Blame the Lender not Yourselves or Each Other

WHEN WAS THE LAST TIME YOU HEARD ABOUT A BUNCH OF UNSOPHISTICATED, POORLY EDUCATED, SOMETIMES NON-ENGLISH SPEAKING PEOPLE SCATTERED OVER 50 STATES GETTING TOGETHER TO DEFRAUD THE POWERFUL FINANCIAL INDUSTRY ON WALL STREET?

  • We can all agree that there is enough blame to go around for everyone — from government and the financial industry, down to the mortgage brokers and borrowers.
  • But here is the essential question: do you want to sit around and arm-chair the game, or do you want to put a stop to it — because you can.
  • Do you want to wake up tomorrow morning and know that you helped some family stay in their home and that you are going to do it again today, or do you want to read more about declining home prices, no bottom, no credit available to expand the business you own or work for, no customers to buy your work product, your services or your products?

Many well-intended American patriots, believing in self-reliance as the core building block of American History have told me that they object to bailing out borrowers who got in over their heads using poor judgment or, even worse, intending to game the system. This is the current mantra of “conservatism” which if you think about it is certainly the bedrock of many American successes.

What’s wrong with applying these very good principles to the mortgage meltdown is that it attempts to force the facts into ideological beliefs which cannot accommodate our current reality. Put another way, people are seeing what they choose to believe regardless of the freely available facts.

It is easy to say that anyone in their right mind would read documents before they sign them. But when presented with an intimidating stack of papers at closing, virtually nobody reads those documents (even the lawyer who was hired to do the closing for the Buyer or the Seller). I know. I’ve been there. That is why the governmental authorities on the Federal and State Level required a consistent form of good faith estimate before closing and a standardized settlement form for the handling of the money (Truth in Lending Act and Respa, Hoepa etc.)

Under these laws, buyers/borrowers are required to be alerted by the lender and the mortgage broker and the real estate broker and the title agent and anyone else who knows the truth, that the terms of this loan are not what they appear on the face page of the documents where the signature and initials of the buyer/borrower appear. And none of these third party “fiduciaries/trustees” had any problem when they were really who they said they were. But when the “lender” became a conduit or a mortgage broker, when the mortgage broker became a loan officer for a particular bank, when the real estate broker became a salesperson for the mortgage broker, and when the appraiser became the agent of the “lender” to satisfy the real (but undisclosed) people who actually funded the “loan” — THAT is when the argument started.

And that is why everyone is suing everyone else. Not because of some nefarious plot by farmers who never heard of a “derivative” living in Montana, but because of people who work on Wall Street and who exerted unrelenting pressure to drop traditional loan underwriting standards in order to come up with more paper to sell (under equally false pretenses) to investors, some of whom were city governments in Europe who now must cut back on services their residents have relied upon for decades.

And the person who calls out those tax and spend liberals for wanting to bailout the borrowers in trouble is one of the many people who has not read his own documents from his own closing. He or she does not know how those documents could be used against them in ways that were never discussed or disclosed prior to or at closing. He or she doesn’t know that deep within the fine print of the note, the mortgage or both are provisions that allow the lender to increase your monthly payment, impose extra fees, force-place insurance (even what you already have it), increase the interest rates, increase the principal, and leave the payment of insurance and taxes to you instead of escrowing that money through an escrow payment to the mortgage servicer.

That person who calls out for “NO BAILOUTS” is probably sitting with a mortgage on record, the rights to which have been parsed up and transferred out to multiple third parties. But he doesn’t know that because he hasn’t checked. He or she is now paying a mortgage service provider that in 65% of the cases doesn’t have any right to collect money from the borrower because the revenue from the note payments was also parsed out and transferred to multiple parties, then parsed and packaged again and transferred again to multiple parties, and then re-packaged with cross guarantees with the mortgage or note of other people the borrower never met, and then pledged to some investor to protect and guarantee that investor a rate of return that exceeds the payments received from the borrower.

That person doesn’t realize that even he or she “played by the rules” the way everyone should, he or she has been paying their mortgage payments to a nominee who has no right to the payments, and that the people who at least think they are entitled to those payments are not receiving them now.

