Just In Case

Are you worried about natural disasters, crime or terrorism? Neil Strauss was. He tried to prepare for everything, but ended up finding himself.

Emergency: This Book Will Save Your Life is an informative, funny, and sometimes disturbing memoir. It details the transformation of the author, Neil Strauss, a music critic and writer who admittedly has few practical skills at the beginning of the book. Strauss’ family lived in a high rise apartment building, so he never learned about nature or how to fix things. By the end of the book, he’s able to care for both himself and loved ones in areas ranging from wilderness survival to hand to hand combat.

The book immediately draws you in with Strauss’ moral dilemma of whether to slaughter a goat in his quest for survival skills. Emergency then bounces back and forth in time, from location to location, and from factual narrative to analysis. This stylistic choice holds the reader’s attention, but is confusing at times.

Strauss first became concerned about domestic terrorism and civil unrest during 1999, exacerbated by the hype around Y2K. When the apocalyptic predictions failed to come true, he relaxed. Although he was aware of it, he didn’t worry about the hatred directed toward America from other nations.

Strauss states that he was quite sheltered and privileged until the 9/11 tragedy occurred. Like many others, he never imagined that the US could be attacked. Suddenly, he was afraid of dying while doing everyday activities like opening letters. Some of his precautions, like buying a gas mask, he later realized only gave him the illusion of safety.

Strauss later falls in with some 9/11 conspiracy theorists. Although he never believes that the US government was behind the plot, he learns about offshoring assets from this group. Strauss discovers that foreign bank accounts are practically impossible for US citizens to get, so he would need a second passport to accomplish this task. Even if he did get a bank account, there is no financial privacy as the IRS requires US citizens to disclose if they hold over $10,000 in foreign bank accounts.

The author then stumbles into a group of billionaires led by a man named Spencer. They encourage him to read about the fall of empires, and realize that a similar fate will eventually happen to the US. They convince him that he needs multiple contingency plans, including a second citizenship, as well as with residences and revenue in multiple jurisdictions. He is motivated to get a second passport due to his distaste for Bush Administration policies like detaining “enemy combatants,” and he worries about losing freedoms.

Unfortunately, Strauss doesn’t have the bankroll for the plans he makes, such as purchasing real estate and citizenship in St. Kitts. He takes out a home equity loan and goes deep into debt, later realizing that his wealth and future is at the mercy of foreigners he just met.

In addition, his new place in St. Kitts is on an island vulnerable to drought, food shortages and hurricanes. If riots happen, he worries that he will be unable to protect his property and himself.

Strauss decides that he needs to buy guns and learn to use them effectively. He chooses Gunsite Academy in Arizona for his instruction, then buys a weapon and takes a course there. Not surprisingly, Strauss lacks appropriate clothes for shooting in the desert.

He’s taught how to shoot attackers while avoiding innocents, and that the police have no duty to protect you. After the training, he realized that he was a hypocrite for backing the First Amendment but not the Second.

Throughout the book, the author’s pattern is to research the best teachers and engage them directly. He doesn’t really care if they are expensive or located in an inconvenient place. With his background as a music critic and journalist, he’s not intimidated to call the top experts on terrorism, knives, or motorcycles.

Strauss finds out about the military training called SERE - Survival, Evasion, Resistance, and Escape. However, he determines that this program is not extreme enough for him, so he attends Tom Brown’s Tracking School. Brown is known for teaching instructors in the Marines how to survive anywhere with nothing.

As usual, Strauss is totally unprepared for the experience. He ends up wet and miserable despite his high tech camping gear, texting his girlfriend with complaints. Once his Blackberry stops working, he realizes that his bad attitude was making his physical and mental discomfort much worse. He starts paying attention to instruction, covering topics such as making a shelter, finding water, and reading the footprints of animals.

Once Strauss returns home from Brown’s school, he decides to fill in the skill gaps he’s discovered, as well as master the new ones. Despite his location in an urban area, he practices making a fire from scratch, primitive cooking, producing water from a solar still, and raising a female goat.

