Housing Doom

For immediate release:

Opposition To Injunction and Temporary Restraining Order Filed

On October 7, 2008, the Mortgage Lender Implode-O-Meter (ml-implode.com) filed a Memo of Opposition in response to pre-litigation motions by plaintiffs to enjoin the Implode-O-Meter and restrain publication of materials critical of the Grant America Program.

The suit was filed by plaintiffs Global Direct Sales, LLC, and (principals) Christopher Russell and Ryan Hill, and (collaborators) the Penobscot Indian Tribe, on September 19, 2008 in Maryland Federal Court, and the motion for injunction and Temporary Restraining Order (TRO) was filed September 26th.

The suit concerns an investigative article written by analyst Krista Railey, posted on ml-implode.com in its final form on September 15, 2008. The article was critical of the Global Direct Sales scheme, which effectively attains 100% financing — insured by the FHA — by making use of an Indian tribe ("sovereign nation") as an intermediary. This arrangement has allowed bans and restrictions on FHA insured seller-funded down payment programs to be circumvented.

Railey’s article pointed out that the IRS has called similar seller-funded down-payment systems "scams," and Forbes has called them (with specific reference to Russell’s activities) a "racket." Seller-financed FHA lending was completely banned (beginning October 1, 2008) by H.R. 3221, signed into law July 30th, 2008. This ban covers the Grant America system involving Indian Nations. However the tug-of-war continues, e.g., with H.R. 6694 (under legislative consideration) proposing to roll back the ban, subject to more stringent credit score and pricing controls.

As argued in the Implode-O-Meter’s Opposition Memo and Railey’s Declaration, all points in the article on the Grant America/Penobscot program are well supported by the evidence, including reports, rulings, and statements from government agencies and courts.

The Implode-O-Meter believes that removal of the article and a ban of further discussion of the Grant America Program would be unlawful suppression of free speech. In this case such suppression would be particularly egregious because of the public interest and legislative aspects of the controversy (the public — that is, taxpayers — ultimately insure the Grant America Program mortgages).

The Implode-O-Meter argues that such an injunction and prior restraint in fact constitutes a frivolous filing, and violation of Federal court rules.

The Implode-O-Meter also points out that the filing by Russell (et al) contains many other major defects including: ambiguously making reference to a draft of the article which was only briefly posted, failing to point out specifically which remaining statements are defamatory, and failing to demonstrate actual malice in the posting.

The Implode-O-Meter believes that the suit, given the nature of the tactics involved, is meant to intimidate us and raise the costs of our legal defense against an opponent that has made millions engaging in unsound lending activities. The plaintiffs’ clearly are willing to resort to "any means necessary" to see us relent and remove an article which is distasteful (and perhaps existentially threatening) to them, and go silent on the issue of the Grant America/Penobscot program and related activities of the principals.

Given the above points, the Mortgage Lender Implode-O-Meter anticipates a speedy denial of the injunction and restraining order. A full copy of the article is available online here.

Relevant documents:

• Railey Grant America/Penobscot article
• complaint by plaintiffs
• plaintiffs’ motion for injunction
• defendent’s opposition to injunction
• Krista Railey declaration
• Defendents’ exhibits
• Plaintiff Attorney Exhibits
• Russell Exhibits