Mr. and Mrs. conservative have now placed themselves in a position where multiple third parties can sue him or her for payments that he or she already made — and they are screaming against the people who have set out to protect them from that problem. It is the people you are yelling at, who are clearing up a title problem that will prevent you from ever selling your house. These same people are, without ever knowing you, are protecting you from having to deal with more than one person or entity claiming you owe the full balance of your mortgage to both of them.

And sorry folks, this isn’t technical legal beagle stuff designed to get stupid consumers out of deals they should never have gotten into. This is real. And people just like you are losing their homes, their hopes, their families, and their savings through this intricate PONZI scheme invented by Wall Street “creative financiers.”

If you are a true conservative it is perfectly clear that you seek to conserve something — probably American values, American lifestyle and American ideals. But this Ponzi scheme conserved nothing and destroyed everything in its path. It didn’t just target the poor and disenfranchised that you feel should work harder to climb the American ladder of success.

It gave the “gotcha” to EVERY borrower (without exception) who took on a mortgage from 2001 to 2008. It doesn’t matter if you took a fixed rate 15 year mortgage or a variable rate, adjustable, negative amortization 30 year mortgage of the 2/28 or 3/27 variety et al. It now has resulted in the largest decline in the sale price, saleability and home equity in American history. Do you really think that such a disparate group, dispersed over the millions of square miles constituting the greatest country on earth, could have pulled this off?

The entire world financial market functions solely on trust and confidence. Do you really think that Wall Street and main Street Bankers did not understand the risk of the financial products that they, not the borrowers, created?

And who do you think cares most about the fact that your neighborhood, through action or fault of your own, is declining with  vandalism, renters, deferred maintenance homes and tumbling home equity? Certainly not the professional “conservers” or who call themselves conservatives. After all, it was they who created the financial “products” that resulted in this mess.

We can all agree that there is enough blame to go around for everyone — from government and the financial industry, down to the mortgage brokers and borrowers. But here is the essential question: do you want to sit around and arm-chair the game, or do you want to put a stop to it — because you can. Do you want to wake up tomorrow morning and know that you helped some family stay in their home and that you are going to do it again today, or do you want to read more about declining home prices, no bottom, no credit available to expand the business you own or work for, no customers to buy your services or products?

If you really want to conserve basic American values of hard work, honesty, savings, and good citizenry, then you should be at the head of the line demanding accounting and correction for the institutionalized lying of investment bankers, “banks” that hold themselves out as lenders but take no risk, mortgage brokers who hold themselves out as the expert upon whom the borrower can rely but get paid bonuses for getting the borrower to sign papers that include prepayment penalties, and government regulators who pretend to reign in excessive predatory practices, while they receive personal and private “donations” to look the other way.

If you really want to conserve the economic values, your nest egg, that you have worked all these years to build and protect it against the continued decline of the value of the American currency, and the hyper-inflation of basic commidty prices upon which you depend, then you will join the growing grass roots movements of concerned citizens of all ideologies including borrowers and professionals who seek to stop the freight train of foreclosures, the creation of 10-12 month inventory supplies of homes, and tell the world, we are as good as we say we are — that we make mistakes but we correct them because we stand for truth, justice, and honesty and that the American way is still an ideal worth looking to when modeling a new society or correcting an old one.

3 Responses

  1. Playing devil’s advocate…. How about the situation where no one knew people would loose their jobs. Presume many people might have been able to repay at the time the loan was made but lost their jobs. I still think that most lenders engaged in a pattern or practice in violation of TILA, and so it can still be used as an argument.

  2. Seems pretty clear to me… illegal for lender to make a loan where he knew or should have known the buyer could not repay.

    From – Truth in Lending @ fdic.gov
    (4) Repayment ability. Engage in a pattern or practice of extending credit subject to § 226.32 to a consumer based on the consumer’s collateral without regard to the consumer’s repayment ability, including the consumer’s current and expected income, current obligations, and employment. There is a presumption that a creditor has violated this paragraph (a)(4) if the creditor engages in a pattern or practice of making loans subject to § 226.32 without verifying and documenting consumers’ repayment ability.

  3. This is a wake up call to everyone that we are all

    in the same boat , it’s sinking America & the world.

    Nobody will be spared …. fight back people …

    You are not alone or powerless, help those you can. Don’t delay and understand you own your case.

    Up to you to protect your home & family.

    Please email Neil Garfield blog to everyone.

    Alan Baron

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