“A question that comes to mind is how much we as a society are willing to sacrifice ourselves in order to punish these borrowers? Because the cost is rising and is already too much.”
I applaud 60 Minutes for going back to back on the foreclosure crisis and hammering it from two different ends. First, they focused on why the banks aren’t being prosecuted for their crimes and second they asked why the banks are walking away from homes they foreclosed on. And, I am sickened by that second story that was on 60 Minutes last Sunday night. It is heartbreaking to watch the homes that the banks first wrongfully foreclosed on, then abandoned, and are now being bulldozed to the ground.
The point being that 80% of these people have asked for some kind of help so they could hang onto the house. These people would have clearly continued to pay had they been adjusted for real market value–maybe 5% or 10% in ordinary times would have been written down. This is even provided for in the bankruptcy code for business deals, but, “Oh no”, the banks say, “We can’t do that with a house”. How quickly they forget the overinflated appraisals that got us here in the first place. If the bank didn’t want that loan to totally fail they would have worked with the homeowner. But the banks do want the loans to totally fail because they want to make sure they can squeeze out every last ounce of fees they can get. So now you have banks and tax collectors bulldozing the very same homes the Banks were in a rush to foreclose on. What a waste.
Hey! Banks! If you’re so set on bulldozing and you refuse to work with the legitimate homeowner, what about seeing the home as a resource? Haven’t you got any homeless in your city? Haven’t you got any people living in their cars? What about displaced homeowners? Why not let them take over the utilities, taxes and maintenance of the home. Wouldn’t that make more sense? Last I checked it costs our society more money to have people on the street than it would to let them take care of a home in exchange for living there.
Do you remember the story of the frog in a pot of hot water? As a recap if you place the frog in a pot of hot water he’ll jump out right away. If however you put the frog in a pot of cool water and slowly increase the temperature, the moment he realizes that he’s cooking and will die, it’s too late to jump so he dies.
So I wonder if back in 2007, maybe 2005 or even as late as 2008, if someone would have published a “Secret Plan of the Banks”, stating that 20,000 homes in Cleveland would be purposely foreclosed on and then bull-dozed, with an additional over 6 million families across the country forced out of their homes with fraudulent paperwork by 2011 and 6 million more to come after that, what would have happened? You see, faced with the tsunami of millions of people forced out of their homes all at once, we react differently than when it happens in pieces every week.
If in 2007, the American public had been informed that THIS is what we would like in 2011, I believe there would have been a reaction, an outcry, an outrage and lots of preventative measures put into place. But it happened gradually and the bar keeps getting lifted on where the outrage should be. Like the frog in the water, the banks made sure we built up a tolerance to the rising temperature.
This is absolutely crazy-making, nuts, lunacy that they refuse to work with the homeowners, foreclose, kick families to the street and then bulldoze. Is there anything more destructive than taking perfectly good homes and destroying them? It’s lose-lose-lose. Think about it. The investor whose money went into the loan. Gone. The homeowner. Gone. The city is screwed because there’s no more tax revenue. The only ones who profited from every angle, and are now rewarding themselves with record bonuses again this year, are the banks.
It’s infuriating to think these are people who would have stayed in the home, paid the insurance, paid the taxes, kept the utilities going, and the county would have made money, the investor would have made money, everyone would have profited except the intermediaries who are pretending to be lenders. Yes, that’s right. The odds that the entity stated on your mortgage as your “Lender” is not. They are the intermediary and never put a dime into the mortgage but they will foreclose on you. That’s why they have the name “Pretender Lender”.
Under HAMP banks don’t have to give loan modifications but they must consider the loan modification. The fact that the homes are being bulldozed is clear proof the banks have abandoned them WITHOUT CONSIDERATION of the modification. Several Judges have picked up on this and more are looking at the evidence. The clear facts point to the policy of foreclosure for the Banks and servicers, rather than mitigation or recovery of losses for the investor. The Banks did not want to work with the homeowner or anyone else. They have only ever desired a total loss. The more total the loss, the more money they made on fees, insurance, credit default swaps and other credit enhancements.
The rule of thumb has ALWAYS been that in all circumstances, a reasonable “work out” is better than a foreclosure. This has always been the model in banking and lending. But here the banks went exactly opposite of that. The first reason is so that the servicers could make more money, but the real reason is that with a total loss no one asks for an accounting. When they originally took money from the investor they did not invest it all into mortgages. This fact is not yet accepted. But it happened. Out of the investor money that was advanced for the purchase of “mortgage bonds” approximately 30% never made it into mortgages. It went into the investors’ pockets as trading profits. Really?! How did that happen?
