Comment: This letter was sent to the AG of NY as he pursues additional evidence in the investigation of mortgage fraud.

This letter presents information on the Federal Reserve's complicity in creating the basis for the eventual destruction of trillions of dollars worth of homeowner equity. Greenspan first publicly stated the real estate market was tenuous, then ordered substantive changes in the Scope of Work Rule which governs the basis upon which real estate appraisers value resales. Greenspan ordered that foreclosures would be included in valuations of resales. This was never allowed before. However, Greenspan knew that with his sub prime strategy, there would occur massive abuse and, therefore, non-performing loans as rates increased. Banks would then have enormous imbalances relative to reserve requirements. To avoid this he allowed banks and brokers to value property well below market, bundle them and sell them to pad reserves. The Scope of Work Rule change constitutes malfeasance since he knew the final outcome would and continues to be detrimental to millions of American homeowners and other real property asset holders. Perhaps, Mr. Greenspan was trying to get everyone ready for: The implementation of the new Scope of Work Rule, which then would later tie to the banks risk management, or perhaps he was getting everyone ready for pulling the plug on sub prime mortgages, just as home owners and investors loans were about to escalate, forcing everyone into foreclosure with no way to refinance. Please see below, the detailed letter prepared by my colleague realtor, Andrea Silverthorne. Thank you, Robert Bostick ============================================================================ Tue, April 7, 2009 1:19:09 AM For the U.S. Comptroller General and the U.S. OIG Author: Andrea Silverthorne Hollywood, FL. andthorne@aol.com Dear Mr. Comptroller General, The Board of Governors, the Federal Reserve Banks, and the Federal Reserve System as a whole are all subject to several levels of audit and review. Under the Federal Banking Agency Audit Act (enacted in 1978 as Public Law 95-320), which authorizes the Comptroller General of the United States to audit the Federal Reserve System, and the Government Accountability Office (GAO) to conduct reviews of Federal Reserve activities. In addition, the Board's Office of Inspector General (OIG) audits and investigates Board programs and operations as well as those Board functions delegated to the Reserve Banks. The Board's financial statements, and its compliance with laws and regulations affecting those statements, are audited annually by an outside auditor retained by the OIG. Below is a request for the vigorous and immediate application of the above auditing authorities of the Comptroller General of the United States and the OIG to resolve the fact of fraud and other unlawful

practices of the Federal Reserve. It is incumbent upon your office to investigate and rectify the heinous actions of the Federal Reserve which have literally robbed millions of Americans of their real estate equity. The Facts I am a long time South Florida Realtor who has discovered that the reason South Florida values have fallen so sharply, in just the last nine to twelve months, is due solely to the illegal actions of the Federal Reserve, who put pressure on the Appraisal Foundation Standards Board to add a new standard that specifically allowed this Lemming- like fall of values. Before I go further I would like to preface my findings with two facts: 1. South Florida values, given they are residential improved property, have never fallen before. Repeat, never, not during the Great Depression, not during the post World War II recession, not during the period of eighteen percent interest rates, or in any other recession. When the real estate market dies, there are no buyers to take value down; when the real estate market returns, it returns at where it left off. This is the tensile strength of real estate, and therefore, as it is the main asset of most Americans, it was also the tensile strength of the nation. Repeat. It was the tensile strength of the nation. The Sub Prime is a scapegoat for the bad judgment and illegal activity of Wall Street and the banks. What initiated the economic fiasco we now face, which is in my opinion careening beyond a fiasco toward economic holocaust, was, however, the halting of the sub prime, yes, I repeat, halting sub prime lending is what went wrong.

2.

