TAXPAYERS WIN BIG IF FORECLOSURES ARE HALTED

Editor’s Note: Because of the complexity of what should have been securitization of loans but wasn’t, and because nearly all the information is coming from government sources which is getting its information from Wall Street, articles are appearing all over the place like the one below in the Washington Times. It intersperses fact with fiction. The main purpose is to get it into the minds of politicians and voters that if the foreclosures stop, so does the country. This reminds me of “What’s good for General Motors is good for the Country.” We all know how well that turned out.

They want us to believe that taxpayers would be the big losers if foreclosures stopped. Not true. Foreclosures would ONLY be stopped if there were fatal legal flaws in the mortgages. If that were true, then proceeding with foreclosures would create a title catastrophe for this country further pushing us into the category of a banana republic. If the flaws are in fact there, and if they are fatal because they cannot be corrected, it can only be the result of fraud. Because if the deal were real, you could get all the people involved back in the room and get the paperwork right by signing new documents if there was not fraud. For those people who cannot be found or who don’t come forward, the court would stand in their stead.

The ONLY reason why the people would not voluntarily resign the paperwork, or be forced to comply in a court of law, is that the deal was a fraud. There is no other reason. If there was fraud, the government guarantees are invalid and the government is entitled to money back (As the Federal Reserve and the MBS investors have figured out after consulting with hundreds of lawyers). Thus contrary to the headline of the story below, the taxpayers win big if foreclosures are stopped. Who really loses? Only the large mega banks that created this mess. All the other investment banks, commercial banks and credit unions — more than 7,000 strong, would be unaffected.

Should borrowers get a free house? Not ordinarily. But as long as we try to pretend that the fraud doesn’t exist, that will be the result. If you want a result that makes more sense, then start dealing with the facts and let the borrowers sign or be required to comply with new terms that impose the obvious obligation they have and secure it with a new equitably designed lien that protects the taxpayers, investors to the greatest possible extent. As I have stated for three years, the structure of that deal is simple: 80% loan to value, with an asset appreciation clause in favor of the mortgagee or beneficiary under the deed of trust. The housing market will boom out of its doldrums as will the rest of the economy. People will be able to move to where the jobs are, thus reducing unemployment. And banking will become increasingly decentralized as the mega banks shrink under the the pressure of lost “capital” reported improperly on their financial statements.

Continuation of foreclosures simply provides the servicers and securitization participants to take more out of the money that the investors advanced for those bogus MBS bonds. Remove the servicers, remove the securitization participants, and install a practical modification program that creates strong incentives for the real parties in interest, and they will come to terms, the taxpayers will see the mortgage guarantee deficit disappear, and the death grip that Wall Street has on our lawmakers will be broken. It’s all up to you. If you believe the story from Wall Street that we have something to fear from stopping foreclosures, then you are doing the dirty work for them.

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Who wins if foreclosures halted?

Moratorium would impose huge losses on taxpayers, feds

**FILE** In this photo from Sept. 24, 2010, supporter Marisa Salas (right) holds a sign during a foreclosure and eviction rally at the home of Carlos Moreno in Menlo Park, Calif. Moreno has owned his home since 2006, had his home under foreclosure since January 2010, and was served eviction notice in July 2010. His case is now pending with the bank. (Associated Press) In this photo from Sept. 24, 2010, supporter Marisa Salas (right) holds a sign during a foreclosure and eviction rally at the home of Carlos Moreno in Menlo Park, Calif. Moreno has owned his home since 2006, had his home under foreclosure since January 2010, and was served eviction notice in July 2010. His case is now pending with the bank. (Associated Press)

By Patrice Hill

The Washington Times

8:40 p.m., Tuesday, October 26, 2010

Taxpayers and the federal government would be among the biggest losers if officials heed calls from some legislators and homeowners rights groups to stop millions of foreclosures across the country because of possible paperwork problems.

Fannie Mae, Freddie Mac and the Federal Housing Administration — already deep in red ink — back many of the defaulted loans and would sustain greater losses if foreclosures are delayed. The Treasury Department is majority owner of one of the biggest mortgage companies, Ally Financial, formerly GMAC, and would have to cover its losses, as well as Fannie’s and Freddie’s.

The federal government’s deep involvement in the mortgage market is the reason why, despite pledges to investigate and punish fraud in individual cases, regulators are also likely to work out a deal with banks and attorneys to keep the bulk of foreclosures on track to minimize harm to taxpayers and the broader economy, analysts say.

Despite much political posturing over improperly assigned foreclosure documents, “robo” signatures and other irregularities that have surfaced in recent weeks, regulators want to prevent any “major, lasting” interruption of the steady stream of thousands of foreclosed houses going up for auction each week, said Ed Pinto, a mortgage analyst at the American Enterprise Institute and former chief credit officer at Fannie Mae.

“Fannie, Freddie and FHA, along with FDIC-insured banks, own too many mortgages for the federal government to allow that to happen, particularly given that there does not appear to be any substantive questions” about the legal rights of banks and investors to foreclose against long-delinquent homeowners in most cases, he said.

