President Obama is taking on a very challenging task. A direct statement to the American people that their mortgages and notes are invalid, unenforceable or void would be portrayed as undermining contractual obligations. It would infuriate the investors who bought the worthless CDOs and undermine Obama’s enormous popularity with allegations of throwing the finance system under the bus. Although he leaves the door open to principal reduction (or elimination), we are still some distance from where that will be possible. The bottom line is it is up to you and me to make this a reality. Until the fraud and negligence in appraisals is addressed, there can be no equilibrium. The fact is that the houses were not worth what the lender represented at closing and are not likely to reach those levels again for 10 or 20 years. Without principal reduction, the only reasonable step for people to take is to walk from the home which will only increase the enormous wave of additional foreclosures that are already in process.
Otherwise there are some viable options that would affect some people who are not under water and not affected by predatory loans. But the fact remains that the modifications proposed by the President presupposes that the “bank” with whom you are in contact has any authority or ownership of the mortgage or note. Without that authority or ownership any modification that is executed will result in a cloud on title that will show up later when the title insurance carriers catch up with the legal implications of their own exposure.
Filed under: CDO, CORRUPTION, Eviction, foreclosure, foreign relations, GTC | Honor, Investor, MODIFICATION, Mortgage, securities fraud | Tagged: borrower, foreclosure defense, foreclosure offense, fraud, Lender Liability, mortgage meltdown, predatory lending, rescission, securitization, TILA audit, trustee |
I respectfully disagree with this being a good start.
It would have been a good start late 2007 or early 2008. But it is definitely not a good start now. We have already been thrown under the bus and this hasn’t changed a thing for many of us unless they fraudulently appraise our houses to the 105% mark. It doesn’t do a thing about purchase money 2nd mortgages which are much higher interest and are often balloons.
Get ready for the second wave.