Strauss also notes impacts to his personality from his training regime, like feeling more masculine and “centered,” with a decreased need to impress others. Strauss had spent his life avoiding walks, dirt and physical labor, but he realized this is what his body was meant to do.

The author then plans to test his level of preparedness with various drills. Strauss instructs his assistant to alert him to a “3 day shutdown” of LA at a random time, to see if he is ready to survive without modern conveniences. On another occasion, he finds he could live three days in the wilderness with just a knife if necessary. The author also sets up caches on a nearby island should he need to flee LA due to violence.

Nevertheless, Strauss keeps discovering holes in his plans. Even with caches prepared ahead of time, he knows he won’t last long without a well stocked retreat. Desperation and hunger can make anyone violent. Living rough is fun for a few days, as long as the inconvenience has a planned end.

At a certain point in Strauss’ quest to build survival skills, he moves from his initial impulse to flee, to a more nuanced position. In order to get emergency training and develop a more positive relationship with local police, Strauss signs up for the Community Emergency Response Team (CERT) in his area. As you can’t expect rescue for 3-4 days during a disaster, CERT training teaches you how to save your life as well as those of your neighbors. He learns many tips such as obtaining drinking water from heaters, and moving heavy rubble with pieces of wood, as well as how to cope with a chemical attack.

The author becomes aware that his life had been free of severe stress to date, and he worries that he would crack under the pressure of a real disaster. Strauss decides to take EMT training to learn how to help others in medical emergencies, but he was never under much stress during his ambulance shifts. Strauss then joins the search and rescue team, and is accepted to the California Emergency Mobile Patrol.

All of a sudden, he feels like he belongs to a team. Rather than choosing anonymity and privacy, he applies for several licenses such as his concealed weapons permit, which puts his fingerprints on file with the government, and an EMT license. This later allows him to save lives when assisting survivors after a train accident.

Now Strauss’ first instinct is to run towards danger rather than away. Although he wants to live as long as possible, his huge skill set makes him feel less afraid of the uncertain future. When he finally receives his long-awaited passport from St. Kitts, Strauss chooses to be useful to his new community instead of just hiding out there.

Emergency: This Book Will Save Your Life is definitely worth a read for its entertaining combination of autobiography and self-help book. Although the title implies it is a practical manual, it's really the story of a man achieving personal growth through learning survival skills. The author transforms from a naive music critic with few practical skills, to a much wiser man who can cope with nearly any crisis. It will appeal to people who are interested in survival skills and self-responsibility, and to those who enjoy an engrossing book as well.

A House of Cards: An interview with Nye Lavalle

Nye Lavalle is best known for his sports predictions. With his family, he founded Sports Marketing Group and stunned many sportswriters with his accurate calls on the popularity of figure skating and NASCAR in the 1990s, among many others. Sixteen years ago, he began investigating mortgage fraud when a bank attempted to wrongfully foreclose on a family property. Many of the issues he uncovered more than a decade ago, like robo-signing, are just being recognized today. He continues to try educate others about problems in the banking industry and the US economy. This is Part 1 of our explosive interview.

Jennifer Barry: Could you tell me a little bit about how you got interested in the whole mortgage fraud and predatory lending and things like that?

Nye Lavalle: Sure. Just to give you an idea, my email, mortgagefrauds@aol.com, has been in existence, since I believe, about 1995.

JB: That’s a very long time.

NL: It all started the night my mom and dad Anthony and Matilde Pew owned a home in Dallas, TX, that we used for our family business called Sports Marketing Group. And I had a place in New York and LA, and we were eventually going to retire to that home at first blush. But we purchased the home, and my family had money, and I had money, we were a business, and basically, soon after we closed on the loan, the bank SOA just started doing all sorts of stupid things. Nobody resided full-time in the home, and they were instructed to send the payment statements to Michigan so that they could get paid on time, and they never sent them there. They sent them to the property address and somebody wasn't on the property for sometimes two to three months. And they wouldn't change that. They wouldn't take off the late fees, then when I would pay bills on time at the bank, it turned out that they would send the payments from the bank to California to the posting center, and they wouldn't get posted for 10 more days, even though you paid it on time at the bank. And then they would put another late fee onto the account.