Sub prime lending was, in the beginning, basically, a creative combination of FHA credit standards, which were in use for a very long time, and also it was a long standing practice of conventional lending packaging. Stated income of both 80 % and 90 % and variable rate mortgages have been around for decades, without causing a financial debacle, or any financial harm at all, and these policies created a lot of homeowners that otherwise could not have owned a home. Moreover, interest rates remained relatively stable during the last five years, and had the sub prime been around when the victims of the predatory lending got their new mortgage bill, usually 3-4 times what the preliminary payment was, they would have been able to go back to sub prime loans, and refinance, tack the closing costs on, and keep their houses and our economy going. The Accomplices Cover-up Wall Street- and certain banks, insurance, and mortgage companies- have created a smoke screen to cover up the effects of: Their predatory lending: The sub prime was the catch phrase of lending when they decided to incorporate their predatory lending practices, with a trend toward a murky index called, ? LIBOR? and the complicity of London based AIG to insure risky mortgages at 150% of their real value.. Certain lender's share direct culpability in allowing outright fraud by ignoring long established underwriting practices. Repeat . . . direct culpability. Background on Standards Strict underwriting guidelines were put into effect after the Savings and Loan debacle of the 80?s and the nature of the alleged fraud that occurred could only have happened if these standards were deliberately ignored by bank underwriters. If you read the 2004 advise to Congress from the Appraisal Foundation Board, just as the fraud was beginning and the LIBOR index came into play, you will see the Appraisal Foundation Standards Board's representative bragged about the complete reliability of the Standards put in after the S and L problems in 1987 and 1989. And he was right; certain banks just ignored them. Personal Knowledge of Fraudulent Practices I am tired of reading stories about buyers who altered a W2; that is not possible, because the standards call

for arms length employment verification. I personally experienced a call from an appraiser, after I had sent her comparable sales, asking me if I had sent her additional comparables; I had not. Someone had sent her closing statements on properties that were not even sold or under contract, let alone legally closed; and I told her so. There is no way that type of circumstance could escape even the most basic underwriting parameters, and yet it apparently did; the loans funded and closed. FBI Investigations??? I know heard the FBI was investigating this buyer for 750 fraudulent loans in South Florida alone. This equates to about 191 billion dollars in mortgage fraud, but after two years there have been no arrests. I have recently asked the U.S. Attorney General to look at the facts surrounding this particular buyer, whose activity, together with others like him have destroyed our state and our country. I do not understand why the banks and, or the states have not pushed for fraud investigations. Until just last week 4/1/2009, the FBI had arrested no one in two years, and it had only arrested people that represented about 200 sales country wide. Last week they arrested more people who did another 150 loans all over the country. There was one buyer who did 750 in South Florida alone. 1. These loans never had the first payment made on them. 2. When, not if, they were sold to Fannie Mae- and subsequently to a REIT, the banks involved had to know they were bad when they sold them. 3. In addition, despite the fact securities laws say that when banks and Fannie Mae and Freddie Mack sell their loans to REITs, they must transfer ownership, they have not, and therefore, they are foreclosing on American homeowners and property investors illegally. 4. Every one whose loan sold to an REIT, which is every one of them . . . has been foreclosed on by an entity that either does not own the loan or does not legally own it. 5. Certain Judges are beginning to throw these types of suits out of court. Certain law enforcement institutions should be throwing the people, who failed to transfer ownership, when they knew they had to . . . in jail. This is what Fannie Mae, Freddie Mac, Wall Street and the Federal Reserve are hiding from the American public and Congress. Misleading Us I saw a report that 50% of America' loans were sold to the REITs. That is not so, and I am tired of my press, the supposed, 4th estate of America, regurgitating planted information as factual because it comes from established institutions and the media eschews due diligence. -- The banks must sell there loans in order to get more capital to lend. -- They sell 100% of their mortgages that are underwritten with Fannie Mae standards to Fannie Mae, the bulk of the rest, which equates to about 98% of all loans, get sold directly to investment packagers, so they lost no money; -- Fannie Mae sold them to Wall Street to get more money to buy loans from the banks, so they lost no money; -- Wall Street packaged all of them, Fannie Mae and non Fannie Mae, and sold them to REITs, so Wall Street lost no money; -- REITs insured the packages with AIG for 150% of their value, so not only did no one loose any money, but someone made a bundle of money on the insurance overage payment, and