The Banks have successfully created a curtain between the real money trail and the documentary trail. It is a curtain above which we cannot see. The only part that we can see is the part where homeowners went to closings for loan products that were so obscure that Alan Greenspan admitted he didn’t understand the whole package. What we know is that out of each dollar they took from the original investor, only 65¢ went to the system. The rest went to various people as fees and trading profits. What they did was steal the money by selling us our own assets as a profit. We used our own money to buy the asset. While this is classic Wall Street maneuvering, it’s just never been done before on this scale.
So where did the other .35¢ on every investment dollar go? It went offshore to a distribution point in Bermuda. Here’s an interesting tidbit. Did you know that Bermuda has more title insurance companies based there than anywhere else in the world? But let’s start from the premise that there is no reason for money to go offshore if someone is making a loan on US property and they are a US lender. There’s no conceivable explanation for that or even a tax evasion scheme that would explain where the money would come from, if they were simply making loans. So the explanation for money going offshore is that the money is stolen and was effectively laundered through Bermuda like some WalMArt distribution center, then sent to Luxemborg and Mexico and other foreign locales. Here’s another tidbit, the government of Bermuda asserts jurisdiction over the transaction for tax purposes but then in the same document waives any tax claim on the money. But I digress. We’ll continue that subject another day.
The banks WANT A TOTAL LOSS. If the homeowner pays off on the loan the banks are screwed because the borrower will only pay the amount of the mortgage which is LESS THAN THE AMOUNT THE INVESTOR PAID FOR THE MORTGAGE BONDS. Let’s say the investor gave a $1 million for FUNDING mortgages. If conventional loans had been the goal, then the money from the investor would have funded approximately $1 million in mortgage loans, at perhaps 4%-7% interest. Instead the Banks searched for people to whom they would give bad loans with a much higher interest rate. A much higher interest rate means that less funding of investor money is required. Think about it. If the investor was expecting a return of 5% on $1 million then he was expecting interest income totaling $50,000 per year. So Wall Street Banks took $500,000 of the money and loaned to borrowers on crazy deals at a rate of 10%, which still leaves $50,000 in income. Then Wall Street sells the loans to the investor for $1 million at a “profit” of $500,000. but the homeowner/borrower only asked for and only got 650k. The banks HAD to make sure the loan failed to hide the fact that they stole from the investors. So if the home is bulldozed so much the better. In a “complete” “loss” no one will ask any questions.
There is a suspicion that the decision to walk away from homes they foreclosed on was a deliberate action in order to wipe out the lower tranches of the pools so that the credit default swaps would pay off 100 cents on the dollar rather than 80 cents or 50 cents. But they’re still not giving it to the investor. Instead they transfer the investor’s wealth and everyone else’s wealth to themselves. It’s very disturbing. Or, as some have said, if this really is just one giant chess game, what’s the next move? Is this some sort of ethnic cleansing where they get rid of the homeless and poorest of the poor first and work their way up the food chain? Or will complete devastation then bring back the bank’s offshore money to restimulate growth, rebuild all those houses, refill those store shelves with goods and put us all back to work again?
Yet some still say it’s the homeowner who refinanced their home to buy a boat and an RV who is the cause of the biggest financial crime in the history of the world. A question that comes to mind is how much we as a society are willing to sacrifice ourselves in order to punish these borrowers? Because the cost is rising and is already too much. When will it become too expensive to punish the homeowner? If we really are as selfish as some would have us believe, we also need to ask ourselves how much it will cost us to see our neighbor go down. Are you personally willing to go into poverty just so the borrowers don’t get a break. Until now, people thought, “Oh, foreclosure, no big deal.” but the the value of your own home has dropped by half. Wake up! It’s not your neighbors’ fault. We’re all in this together. There are solutions but it’s a political issue to force the pretender lender banks to tell the truth, all of the truth, and to give homeowners a break.
Nobody cares if when the economy is rocking and rolling and everybody’s working and making a living that huge corporations such as the oil companies, get massive subsidies. So isn’t the idea here, to get our economy rocking and rolling and everybody working again? If that means forcing the banks to tell the truth so homeowners have a place to live and can find a job, doesn’t that benefit all of us?
How do you define survival? Is it just you and your family? Is it all of us? Is it you and me but not the guy two blocks down? I think when we figure out what survival means to us we will open the door to an incredible opportunity to receive the gifts that unity will bestow upon us. It’s in our namesake. It’s our destiny. Are we not the UNITED states? You know why the Occupy Movement has overwhelming and growing support? It’s because in our heart of hearts we know everything they stand for to be true. And overwhelmingly it’s what our souls crave. It’s truly a spiritual solution to this economic problem.
Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: | bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND