Mortgage Meltdown: People Fighting Back, “We the People”

We the People: Fighting Back

At first the U.S. Constitution was written without the Bill of Rights — 10 Amendments that spelled out the specifics of what the founders were looking for when they established the Republic for which we stand. When you read the whole Constitution, which isn’t long, and the Bill of Rights, which isn’t long either, you see something that isn’t in our social studies. There are FOUR sources of power, checks and balances, not three as everyone keeps saying.

The U.S. Constitution provides for three of them and hints at the fourth. It provides for the Executive Branch, the Legislative Branch, and the Judicial Branch.  Anyone with a passing knowledge of our system of government probably knows that.

But the Constitution starts out with “We the people” indicating, as Thomas Jefferson did, that all government, including the three branches established by the Constitution, derive their power from consent of the governed (the people) and are subject to the power of the people to change it. You might argue that this was a declaration delegating the power of the people to the three branches of government created.

The Bill of RIghts clears up any miscalculation by providing in the 9th Amendment, that all powers not reserved to the Federal Government and the States reside in the people. It also spells out many powers that are NOT allowed to either the Federal or State governments, including freedom of speech, a free press, freedom of assembly, freedom to petition to redress grievances, freedom to keep and bear arms, the right to equal protection, the prohibition of taking life, liberty or property without due process of law and many others.  

So it is not surprising that people are awakening to their power and exercising it as they defend their home, their lives and their property from predatory practices of financial institutions. Foreclosure and repossession are not the only options. People are refusing to go along with the regular business as usual and finding tiny slip-ups the predators made when they had the victims sign documents that were guaranteed to put them in debt for the rest of their lives. 

Make allegations of violations of truth in lending, claim rescission, fraud, treble damages, RICO conspiracy, Securities Fraud,  illegal kickbacks to mortgage brokers etc. Make the creditors work like they never had to work before. Make it sound like a class action. Get help.

I have a publication coming out in 45 days called Garfield’s Handbook for Borrowers in the Mortgage Meltdown including many defense strategies and the forms you can photocopy and send in without a lawyer. The Courts are duty bound to help you if you don’t have a lawyer. If you do get a lawyer, show him the book. If you want an advance copy of the manuscript, contact me at The retail price is $19.95, but the pre-publication price is only $24.95. I can send it to you via email or you can order it in hard copy for $24.95 plus $6.00 shipping and handling. And if you want other people joining you in this crusade, it would behoove you to make sure they buy a copy rather than pirate it from you. It is going to take money to set up an infrastructure to get everyone the help they need.

Bankruptcy, state and federal judges are getting the message too. But we all know that nothing effective will come from the executive branch until a few months after the next President is sworn in (January 20, 2009). By then things will have fallen into hell and a hand bag. We also know that the legislative branch won’t be able to do anything meaningful, if they ever do, until new congress convenes after January 1, 2009. And Judges while sympathetic, need something to hang their hat on to justify equitable relief that stops mortgage contracts, notes, loans documents, and other transactions from running their course. 

In short they need you to stand up and say NO!

Start with sending form letters to all your creditors including credit cards, claiming that they have been overcharging you on fees, interest and minimum payments and that you contest the balance due.  Put the burden on them. If you live in a state like Arizona (A “trust deed state”) go down to the clerk’s office and get the forms necessary to contest the filing of the notice of foreclosure and eviction. If you get an order of eviction, don’t leave. They must still go to court and get an order to get you out.

Even after the order is entered, the only way they can get you out is if the sheriff send deputies to take you and your stuff out. If enough of you do this (and the number is already growing) neither the Court nor the Sheriffs will have the manpower to deal with the crisis and neither will they politcially want to be part of that problem. Give them the excuse and they will slow down or even back away.

If you have a choice between paying credit cards, or hospitable bills and paying your mortgage, then pay your mortgage but don’t give up on the attack against these creditors — all of them. The credit card companies generally don’t even sue and even if they do, they can’t take your house. Only the mortgage lender can do that. 

If you have a choice between paying your home equity line of credit and the first mortgage, pay the first mortgage.  If your equity has disappeared or turned negative, the LOC lender will have no choice but to make some deal with you.

Speaking of deals — approach the lenders from a position of strength. Get some help from people are aggressive advocates, whether they are financial advisers, lawyers, or accountants and go after them.  I have a website under construction at

Present them with a proposal that minimizes or eliminates the write-off and keeps your payments within bounds that you can afford. The lender and the investors that took the risk off the lender’s hands, will be in a position where they don’t have to write-off huge sums of money that will depreciate the value of their publicly traded stocks. Each deal they save represents $ millions to them in their stock price (and potential liability far in excess of the loan or investment itself). The leverage is on your side now. If these predators don’t cooperate now, they risk jail.

When you make the deal, do NOT accept an increasing mortgage balance. You don’t need to despite their demands that you do.  If the lender forgives part of the mortgage balance it is no longer a tax event to you. No taxes are do from you. The best deal will look something like this:

1. Make certain, in writing, that the mortgage lender agrees to file any report necessary to repair or preserve your credit score. 

2. Mortgage balance is no more than the amount you originally borrowed, less any principal payments made.

3. Future payments are what you can presently afford, so long as you can cover the utilities, taxes, insurance, and maintenance of the house (a vacant house is a tremendous liability to the financial institutions after foreclosure) and something toward the loan even if it doesn’t cover the minimum payment for interest. 

4. A seven year minimum period during which there will be no change of payments, no threat of foreclosure, no threat of eviction as long as you make the minimum payments described above.

5. In the event of refinancing the house within the seven year period, you owe them only what you originally borrowed less any principal payments paid to them, and they waive all costs and accept the cost of any recording, points, fees or other expenses on the refinancing. 

6. In the event of sale of the house, you get everything up to the original purchase price of the house. After that you share with the Financial institution, 50-50 up to 20% over the original price. After that it is all yours.

7. Do NOT accept any payment or amendment that mentions inflation or any index that is tied to inflation. This provision alone will kill you financially.

8. The more trouble you cause, the better the message will travel up the line through the mortgage broker, the lender, the investment banker and the investor that they have liability here, and they could lose not only the loan, but be paying damages as well.

9. Get together in groups. Find other people in the same situations. It does not have to be identical. Get in touch with your state’s attorney general, who is probably already taking action against the perpetrators of this massive fraud. Get in touch with any one or more of the attorneys who have so far filed more than 40 class action suits against the lenders, the investment bankers, the rating companies that said these were triple AAA securities and the retail securities brokerage houses. 

10. DO NOT GIVE UP. People high up in Federal, State and Local government understand full well that unless this monster is stopped in its tracks, the economy could actually fail and the dollar, once king in the international markets, could be worthless. 

11. FORGET ABOUT BLAME: Everyone in this scheme must be saved. You are all to blame to some extent from borrower through investor. We don’t have time for blame or prosecutions or investigations. We need remedies. Everyone is going to be affected by this. Some people will make a lot of money on the decline of the dollar. Some already have. But most people are going to be caught with their pants down and not realize until it is too late that they have been stripped of what they thought was their wealth. 



4 Responses

  1. That is very important section. You are possibly that a good broker. Thanks.

  2. Thanks for sharing these great thoughts. I’m bookmarking this for future reference. Some of these I already do, so the point resonated most strongly with me. Keep feeding the creativity.
    I am currently on holiday so, for this reason, I’ve nothing better to do than surf the web for travel ideas, lie around and update my blog. Well, more or less anyway
    Doug C

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