-- The American public paid AIG, a foreign corporation, REPEAT, American tax payer money was used to pay a foreign corporation for their loses. This could not be legal, and no one has opened a challenge to it. How can my government give American taxpayer money to a foreign corporation . . . AIG, and how can you buy interest in a foreign corporation with American tax payer money??? The Great Equity Robbery Better than average real estate value escalation, between late 2003 and 2005, was legitimate and warranted because of an increasing trend for Americans to put their money into income real estate properties, not the stock market. After 9/11 while the stock market was moving laterally for five years, during the above period of predatory lending and rampant unchecked fraud, naturally, the real estate market took off like the proverbial bat out of the proverbial hot place, just four short months after 9/11/2001. Stage One This steam engine of buyers was driven by money removed from the stock market to put in the more stable terra firma we commonly know as income real estate, and by the creative, albeit soon to be compromised, Sub Prime that allowed conventional mortgage lenders to use FHA credit standards. Unfortunately, it was bound to get a bad name, when it was also used for fraudulent and predatory lending tied to the LIBOR. And, the 2005-2007 escalation in property values was valid; it was real, because of limited land near urban centers, and because of a growing population in this country. The increase in values in South Florida the first quarter of 2008 was well after fraud had stopped, and by then financing was the most difficult it had ever been. Stage Two The increase had nothing to do with inflated appraisals; repeat, it was real; it was the beginning of a normal two year come-back that was suddenly squashed by the Federal Reserves complicity stemming from 2006, because so many banks held unhealthy levels of non-performing mortgages and needed to find a way to dump their inventory. The Federal Reserve made the Foundation agree to tie the new Scope of Work ppraisal Standard to their risk management, and as the banks lost no money, they are making a bundle even at te lower prices. Taking it In the Neck We are being victimized by a plain and simple scam. Congress, or someone, needs to make these mysterious toxic assets show up on a grid with the following information: Buyers name; Original Lenders name; Date of Closing; Date of first Mortgage payment; Date of last Mortgage payment made borrower; Owner occupied or non owner occupied.; Current occupancy status of the property; Date of all sales of the mortgage, and to whom, and Was ownership also transferred; Date transferred to a REIT;

Date the actual ownership transferred to the REIT, as it should have been; Market value just prior to when the Scope of Work Rule combined with a risk management mandate to the appraiser from the bank in 2008; Has it been foreclosed, or is it in process; Finally, if there was a short sale what percentage of value did the owner loose?

That these upward value trends created an affordable housing issue is another problem! And the fact that someone who saved enough to buy a home and lost their 400 thousand dollar home to a 200 thousand dollar buyer is not a bitter sweet story: It is a horror story, because every home owner in the area of that 200 thousand dollar foreclosure lost 200 thousand dollars worth of equity too, the day that first home closed, and the communities lost the tax dollars, and any bank with an equity line on the property lost their collateral. If any of these home owners in the community effected by the 50% discounted sale gets into financial trouble, they will let their home worth less than they owe- go. SHORT SALES ARE ILLEGAL AND MUST BE STOPPED This is highway robbery of American equity by the banks? predatory lending and the Federal Reserves machination of Appraisal Standards, which were designed to be a neutral buffer between the American property owner and the lenders, and now can only be described as predatory, with not a vestige of consideration for American property rights. What Did Greenspan Know? Is he a Mystic or a Madman? In the spring of 2005, Alan Greenspan opened his mouth and said that the real estate market was doomed. At that point in time the market was slowing on its own accord, because income buyers found their losses too high to carry, but the normal first and second homebuyer carried on. As Realtors, we were perplexed by his statement; we had had two year cycles of ups and down regularly for decades. Doomed? We wondered why he was not saying that about the stock market, if it moved laterally for five more years, there would be no stock market. Mr. Greenspans remarks were immediately followed by a press onslaught about the certainty that real estate investors were going to take a big hit, a very big hit. We had never seen anything like it before. There was no reason for the press to tell stories of certain value lost, when that is never what happens when the market dies, because there are no buyers to take the market down. 1. 2. Perhaps, Mr. Greenspan was trying to get everyone ready for: the new Scope of Work Rule., which he would later tie to the banks risk management, or

3. perhaps he was getting everyone ready for the pulling of the plug on the sub prime, just as home owners and investors loans were about to escalate, forcing everyone into foreclosure with no way to refinance. What ever the reason, Mr. Greenspan predicted doom for our industry, and what ever the reason, the press fell in line and marched to his tune, with unending noise, without any research at all, we will, perhaps, never know, but the effect was immediate. Mr. Greenspan bears a lot of weight and the public is not a Realtor; they did not know that when the market dies there are no buyers to take the market down, and they stopped buying because no one wants to buy a house and loose money on the way to closing. With Fraud In Their Hearts