Then, when we had insurance and we paid on a quarterly basis, they would send cancellation notices 30 days ahead. The bank would force place another insurance policy on the property even though we had our own insurance on it. And the long and short of it's all in a report I created called “Predatory Grizzly ‘Bear’ Attacks Innocent, Elderly, Poor, Minorities, Disabled & Disadvantaged!” They were just churning the account, just trying to make fees and money all over the place.

What we learned years later in litigation is that our account was red-flagged for fraud. The loan officer who approved the loan and did all the documentations had taken blank applications that my folks signed, and put as monthly income from my family, $100,000 a month, when that was their annual trust income.

So they were trying to do what we call manufacture a default. A lot of servicers do that because they want to foreclose on the house. They want to get rid of the liability because that mortgage has been tainted or it becomes instead of A paper, B, C, or D paper. It's called a scratch and dent mortgage. It's kind of like a refrigerator, it gets that name kind of like from a refrigerator or stove at the store that someway gets dented and damaged during transit, and it's not as valuable as the perfect condition new appliance.

JB: Right.

NL: So after that we went to pay off the note. We go look, this is crazy, we don't want to do business with you, we just want to pay you off. They wouldn't meet with us. We asked for servicing records. They sent us records that made no sense. We offered to pay them out in cash in 14 days on two conditions: that they could come up with records of what we actually owed them, it was about a $100,000 note, and that they could provide us the original note, stamped, cancelled and paid in full. I knew how banking worked because I had represented some banks. Well the servicing records they gave us, the year end balances were like $5,000 off, I mean literally. And they showed and proved our point that when we had insurance on the property, not only did they put one forced place policy on top of our insurance that we had, but they put two more on top of the one that they had, so they actually had three policies on top of each other.

JB: Incredible.

NL: And that was just a mess. And it was really, they were cooking the books is what I learned. And when I got all the information and gave it to them and said look, we want to get rid of you, they assigned it to a company called EMC Mortgage, which was a unit of Bear Stearns. EMC initiated foreclosure, and we initiated a defense to that, and over the years they spent $2.5 million and 7 years in litigation on a $100,000 loan.

JB: Well, that seems crazy. I do have a quick question for you. Just to clarify, you said they were putting multiple insurance policies, are you talking about derivatives or just regular insurance policies?

NL: No, it's not a form of a derivative. It was just a scam, it was called churning force placed insurance. And those things have been sued upon and there have been class action lawsuits and settlements, but that's gone on for years and there are different variations of a scam. If you read my “Predatory Grizzly Bear” report it details all the predatory servicing schemes. I was the first one to coin that term in that report, I mean I coined it back in the late '90s but the report was written between 1996 and 1999. It really was a lot of work to figure where all this money was going.

So that being said, what we learned in that process is that the bank cooked their books and they did it on the notes that they owned. I realized that if a family who is wealthy, who had money, could be treated this way, then God bless everyone else. What did that mean for our financial system?

JB: It’s very disturbing, because they were pushing you around and you could actually fight back, and you said they spent $2.5 million?

NL: Over $2.5 million, and the month before trial our law firm withdrew and we got a default judgment against us. It turned out our law firm was representing Bear Stearns and hadn't informed us of the relationship and banking interests. And we had paid them $75,000 and then capped their fees, and they racked up a $750,000 bill themselves.

JB: Wow. So why do you think that Bear Stearns spent that much money fighting over a property not worth nearly that much?

NL: I was the first to unravel what you're seeing now. The emperor had no clothes. They didn't own the note, they churned these properties, they double-pledged their notes sometimes. They had no right to the note, they had no right to foreclose, and they were cooking the books, all those things.

JB: So you are saying that by making certain demands, you were uncovering fraud, and they needed to keep the fraud undercover, and $2.5 million was a very small price?

