The Mounting Outrage...

[Capt. Jack]

While there are many components in play, let's set aside all the social, ideological, and political ingredients and look at what this country is founded on.

This is a country of laws..not men.

If a borrower commits a crime in the act of borrowing said borrower should be held accountable.

If a lender commits a crime in the act of lending said lender should be held accountable.

Americans are splintered on this issue because understanding this very nuanced and technical area of law is by design deliberately counter intuitive and laboriously difficult to understand.

An argument could be made that the dreary complexity of the laws involving borrowing and lending forge the bedrock of popular opinion - which largely and lamentably defaults to everything BUT the law.

The splinter is large but not yet incurable. I'll go out on this splintered limb and say that not only have homeowners in default ostensibly been had - but so have many of those not in default. Shine the light on all securitized mortgages and let the chips fall where they may.

These days, who even knows the averred value of a performing vs. non-performing loan? The same laws that apply to homeowners in foreclosure apply to those who are not.

The outrage is coming....

From the Right:

Wall Street Probe Widens - J.P. Morgan, Citigroup, Deutsche Bank and UBS Also Face Prosecutors' Scrutiny.

Government Probe into Wall Street Sales Widening.

From the Left:

Prosecutors Ask if 8 Banks Duped Rating Agencies.

Class Warfare: Hundreds Protest Outside Bankers' Houses In DC.

From Abroad:

Greece Considering Legal Action Against U.S. Banks for Crisis.

And lastly...from Florida:

State AG investigates its own.

The Hamlet

[agent46]

1. Would you say...

we're going to see a perfect storm of backlash sooner or later? If so, would you say we'll be seeing it sooner or later?

[dixiegrrrrl]

2. Rec'ing, esp. for the link to The Hamlet.

That is a cool website for foreclosure information, news.

[Capt. Jack]

11. Thanks Dixiegrrrrl

Imagine a thousand Little Hamlets popping up across the country!

I am the site admin there and will help anyone who wishes to set up their own Hamlet.

It's not all that difficult and there will be no charge.

[Echo In Light]

3. K/R

[Capt. Jack]

4. Yes...I will sound like a parrot to some...

...but I'll keep saying this. It effects us ALL!

How Main Street has Destroyed Wall Street.

We've all heard the phrase "No one held a gun to the heads of these homeowners when they signed the dotted line."

I guess now would be a good time to shoot the greedy homeowners.

It’s crystal clear. From the very beginning the homeowners have gamed the system. They started by tricking the property appraiser (lender’s agent) into submitting an outcome-based appraisal.

Then, millions of homeowners shrewdly conned the “lenders” into dismissing all agency and fiduciary responsibility in the underwriting process….going so far as to force the “lenders” into forging documents.

Then, the greedy homeowners forced the “lenders” to securitize the loan in such a fashion as to bifurcate the mortgage from the note.

On top of that, the homeowners secretly cooked up the concept of “Credit Default Swaps” and forced the “lenders” to insure the collateral at the full (outcome based) value 30X over.

Having successfully pulled the wool over everyone’s eyes – these irresponsible homeowners showered themselves with well deserved bonuses.

Realizing they were too big to fail, these irresponsible, reckless homeowners lined the pockets of legislators and received enormous sums of taxpayer bailouts.

The result of these cunning maneuvers by the fraudulent homeowner scheme has them sitting fat and happy in the cat birds seat. Yup, that’s how they did it. And they’re getting away with it.

Savings drained – check, 401ks all gone – check. Kicked out of their homes – check. “Lenders” made whole many times over via Credit Default Swaps – check. Homeowners foreclosed and “lender” buys back property for pennies on the dollar – check.

Follow the money and you’ll find the culprit. It’s about time we hold these homeowners accountable.

Good call. The websites below are sponsored by a well-healed, politically connected, PR machine of greedy volunteers…and contain detailed information on how the collusion on Main Street has ripped off Wall Street. Like a swarm of angry bees....we must pollinate this information.

Don’t look though…it’s just spam.

The Hamlet

4closurefraud

[dmallind]

5. I kept getting ARMs and interest-only loans pushed to me.

I said no - I wanted a fixed rate (why on earth would anyone think an ARM was a good choice with historically low interest rates defies belief). End of story. Nobody forced me to lie about my income or take a balloon loan that I didn't want. Mortgage paperwork contains much small print but it ALSO contains - always - one very simple very clear document that tells you how much you will pay and what your interest rate is and can change to if applicable.

Yes the banks were pushing bad choices. Yes they were taking on way too much risk because they knew they were going to offload it right away. Yes they overleveraged with derivatives and swaps to an asinine degree. But people signed for those loans, and it's not that the disclosure page is written in complex financial jargon. My sympathy extends only to those who can honestly claim they were duped or signed fraudulent paperwork. Not those who couldmn't resist a sales pitch or think for themselves.