1. This portrait of the biggest equity grab in the history of the nation is almost finished. The new Home Valuation Code eliminates local appraisal and puts the liability of determining market values on Realtors, with "Opinion of Value" letters, which are to be based on "market conditions." Mr. Geithner only has to get permission to use the tax payers dollar to finance 80% of the foreign national acquisition of Americans lost equity. An owner of a 400 thousand dollar house is not rich, and the Federal Reserve is no Robin Hood 2. On February 7, 2008, I read a story about the condition of the real estate market in the South Florida Business Journal. The story quoted Michael Cannon, a respected owner of a large appraisal firm and consulting company.. He said Wall Street did not understand real estate. I sent Michael Cannon an email complimenting him on the article, and then I asked him a question about what I had recently observed on appraisals; they were beginning to use foreclosures and short sales when computing values. This had never been allowed before. 3. During the Savings and Loan Scandal of the 80?s, a short sale meant only forgiving the unpaid interest, late and legal fees, because the bank could not sell the property for less than market value and meet their fiduciary responsibility to their Directors and investors unless they could prove market value was less, and they could not use the foreclosure, any other foreclosure . . . or duress sale to do it; you had to use arms length sales. Mr. Cannon responded to my email thanking me for my compliments, but he did not answer my question: had appraisal standards been changed?? 4. Three weeks ago, I saw a graph that accompanied a story on George Perez; it demonstrated South Florida property value median costs from 2005 on; showing the market becoming becalmed and running in a straight line, neither up nor down, then it showed small increases and decreases, ending with a substantial increase the first quarter of 2008, repeat, a substantial increase, before it dropped straight down, almost 50%. 5. This time I did not email Michael Cannon. I got on the Internet; it took me ten minutes to find out how the Federal Reserve destroyed America in three years. I have a series of emails that tell the story. 6. Since most of the media and reporters are ignoring the mass destruction that has been visited upon the American publics real estate equity, because you think values had to come down anyway, please think again, because Michael Cannon was right; the Federal Reserve did not understand real estate, and I am right: We effectively became the economy after outsourcing did its damage; it is too late to bring the jobs back; they will be lost no matter where they are, and if American property equity is not restored to Americans, rather than foreign investors, I predict, as I did to Michael Cannon that we will have a depression that will last decades. 7. While I have made some headway, I am worried about a clear conflict of interest with the National Association of Realtor's dedication to telling this story. The large firms are being kept alive with income from short sales, despite the fact that if the standard change was illegal, the short sales are illegal. They are too short sighted to see that as soon as Obama and the Federal Reserve get the next money package through, which will finance the foreign acquisition of Americans lost properties, with American tax payers money, the short sales that are keeping Realtors barely alive will be removed from the market. 8. It is the Federal Reserve that owes America money . . . both their lost equity and punitive damages. The media reporting of it, without discovering the real reason values were going down, has caused great damage, which is going to take a long time to repair. It will be a great stimulus program. I, for one, promise to use my lost 600 thousand dollars in equity to stimulate the economy. I will save all the punitive damage awards for my old age. If this makes you laugh, because you think it is not possible, because it is the Federal Reserve, then this demonstrates that the law does not apply to the powerful, because the Federal Reserve is clearly libel.

Case in point: A unit at Brickell Bay Club, in Miami sold all cash for $114,000.00; that is a price that is less than the units sold new for in 1975! The unit last sold for $400,000.00. Now, according to the combined S of W rule and the Fed's risk management advisory, every unit like it in the building assumes that value. Say goodbye to the equity lines in the building; say goodbye to the banks that gave them, and say hello to more and more foreclosures in that building, because owners will all walk away in this new dog eat dog world in which we live. 9. The movement in the market is overwhelmingly investing cash buyers, not real primary home buyers; the new apartment starts are government funded to developers through the NSP. CNN let the cat out of the bag; the banks are bringing in Chinese buyers to buy up America . Real estate can not be the sacrificial lamb in this scenario. Restoration of values and a real National Stabilization Program rather than a thinly veiled bail out for developers is our only hope. If you would like any of the documents such as: 1. the Scope of Work Rule, 2. the change to the Foundations preamble that they had to complete to satisfy the Fed. and 3. the Federal Reserves 2007-2008 Advisories to the Appraisal Foundation Board, Please let me know and I will send them. Andrea Silverthorne andthorne@aol.com In the absence of freedom there is no creativity, and in the absence of creativity there is no progress.