NL: It was a pittance for them to attack us with lawyers in comparison to what I discovered. Because what I discovered was connected to Fannie Mae. This was before the internet, so I had to travel all around the country looking for court files and making copies. There was no real internet at that time, or high speed internet way back then where we could post all these things. And I literally had to go and review court files all around the country and write to the courts and other things I did. The point is I found out it's the whole industry, it wasn't just Bear Stearns and EMC.

JB: You found out that that your case was the tip of the iceberg in what was going on.

NL: Right, exactly. And it all came down to securitization.

JB: I agree that securitization is a big part of the problem. Can you talk about what you see is the problem with derivatives, such as mortgage-backed securities and why the average homeowner should be concerned about that? How does it affect them?

NL: There are many problems. Everybody should be concerned, I mean, whether they're a homeowner or not, as a tax payer it affects everything that we do. It affects our financial stability as a nation and our national security. It affects our property values, it affects the neighborhoods we live in, it affects the condominiums you might live in, and foreclosures, and people being able to pay HOA dues. It affects members of country clubs, where people walk away, while some of the other members have to pick up the $100,000 dues for the ex-members. It affects your life in more ways than you know. It affects title on property. It affects the cash flow that the nation needs to do its business, and pay for the services that we all need.

To me, the most important thing that nobody has really covered is how much of this junk was sold to our respective mutual, trusts, insurance, and pension funds, the institutional investors. And so our retirement, besides social security being there when we retire, will our trust funds and will our mutual funds and annuities and other savings, the 401Ks be there when we retire? It's all of us are really the ultimate investors.

JB: That’s a big concern. I have a retired relative with a pension from GM. He worked there a long time, and I’m concerned because I don't know how long that pension is going to be around. Who knows what they invested in or didn't, or how well they're managing it? Most of these pension funds are under-funded anyway to start with.

NL: Right, and they're guaranteed by the government, the government fills the stop gap. So if you look at the total debt that the US has, which is in the trillions, that's one thing, but when you look at the total obligations that the US has guaranteed between pensions or banking, Fannie Mae, Freddie Mac, you see where I'm going, so it's a staggering number.

JB: I think Lawrence Kotlikoff is putting it at $202 trillion right now. He wrote a book with Scott Burns from the Dallas Morning News about six years ago called The Coming Generational Storm and talking about how the US is broke.

NL: I was going to say it was over a hundred trillion, but I wouldn’t be surprised at that number. He's great, I like his work. Without independently auditing his numbers I couldn't confirm it, but I would definitely say that's in the ball park. But that's a number that nobody talks about very much.

JB: I agree, usually the news reports a much lower figure.

As far as those derivatives are concerned, I suspect that the mortgages have been sold many many times over. That’s another big problem.

NL: That's absolutely true. I can tell you that that's conclusively proven. I've had evidence of it, I've seen it happen, and I've been talking about that. It’s the trillion dollar scam - they pledged and hypothecated the mortgages to multiple parties in addition to the trust. They never got to the trust that was supposed to hold the securitized mortgages. We have evidence of this. Here's the real kicker though, the Federal Reserve and Federal Home Loan Banks actually have some of these mortgages because they were pledged to them in exchange for loans to the various banking institutions.

JB: Are you referring to the mortgage-backed securities, or the mortgages themselves?

NL: Not the securities, I'm talking about the mortgages themselves. A lot of times the banks need to borrow money for operations or whatever, and so they have to give collateral as well. That's why a lot of the notes endorsed are blank, they actually transferred the collateral files to the Fed, and the Fed actually holds the actual mortgage notes.

JB: So the paperwork is not signed so that they can easily swap it around, is that what you're referring to?

NL: Yes, the notes typically are endorsed in blank so that it becomes bearer paper. The the policy of Fannie Mae, Freddie Mae, even Ginnie Mae and most banks is that promissory notes are endorsed in blank, that's typical policy, so imagine trillions of dollars of negotiable paper just floating around out there. That's why it was funny in Florida when they said they lost a note, I would kind of laugh, how do you lose a two and a half million dollar note? That's like $2.5 million floating around somewhere.