Fannie and Freddie executives, with an eye on rising losses of as much as $150 billion a year that would add to their $148 billion federal bailout, warned processors this week to get their paperwork in order and said they want to keep the foreclosure process moving to minimize losses and further damage to the housing market.

Fannie Mae has become, by some measures, the largest residential property owner in the country as it has taken possession of the equivalent of all the homes in Tampa, Fla., as the result of defaulted mortgages that it guaranteed in recent years.

“As an industry, we just need to move quickly and get it done so there is not an overhang effect,” Fannie’s chief executive, Michael Williams, said at a Mortgage Bankers Association conference Monday in Atlanta.

Its important to “protect the rights of borrowers, but at the same time, if possible, not have a moratorium on foreclosures,” said Charles E. Haldeman Jr., chief executive of Freddie Mac. “Thats the balance weve been trying to achieve.”

While mortgage-servicing companies must take time to get the paperwork right, any fumbling on their part does not automatically absolve homeowners of their responsibility under the mortgage contract, analysts say.

With an all-time record of more than 14 percent of U.S. home loans either delinquent or in foreclosure, it was the “overwhelming amount of delinquencies” — not problems with securitization of the loans — that led to the paperwork problems, said Theodore Tozer, president of Ginnie Mae, the agency that turns FHA-backed loans into mortgage securities.

By the time of foreclosure, most loans are many months if not years behind payment, often with the homeowner still living in the house essentially rent-free until they are physically dispossessed by the bank.

“The regrettable truth is that many of the properties currently in the foreclosure process are either vacant or occupied by borrowers who simply cannot make even a significantly reduced payment and have been in arrears for an extended time,” Sheila C. Bair, chairman of the Federal Deposit Insurance Corp., said at a mortgage conference Monday in Washington.

She said she has notified mortgage companies that the FDIC will not share any of the losses on defaulted loans in failed bank portfolios until the paperwork problems are corrected.

But she said that with millions of foreclosures pending or in the works, and the widespread use of mass-production law firms and foreclosure mills to handle the unprecedented volume, regulators may have to go further to ensure that the system doesn’t grind to a halt.

“Ultimately, this problem will require some type of global solution” to avoid further losses and harm to the economy from protracted litigation over documentation issues, she said.

“I would suggest that all interested parties consider some type of ‘triage’ on foreclosures, perhaps providing safe-harbor relief if the property is vacant or if the servicer offered a meaningful payment reduction — say a minimum of 25 percent — and the borrower could still not perform on the loan.”

Despite the threat to taxpayers and the broader economy, an army of attorneys for delinquent homeowners has stepped up foreclosure challenges in court.

Meanwhile, homeowners groups and some members of Congress, including Senate Majority Leader Harry Reid, Nevada Democrat, have called for a nationwide moratorium on foreclosures.

Some have suggested that banks should be required to rent the homes to the borrowers who have stopped mortgage payments. But most activists appear to be using questions about documentation to try to prod banks into offering big reductions on mortgage payments to the borrowers.

The Service Employees International Union, along with other community groups, staged a series of protests earlier this month demanding that banks halt all foreclosures “until all homeowners have had a full opportunity to modify their mortgage.”

Such a blanket moratorium could end up imposing an additional $150 billion a year of losses on distressed banks, mortgage investors and the government, said Robert Romano of Americans for Limited Government.

With foreclosed homes accounting for about one in four home sales, it would severely depress a market already skirting just above record lows. Sales and home prices are on the decline again after a short-lived revival spawned by a federal tax credit last spring.

“The housing market would seize up” if foreclosure sales are put on hold, he said, “all to allow delinquent borrowers to stay in homes they cannot afford.”

The foreclosure process already is plagued with delays, including waiting periods imposed by states before banks can take possession of properties and backups in getting cases on the docket at deluged courthouses.

Moreover, the federal government and many states have imposed numerous temporary moratoriums since 2008 that have had the effect of delaying the foreclosure process nationwide by almost a year, Mr. Romano said.

Now that the huge backlog of foreclosures is hitting the market in earnest, borrowers and activists are citing paperwork irregularities as one more reason to put off the inevitable, he said.

If another moratorium becomes a “Get out of jail free card” enabling delinquent homeowners to stay in their homes rent-free, that will only encourage other “underwater” borrowers to default and compound the crisis, he said.

