How the Housing/Foreclosure Will End

There are several scenarios that could play out. I will list the ones I know and concentrate on the one that is most likely to bring this crisis to a constructive conclusion.

SCENARIOS:

  1. The current scenario remains unchanged resulting in a thirty-year battle over all kinds of debt besides home loans — student loans, business loans, commercial real estate debt, auto loans etc. In my opinion this would be catastrophic for the economy (total stagnation) and for the REAL people who have skin in the game — the investors who put up the money and the homeowners who put up their homes. The losses in many cases would be total losses as the intermediary non-creditor pretender lenders take what is left of the capital in the marketplace and keep it as profit (untaxed in most cases because it is unreported) instead of being used to increase the reserves of banks, mitigate the losses of investors, and mitigate the losses and dislocation of homeowners.
  2. State legislatures attempt to legitimize titles obtained through securitized mortgages. By enacting legislation that makes legal what is mostly illegal (see Minnesota’s law empowering MERS to foreclose even though it has no claim as creditor) states may try to force the issue of foreclosure leaving borrowers and investors defrauded with no apparent legal remedy.
  3. State Treasurers and Attorneys General claim taxes, filing fees, and other remedies or penalties based upon the trafficking of securities or interests in real estate located within their state. While this will eliminate or minimize the budget deficits caused by drainage of wealth out of the states and into Wall Street, these actions might be met with blow-back from U.S. Congress, or the administration. It would be an effective tool in setting the stage to clear title on tens of millions of homes where title is now clouded (questionable), defective and thus unmarketable.
  4. Judicial (i.e., courtroom) actions continue to gain traction as the creditors (investors in mortgage backed securities) and issuers (homeowners who executed documents that were part of an undisclosed securities issuance scheme continue to gain control of the situation.
  5. Judicial action combines the interests of investors and homeowners. This is what I predict will happen sooner than later. Right now investors are paralyzed by fear and terms of their investment that strip them of any right to control the process of mitigating losses. The problem for investors is the same one as the the problem for homeowners: the creditors (investors) are being kept out of the process and in the dark about the issues and actions being taken allegedly on their behalf by parties who have their own interests ahead of the actual creditor. Thus investors are not getting the information, money or titles they have coming to them — and neither the investor (creditor) nor the homeowner (debtor) have an opportunity to eliminate the intermediaries who are acting in breach of their duties and to either deal directly with each other or through new intermediaries who answer directly to the investors.

Investors are in the best position to actually demand and get the real details and information on the status of each and every loan attributable to their fractional interest in alleged pools of loans. Investors, as the real creditors, are in position to get a full accounting, demand the appointment of a receiver, fire the servicer and other intermediaries, approve short-sales, modifications, mediations, settlements and, most importantly take REO property off the market forever as they work out deals with homeowners to create performing loans that fall within the category of normal home loans.

Both investors and homeowners have virtually the same causes of action against the intermediaries. If they join together to file those actions, the intermediaries have nowhere to hide and are exposed for what they are. There are numerous ways in which the joinder of investors and homeowners could result in judgments that can be collected. Neither group will be as successful alone as they would be joining forces.

The snow-ball effect would be executions on both performing and non-performing loans, reducing the amount of foreclosed properties headed to market to perhaps 10% of current and projected REO inventory. Pressure on housing prices would be alleviated and there could even be a bounce as people see the market as oversold under the new paradigm of mortgage modifications and settlements. The amount recovered by investors, even with substantial principal reductions will vastly exceed the returns they are now receiving (usually zero).

This will probably result in a number of non-performing loans converted to performing loans since the motivation to mitigate losses is the paramount concern of investors whereas the improper motivation of intermediaries would be eliminated: to force homeowners into default and achieve additional ill-gotten gains from servicing and selling homes in friendly sales at a fraction of their value. These intermediaries are neither too big to fail nor protected from actions for fraud, breach of fiduciary duties, violation of federal and State Statutes and predatory tactics resulting in losses to both investors and homeowners.

The probably unintended consequences of this joinder is that investors are composed by funds and fund managers with conflicting loyalties in this mess, which would pit some investors against other investors. Another unintended consequence might well be the conversion of a borrower into an investor when the dust settles and the execution of judgments results in the ownership of loans outside the scope of particular cases in litigation.

Special Note to Investors: For those of you who have no conflict of loyalty to the investment banks and other intermediaries who caused this mess contact me at ngarfield@msn.com. We’ll put you together with other like-minded investors along with lawyers for homeowners who are open to this strategy. The rest is up to you.

11 Responses

  1. the Housing/Foreclosure Will never End as long as all the scum sucking judiciaries, congress’, and adminstrations make money off of it it will never end. Our only chance at ending this insideous cycle is to take them all down for good, END THE GOVERNMENT FOR THEY HAVE PROVEN THAT THEY CANNOT GOVERN AS THEY WERE MEANT TO

  2. I am by nature a very positive person, but back in the day when i used to wrestle if the other guy put lots of vaseline on him there was simply no way to get hold of that SOB! and that’s exactly what the evil pretender lenders are doing, they are manipulating the “higher” government by having them put vaseline even up their asses so that we the “screwed” parties, both homeowners and investors will never get hold of them, just look at the crooks “advising” what to do with the mess that they themselves deliberately created and now have the audacity to be back to the place where they did set up the worse “economic rape” ever planned and perpetrated in the history of our country.I am not being negative here but I’ll say that it will be more # 2 than anything else. what else is new folks? i mean really?! the very *&^%$ that got us into this mess are manipulating the system AGAIN!!! to put a nail where they just put a screw!!! i yearn the day of justice to come and stare this bastards right in the eye as they go down in their ship full of shameless and cowardly actions!!!!
    TO VICTORY AMERICA!!!!!!

