes containing the missing emails had been destroyed.  

That now turns out to have been a lie.

So aside from the content, which may or may not show anything, where are the handcuffs for what appears to be black-letter perjury?

View this entry with comments (registration required to post)
 

Main Navigation
Full-Text Search & Archives
Archive Access
Get Adobe Flash player
Legal Disclaimer

The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.

NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES.

The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.

The Market Ticker content may be reproduced or excerpted online for non-commercial purposes provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media or for commercial use.

Submissions or tips on matters of economic or political interest may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.