Lets not confuse blame for financial industry collapse (which does belong squarely with the banks and trading houses)with blame for stupid mortgage choices (which belongs much more with the borrower).

[Nuclear Unicorn]

6. Those loans are designed take advantage of the disadvantaged...

...poor people are told essentially: you'll never get a home under conventional terms you HAVE to take an ARM(-twisting).

How long do you have to pay interest on an amoretized (sp?) loan before the principal drops to appreciable levels? Even conventional loans are criminal. They take up, what, 25-plus percent of your income for decades and you pay more in interest than the actual cost of the home?

People deserve homes, not indentured servitude.

[dmallind]

9. Poor peopole are too stupid to say no? That's a bit condescending.

I made $18K a year when I got my first mortgage. Not exactly starving level poor but pretty darned low income. Never even considered an ARM. Said no when they wanted to sell me one - and that's when interest rates were 6 7/8 not 4 7/8.

Tell me if you had hundreds of thousands of dollars of your own money and needed to make your living from that, how much interest would you charge to give it to a complete stranger who by definition would only be able to pay it back over decades even if they are both honest and fortunate enough to be able to keep paying? How much less than 4-5% would you take?

People deserve homes but they also need to pay for them. Builders and carpenters and people in window and shingle factories should get union scale, right? How much should a house cost then? How low should the interest be on a loan for that amount who would provide the cash upfront for such a return?

[Nuclear Unicorn]

12. You make a fine capitalist

Yes, people deserve good wages but a big part of the reason why wages have to be so high is because the money-changers charge more interest than the value of the home so when those carpenters etc go to buy their own homes their just as indentured as the people they build homes for.

Once the home is built and the price tag is slapped on it the carpenters and shingle makers have been paid in full. Then come the bankers with their usurous interest rates.

And sorry I'm not buying into the "your own money" canard. The banks are pretty much printing--or not printing--money in whatever quatity they need to control us. It's the leash they use to make us heel. A recession is, by defintion, people with money refusing to move that money into the economy. That hurts the poor first and foremost. Others more accurately call it a "capital strike." Don't give the bankers enough of that green, green goodness and they'll take back what little they gave you to begin with until you smarten up and get back in line.

[dmallind]

18. Along with all but a fringe, yes I suppose I do

But other than ill-formed Marxist rants about evil banks, what do you think a house should cost and how much interest should be supplied to people who front the money? Not one single mortgage bank can print or create money on its own. Banks provide useful services and need to be iether profitable or at least break even if state controlled. The reduction in mortgage interest rates in the latter case would not make a huge difference.

[ljm2002]

7. How many times do most people buy a house?

Once, maybe twice. Yes many people buy homes more often than that, but the vast majority of people buy a house once.

They were duped, first, by the incessant drumbeat of the "ownership society" and the "American Dream" which includes owning a home.

Then they were duped by slick sales people to buy more home than they could afford, who assured them that by the time the 3 years on their low-interest APR loan was up the value of their house would have appreciated and they could renegotiate the loan.

Then they were duped by slick closing officers, who go through those piles of paperwork like they're running a game of 3-card monte (which of course they are) -- keep your eye on the pea, which cup is it under, shuffle shuffle shuffle -- here you go, sign here here and here. When the prospective homeowner asks them to explain a clause, they are ready with the smooth talk and the hand waves: they've had lots of practice.

That is how it worked. Save your sympathies if you like. Me, I'm pissed that more of the above-mentioned fraudsters have not had their asses landed in jail.

[dmallind]

10. So they should pay a bit of attention to it then, right?

If they wanted to rent, renting is legal.

If they wanted to spend less, they could have.

If they are committing a huge portion of their income to something for decades, they don't have the ability or common sense to understand at least a little? How many people buy cars without knowing whether they are big enough to tow their boat or fit in their kids? How many people buy a TV without knowing if it will fit in their shelves orconnect to their VCR? Why should they not put in at leatst that kind of effort for something costing many times more?

It's easy bit facile to think your stance is more empathectic, but essentially you are calling these housebuyers thick as shit, because that's what they would need to be not to be able to look at a HUD form (sent well ahead of closing incidentally) and see if it made sense for them, or think it unimportant to do so. They don't have to read every conveyance document or every subclause - they have to be able to understand basic English like "your interest rate is......" "you will pay $X for Y months ending in....." "Total amount paid is......" and think the biggest commitment of their lives is worth doing so.

Again. Fraud? Not their fault. Paperwork errors? Not their fault. Bait and switch? Not their fault. Being too stupid to care about or understand a HUD form? Their fault.

[Capt. Jack]

13. It's not that simple.

Allow me the liberty of quoting myself:

"Americans are splintered on this issue because understanding this very nuanced and technical area of law is by design deliberately counter intuitive and laboriously difficult to understand.

