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Now that Obama has won a second term he is unencumbered by the need to run for re-election. But he is still stuck with a Congress that is largely bought by the banks. There are a lot of things he can do administratively without Congress and that is the path he should take.
The first issue is of course what is best for the Country and he has answered that in both word and deed — developing the middle class to restore prosperity and the hope of the American dream. The biggest thing available to him is the fiscal stimulus that would result from resolving the foreclosure crisis which is ongoing along with the corruption of title throughout the United States creating uncertainty in real estate transactions that will haunt us for decades.
That resolution is going to involve a choice of one of two paths. The one most of his agencies are following is predicated upon the assumption that the loan closings were bona fide and for value. This assumption leads to such narratives as “reckless” lending by the banks etc and leaves some room for punishing them, and providing relief for homeowners — past, present and/or future — as to wrongful foreclosure or wrongful closings. The relief for people who “borrowed more than they could pay” is going to be minimal.
The second path is the path we have been advocating here for years. It is simple. If we assume that the loan closing was defective and fraudulent (fueled by fraudulent appraisals) then the administration has a free hand to fashion resolution and settlements that are in the national interest.
By defective I mean that the mortgages were never perfected and that therefore the amount “due” is not secured. AND we have the whole issue of what is the amount due on a loan receivable that was converted to a receivable from a bond that contained vastly different terms than the note that was signed to the order of the wrong payee.
If we force an accounting for exactly where the money came from, what route it took and how the paperwork does NOT match up with the road taken by the money, then the transactions with Federal Reserve and the resolution with investors (pension funds) as well as borrowers (homeowners) can be much more easily achieved administratively.
The first route might just lead to window dressing on a crisis that will erupt in the coming year as pension funds, now underfunded through losses on the so-called mortgage-backed securities (backed by loans that never made it into the pool), start announcing that they do not have enough money to meet the pension obligations that were promised or even vested. In short, another huge bailout is on the way if he moves in that direction, this time paying for the banks’ misbehavior by giving money to the pension funds again from taxpayer dollars.
The second route relieves the banks bulging pockets of off-shore and on shore funds taken during the mortgage meltdown and distributes it as restitution for fraud against the investors and the homeowners. As I have repeatedly said, the day will come that we will be required to grant amnesty to everyone and simply share the losses in some proportions that make sense.
In the courts meanwhile, we will continue to press for the DENY and DISCOVER strategy of following the money and opening up that can of worms. We are making progress with that as more and more judges are starting to understand that the failure to register the the REMIC as the owner or payee on the note according to state laws regarding the recording of interests in real estate, is indicative of a systemic fraud that was intended to deprive the investors of the protections they were promised through insurance and credit default swaps (the banks pocketed that money) and eventually federal bailouts (the bank pocketed that money also).
Many lawyers and pro se litigants are understandably intimidated by the prospect of taking a transaction that was once fairly simple and straightforward and denying that it ever took place. Lawyers are afraid of looking stupid denying the obvious.
But that, according to our information here, is exactly what did occur. The transaction documented at closing was NOT the financial transaction that occurred in which money actually exchanged hands. The REMICs were excluded from the paperwork because the banks hijacked the loans in order to get the insurance and credit default swaps payable to the banks instead of the investors who put up the money.
So we are left with an actual transaction in which money exchanged hands but which is undocumented except for the wire transfer receipt and the wire transfer instructions. At the same time we are left with a documented transaction based upon a loan that never occurred between the parties to that documentation.
Obama has a lot of political capital and the bank-bought politicians in Washington and state legislatures had better take notice: the demographics won this election for Obama and those demographic include people hardest hit by foreclosures or the threat of foreclosure. Despite all the money spent, the bank-owned politicians are in a far weaker position than they thought they would be this morning.
It’s time for the President to take the initiative and push for a final resolution of this crisis, lest it fester for decades.