8 Responses

  1. Regarding the thread I believe I,m responding to here for a post entitled TAXPAYERS WIN BIG IF FORECLOSURES ARE HALTED and the underlying comment.
    The article in question predicted a “truth” that the country would go off the cliff if the paper trail mess wasn’t papered over –to the detriment of those losing their homes.
    Please note: the article ran in the Washington Times. Not the Washington Post.
    The former is a narrow niche paper that caters to conservative Republican views and is pretty unapologetic about it.
    The latter paper is one of the flagship journals of our nation, widely read and respected whose journalistic standards wouldn’t have allowed it to print such naked bias as the offending article displayed.
    A paper also much ballyhooed as one of the members of the”liberal elite media”.
    You might recall, it was in the Washington Times editorial room, as the economics crisis that has engulfed us all was unfolding, that the Honorable Republican Senator from Texas, Philip Graham
    opined that the impending disaster was our own fault, that we had become “…a nation of whiners”. While also a vice-president of UBS Bank shipping private wealth offshore to, heaven forbid, avoid taxes.
    I suspect this very useful website is mostly visited by common folk, me, in a terrible situation as well as a few attorneys vetting arguments for our benefit.
    I also suspect that many of us visitors would identify ourselves as part of the Tea Party and voted accordingly, which we’re told is largely a Republican phenomenon.
    It was with great relief when I re-checked the by-line and found that the referenced story was indeed from the forgetible Washington Times and entirely within line.
    Had it been in the Washington Post written that way it would have been stunning and a very serious omen. In the Washington Times –marginal. However it is a dress rehearsal for the marching orders with talking points of the Set-Up to come. That is what the Washington Times is for, that is why it is in the Capitol and that makes it serious.
    If you are indeed one who would identify yourself as inclined towards the Tea Party, beware and take note. This is what your handlers have in mind for you.
    Our time would be well spent for our issues in prying the Administration to finally Man-Up because the Set-Up is what’s coming.
    Thanks,

  2. Everyone should go on tax strikes, stop paying to show them that what they’re doing is actually harmful and force them to lay-off all government employees because our country can’t afford to keep paying all these lazy self-centered sleaze balls who continue to do nothing (if not make things worse). We can’t just let these “irresponsible” people off the hook from their obligations. Our government only has the authority to govern by the willing consent of the People governed. We need to organize, gain a majority support all in agreement on deciding to revoke that consent make the decision known and stick to it. This is our country not their’s We the People founded, ordained and established these united States and by God We need to take them back!

  3. Case 1 :09-cv-02407-CC Document 20 Filed 10/06)10 Page 1 of 1
    UNITED STATES DISTRICT COURT
    NORTHERN DISTRICT OF GEORGIA
    ATLANTA DIVISION
    PAUL REARDON,
    Plaintiff. CIVIL ACTION FILE
    v. NO. 1 :09-cv-2407-CC
    COUNTRYWIDE HOME LOANS. INC..
    Defendant.
    JUDGMENT
    This acbon having come before the court. Honorable Clarence Cooper, United States District Judge, for review of the Magistrate Judge’s Final Report and Recommendation and the defendant’s Motion to Dismiss First Amended Complaint, and the court having adopted in part and denied in part said recommendation and granted said motion in its entirety. it is
    Ordered and Adjudged that plaintiff take nothing thatdefendant recovertheircosts of this action, and the acton be, and the same hereby. is dismissed with prejudice.
    Dated at Atlanta, Georgia, this 6th day of October. 2010.
    JAMES N. HATTEN
    CLERK OF COURT
    By: s)Amanda Querrard
    Deputy Clerk
    Prepared, Filed, and Entered
    in the Clerk’s Office
    October 6,2010
    James N. Hatten
    Clerk of Court
    By. s!Anianda Querrard
    Deputy Clerk

    I am in need of some advice on how to
    proceed to defending my home. In light of all of the big news since OCT> 1 it appears to me I either wait for some thing to happen or should I file Quit Title at the State level in the Count of Cobb?
    The last Exhibit was a fake, and dated incorrectly. I wish not to proceed with the existing Council of record.
    Is there a lawyer that gets it in North Atlanta?

    “Livinglies.wordpress.com” a non main street source
    “4closurefraud.com” you will not find this on TV or on

    A SOVEREIGN AMERICAN living in
    ATLANTA, GEORGIA

  4. None dare call it Treason….

    but it is!

  5. This author is probably a renter

  6. We need to find more reporters/media outlets that will tell the truth, the whole truth and nothing but the truth about the foreclosure mess. It is not the homeowners who started this mess. It is fraud from the first day the would-be homeowner began the process of purchasing a home. Phoney paperwork at the closing (violations of TILA, RESPA, contract law). My loan was closed by an attorney who did 3 yrs. in the Fed Pen for wire fraud related to flipping houses with 2 loans. I also had to pay a bogus fee at closing. The title turned out to be clouded, because 2 satisfactions of mortgage had never been filed with the possibility that both “flips” of the mortgage were illegal as well in order to increase the value of the house. How am I, the borrower, guilty of fraud? I am not, and I am tired of the “system” blaming it on the taxpayer/borrower. Put the blame on the pretender/lenders, appraisers, title companies, Wall St. and the servicing companies who are to blame. I am mad, and I am not taking it anymore. Pls check out our website: http://www.challengingforeclosure.com Burmese8@yahoo.com 864-241-8602

  7. Can somebody answer this for me?

    I’ve been waiting for the final summary judgment for the past 4 months, and still nothing, nada, zippo…

    There was an assignment recorded month after the foreclosure summons from the original lender, Argent to US NA trustee for the holder of asset back …….2007-amc2, as well as an allonge.

    lost note was never submitted, nor the assignment and endorsement from sponser to depositor to servicer to trustee…..
    Can the plaintiff still be allow to resubmit or these paperwork while pending final summary judgment or is it too late.

    Also how long does it take for the final sm?

    Thank you,

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