An argument could be made that the dreary complexity of the laws involving borrowing and lending forge the bedrock of popular opinion - which largely and lamentably defaults to everything BUT the law."

Do you honestly believe that understanding your HUD-1 is the equivalent of understanding the entire securitization trail of your loan??

[dmallind]

15. I honestly think they are two separate issues

I will not quote, but will repeat myself somewhat. I blame the people signing those mortgages for thir inability to understand clear data on interest rates and payments, and for not knowing that ARMs can reset or that interset only loans have balloon payments when such things are obviously stated in plain English. I do not blame them for credit default swaps and gambling on derivatives.

What happens to your loan in that area is immaterial to whether you can pay it and whether you are sensible enough not to get suckered. A few weird outliers notwithstanding, bank failures and hedging losses do not cause foreclosures on people who pay their bills.

[Capt. Jack]

17. The dam is breaking...and I love it!

http://www.tcpalm.com/news/2010/may/19/attorneys-forged-signatures-sloppy-paperwork-on/?comments_id=540113

http://www.foreclosurehamlet.org

[ljm2002]

19. We'll have to agree to disagree...

...we have a fundamentally different outlook on the situation.

When this country imprisons more of its people than any other advanced nation -- including China -- more by percentage, and more by absolute numbers -- the question arises: are we just a more criminal population? I don't think so, I think there is something systematically wrong.

When huge numbers of home loans go into default at the same time, and everyone recognizes that there was a "housing bubble" that burst, and we start to look into it and people were sold ARM loans because they were "high risk" but then you look at it and they weren't "high risk" at all, the loan officers merely chose to sell them that loan because it makes more $$ for them -- then I see a systematic problem.

I am not against personal responsibility. But I do think there is something wrong with systems that are put in place specifically to guide people towards doing that which is less responsible. So while there is certainly blame for many of those who have defaulted, there is more blame on the system IMO.

It seems like "personal responsibility" nowadays means "If you got suckered by a bunch of slick operators, then you're not a responsible individual". My position is that the slick operators need to be rounded up and charged. The suckers are already paying, but there is no excuse for maintaining a system based on fraud, which is what our current financial-based system is all about.

[xiamiam]

24. good for you...must be great from your little perch watching millions lose their homes..

50% devaluation from 5 years ago in my community is NOT because of bad mortgage choices..

[redqueen]

8. K&R

[OllieLotte]

14. There is plenty of blame to go around.

Putting the whole mess at the feet of the banks ignores the other two gorillas in the room. The government paid banks to and threatened banks if they failed to make loans to people that should not have been given loans. They provided the means for the mortgage companies to get rid of many of the loans that they (gov't and banks) knew were bad.

Of course, none of this would have been possible if the borrowers had enough common sense to not take out a loan that they pretty much knew they couldn't afford. All three groups knew what was going on and they went along with it.

My solution: Should have let the banks fail, their assets sold to the highest bidder (probably cents on the dollar). Homeowners that don't pay their mortgage? Throw out of their house and let them rent someplace. Let someone that is responsible buy it at a fire sale price and move it.
Gov't...throw the bums out. For them to blame the banks is a joke. They are as much to blame as the banks and the irresponsible home buyers.

[Capt. Jack]

20. Where are the Clerk's of Court?

I have an idea I'd like to run by you...

If I go into the clerk's office in my county with a "make-believe" Satisfaction of Mortgage would that work?

Since the Clerk's offices are asleep at the wheel..who knows??

What do you think?

http://www.foreclosurehamlet.org

http://www.4closurefraud.org

[Capt. Jack]

21. Mr. Potter would be a modern day Saint...

If we were talking about Frank Capra's "It's a Wonderful Life" and Bailey Savings and Loan you're argument would hold a lot more water.

If you haven't noticed...this is not an old black and white movie filmed in 1946.

Not to mention the fact that evil Mr. Potter did not securitize and insure the collateral with Credit Default Swaps.

[Jeffersons Ghost]

16. K&R great point N/T

[chill_wind]

22. K & R. n/t

[KharmaTrain]

23. The Investors & Lawyers Will Have The Final Say...

I've already received several proxies regarding class action suits against several of the major brokerage houses and I've read of many others in the pipeline. The Feds have their chance now...and in some cases with the help of the private suits...the heat is truly building on those who were at the controls during this economic disaster and are not going to go quietly away until they get answers and/or their money back. Even with the market rebounding, there are many who felt robbed...losing their savings or years of interest and they want someone held accountable. It's even more the case when its been disclosed as to how much bail out money many of these banks got and how much money they are trying to sit on.

The wheels of justice move slow, but move they are. The banksters are doing what they can to avoid taking any responsibility or trying to clean up their house. They do this at their peril as they've made themselves into some of the most hated people in this country, there's little pity for 'em. Here's hoping we start seeing some trials and discoveries in the near future to further unpeal this stinking onion.

[Karenina]

25. K&R