  3. Uh are you guys forgetting that investments can be replaced. Homes, you know what we call Home like home of the free land of the brave and all that, if you let or if the country lets a scenario like lettign homes get taken away FOR SURE THERE WILL BE BLOODSHED! People seem to be forgetting just how sacred a home is how would all the judges and congressmen like it if all thier homes(because youknow they have more than one), just suddenly burned to the ground simultaneously and all the insurance companies went belly up, and the rest of the country was just like “oh well that’s too bad, you should have been more careful choosing insurance”. because if our country keeps up this worry “mitigation of lost profits” for foreighn investors I assure they will not worry much longer soon they will be mitigating in the losses of lives.

  4. Since there is not enough money in the world to
    pay the interest on these fraudulent debts, the fairest
    solution would be a moratorium on interest payments
    and a 50% extension of the term to pay back the principle. In this way a gentle “deflation” would take place instead of runaway inflation, which is the only
    way these debts could ever be paid back, ie in “cheaper” dollars.
    Deflation over a twenty year term would restore
    the original value of the dollar. For example 5% A YEAR DEFLATION WOULD RESULT IN A 1 TO 1
    RATIO BETWEEN A SILVER DOLLAR AND A PAPER
    DOLLAR ,in approximately 20 years (IT IS CURRENTLY ABOUT 15 OR 20 TO ONE.)
    The early Federalists did it with the help of the
    First United States Bank. The lesson from history
    is clear. We need to do the same thing now.
    Nationalize the NY Fed and call it the Third US
    Bank. Use the national debt as the basis for the issuance of “red label” US Notes, spent into circulation without interest but accompanied by an
    excise tax on imports of foreign energy to pay off the
    National Debt over a 20 year period. A FEDERALIST SOLUTION!

  5. For my circumstance # 4&5 is how my case will be settled. I started out in Federal Court and the Lawyers for the Defendant Lender/ and or their new owners, have filed another cross claim to dismiss all allegations. The first time any official response was an answer to our original complaint [ filed suit ] dated Sept/09. 210 plus days later, not 20 Days required by “TILA”, as they have never really given us the name of the [ Investor ] lender, or proper Disclosure’s unless it is some how still with the original lender. Possible but not probable. They the “Defendant Lawyer’s” motion to dismiss on all allegations based on their opinion and Citations of case law to support their defense “not Evidence” entered into court properly, [ too early ] only statements of claims, as we had to shot off the hip to get a response from someone some where. So I believe our response to their outrageous and blatant disregard for fair play will prove to create at least some drought in the mind of the Judge. So it is in our interest to motion for stay and wait for an answer to continue in this venue in part or in whole. We will promptly reply to ‘”motion to stay” and pray that the Judge in Federal Court rules in our favor to continue on with the venue to begin Discovery and proceeding’s. If all else fails we will proceed to the next Offensive maneuver. More later.

  6. Well, my endgame is drawing nigh…

    Talked to my lawyer today. We lost our bid to stay in state court and now are facing federal court, which our lawyer says will cost us $25K in just attorney’s fees–not including any expert witnesses, etc. To top it off, he feels that even if we were to win, all we would be doing is stopping the current group of pretender lenders from foreclosing. The obligation on the note would still exist and still be held by SOMEONE and could presumably be enforced at some point in the future anyway, regardless of the outcome of our current case.

    That’s if we “win.” If we LOSE, we’re out a lot more. So I’m not feeling particularly awesome at the moment.

  7. Ok..that one works…just click the pdf file.

    Dave

  8. Sorry, bad link. Let’s try again.

    http://www.foreclosurehamlet.org/profiles/blogs/paul-l-muckle-v-president

  9. I’m preaching to the choir here I know. 4 and 5 are my favorites and provide this link to support my belief…if it can happen anywhere it’s here in America.

    Please read this fascinating Pro Se lawsuit in United States District Court.

    http://api.ning.com/files/efudYf7RSY2Lhw7nttQ-yzs-gvmLJq-vlI1zyt*RnlM_/UnitedstatesDistrictCourtTheAnvil.pdf

  10. We know the end is very near when both Jay and Conan walk away from NBC.

  11. Care to place odds?

    I’d guess that 30-40% will be solved by #2, including those that have already gotten the shaft without taking up other methods, and future legislation that will guarantee the shaft to some portions of the population.

    I figure the remainder (the other 70-80%) will remain split, with one-third stagnating around and never getting resolved, one-third getting resolved successfully (read: correctly) by the courts, and the final third at the tail end getting handled by state legislatures that manage it correctly. But despite my cynicism, that’s way better than without your efforts, and the efforts of those who fight alongside the cause.
    And my odds can be made wrong by our actions to improve the situaton, if those who read this continue to add their weight to the snowball building here. Thanks.

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