The beautiful symmetry of the foreclosure racket

[Joanne98]

The other month I attended a foreclosure auction on the steps of a Maryland courthouse. The property, a small townhouse about 4 years old had been vacated by the owner who just handed his keys in & walked away. The original mortgage holder, Countrywide, was then stuck with the original cost of the home, the missed interest payments, and all legal fees etc.

Meanwhile, Countrywide had gone out of business and was acquired by Bank of America. A recipient of $45 billion in taxpayer TARP funds which it has since paid back with low-interest loans from the same government but which come with far fewer strings attached -" a slight of hand that appears to go over the heads of our "lamestream' media.

Anyway, it was fascinating to watch the foreclosure auction as the bids went up to well over the fair market price of the property and local first-home buyers were effectively locked out of the process.

A couple of weeks later I decided to do a little investigating & asked the Clerk of the Courts to see the documentation & follow the details of the foreclosure process.

http://www.opednews.com/articles/The-beautiful-symmetry-of-by-Ted-Newcomen-101220-82.html

[daleanime]

1. Huge K & R...

:banghead:

[xchrom]

2. Recommend

[canoeist52]

3. More...

"Now remember, this property may have been owned by Bank of America but that is basically YOU, the taxpayer. They put the home up for auction and not only got all their original loan back, they got enough money to cover all the missed mortgage payments, all their legal fees and made over $20,000 profit on the deal!

Well, isn't that good news for the bank, and ultimately us the taxpayer?' I hear you say. Not so fast folks -" the winning bid that paid well over the current market price for this home & effectively locked out local people who wanted to get a foot on the property ladder was non other than Freddie Mac -" the government-owned (read taxpayer-funded ) mortgage quango which with its twin Fannie Mae looks like costing us about $154 billion before the current crisis is over."

[drm604]

4. K&R

If true, this is big.

[crikkett]

8. I don't quite understand the potential hugeness.

? :shrug:

[some guy]

9. I'll give it a try.

The numbers used are just "for example"

Person A took out a mortgage for $150,000. They subsequently walked away owing $120,000.

The current market value of the house is $75,000 - so if a person bought it at auction for that, the bank would lose $45,000. The difference between $120,00 and $75,000.

Instead Freddie Mac bought the house for $120,00 (or more) so the bank loses nothing. However, Freddie Mac's money comes from taxpayer bailouts which are not going to be paid back, so the bank is getting its $120,000 from we the taxpayers.

A taxpayer bailout of the bank, funneled through Freddie Mac, that the bank doesn't have to pay back.

[tridim]

11. The "bank" in these cases are just servicers of the loan.

Or at least that's what they claim.

Fannie and Freddie take the hit if their investments sell for cheap. The banks are insured if the investments lose money. IMO that's the scam part. It's terribly confusing.

What I don't understand is how Fannie can bid on something they technically already own. They're buying these houses from themselves. I wonder if any cash is ever transferred after the sale?

[tridim]

5. Fannie bought my foreclosure for exactly the outstanding balance plus fees.

And they gave me some cash for moving expenses.

I still don't know why they did that, it doesn't make sense. :shrug:

I think they're planning on renting the place. There is no way they'll sell it for more than they paid.

[drm604]

6. They bought it directly from you?

That's much better than waiting for the foreclosure then buying it from the bank.

[tridim]

7. No, they bid on it a few days prior to the auction.

Actually Chase bid on it for Fannie (the investor). Nobody else bid, so they won.

BTW the "cash for keys" program required that I get EVERYTHING out and leave it in "broom swept" condition. I think it's their way of keeping evicted occupants from trashing the place on the way out.

[n2doc]

10. If the Government is going to buy these places

Then they should be turned into subsidized/low income public housing. At least get some use out of them and get people off of the street.

[tridim]

12. Absolutely. nt

[JohnWxy]

13. recommended