INVESTORS AND BORROWERS COULD SHARE COMMON INTERESTS AND SOLVE THE PROBLEM

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

GET RID OF THE MIDDLEMEN

NOTE TO INVESTORS AND BORROWERS: IF YOU ARE SERIOUS ABOUT RESOLVING THE MORTGAGE CRISIS AND YOU WANT TO DO SOMETHING ABOUT IT WRITE TO ME AT neilfranklingarfield@gmail.com.

EDITOR’S NOTE: For those of you who have followed the blog from the beginning in 2007, you know that I have pounded on the idea that investors ans borrowers had a common interest and that if they got rid of the middlemen, they could work things out. It’s not that anyone would get a windfall, but everyone with a real interest in the property and the loan would be treated as fairly as possible. The method I suggested was equity sharing wherein the principal is corrected back down to 80% of current fair market value, the resulting balance is amortized over 30 years, with a reasonable rate that could be adjusted every seven years or so. For the investor, they would have a bottom established, and they would keep their claims against the investment bankers, and they would get a share in any increase in equity that could be split 50-50 for the investor or some other acceptable number.

So far I have received nothing but silence, but now someone from the real estate industry is proposing something that is close to what I have been saying and it appeared in the New York Times which means that a lot of people have seen it. See article below. So I decided to try this experiment.

If you are an investor who would wants to pursue this further, then write to me and tell me so at

neilfranklingarfield@gmail.com

If you are a borrower who would like to explore this option then write to me and tell me so at

neilfranklingarfield@gmail.com

Let’s see what happens.

By ALEX PERRIELLO

THREE years after the mortgage crisis began, there are still 11 million to 15 million homeowners who owe more than their home is worth, meaning that about 25 percent of all mortgage holders are underwater. As a result, foreclosures continue to mount; many homeowners can’t make their payments and are tempted to simply walk away from their debt. Meanwhile, the lenders and investors who own the loans are unwilling to work out a deal if, as is usually the case, it means losing money.

Fortunately, there is a solution. Rather than be at odds, homeowners and investors should partner in long-term equity-sharing arrangements.

Here’s how it would work. Let’s say a homeowner purchased a house in 2004 for $300,000 with no money down, and the property is now worth $150,000 — a 50 percent drop in value.

In an equity-sharing arrangement, the lender would write a new loan for $150,000, retire the original $300,000 loan and, to make up for that loss, take a 50 percent deeded ownership interest in the property. The homeowner would also agree to split 50 percent of the net proceeds of any future sale of the property with the lender. The new arrangement would also include a buyout provision, so that if the homeowner ever wanted to take over the lender’s share, he would simply pay the lender a predetermined amount of cash.

Such a plan would be relatively easy to put in place, assuming the lender held the loan in its own portfolio. In most cases, however, lenders immediately sold their loans to investors and merely performed loan-servicing duties like collecting monthly payments and sending statements.

In those instances, the lender would have already made its money when the loan was originated, the proceeds from the new loan and the 50 percent deeded interest in the property would go to the investor, not the lender. The investor would also benefit from any future sale or when the homeowner exercised the buyout provision.

Equity-sharing would be a boon for everyone involved. Homeowners could stay in their houses and preserve their credit (assuming they stay current on the new loan). The neighborhood would avoid a foreclosure, which can depress property values. And the lender or investor could participate in the upside potential when the house eventually sells. Best of all, it wouldn’t cost taxpayers a dime.

A major reason the mortgage mess has gone on so long is that homeowners, lenders and investors assume their interests are at odds. An equity-sharing arrangement would bring all three onto the same side — and help solve America’s foreclosure crisis.

Alex Perriello is the president and chief executive of a real estate franchise organization.

65 Responses

  1. Kimmi n Cali.,

    Your last sentence is all important — “Dead beat?…yeah, for 33 years!”

    How many others like you?? Many. This is what the administration just does not get. They used publicity to promote — “borrowers bought too much house” — Whoops — forgot to do their homework — most subprime loans — were refinances — targeted to people like you — who owned their homes for many years.

    Long post — but much much truth!!! Thanks.

  2. Hmmm, ok this has merit, but don’t get it twisted.If your particular experience mimmicks mine,you may find the first reaction to be,”WTF, share WHAT with WHO?!!” My auto reponse is “Burn in hell!” As I surely have copious things to share starting with, I know what you did to me, what far reaching connections and controls played a significant part, the profound connections between the whole crew, the clever, convoluted covers and most of all ‘the unmittigated gall” of such inflated entitlement, obscene greed, and power drunken debauchary. After all, who do you mean when you refer to ‘lenders’? If you mean the banks, no thanks, I’m already wondering is left to assist me with, all that’s left to do is eat me as all else has been stolen. If you are spending your time here doing this, I would guess you were neither; a) a liar who wanted a mansion you knew you couldn’t pay for, b) irresponsible or apathetic making the most important purchase in your life, c) thought your modest home in a middle class or low income area was an ATM machine for exotic vacations, d) Just stopped paying you, like most homeless people of past decades prefer living outside or e) (my favorite) are either illiterate, ignorant, or opposed to reading contracts? The common message being, “You deserve it it because it was your own fault!” Now every one wants a free house…….doesn’t that help direct the blame? Now ask this, ‘why would that make so many people SO PISSED OFF. So angry in fact, they are spending more money than their home is worth to continue to fight beyond eviction and for the most part HOPE. With all that said, if the investors have also been ripped off, why are they making it so easy to be hidden? The “lender” certainly don’t allow you to know and in my case, lie in writing! So who are these folks cause I would live to know them, and THEN talk about the next deal. Of course, if they were taken as badly as I, there is little room for another deal and if the gov is in charge….I’ll pass. But, if they retirees instead of moguls, like myself, were defrauded, are not hiding between layers and layer, let’s get togetherfor their life savings then manipulated by their banks, credit reports, escrow accouonts and more. Were you defrauded of the equity in your home that you could afford, absent a combined pattern of corruption and deceit? If so, you know how I feel. This was a rip off and the last straw was pretending to assist me with a gov program where you REQUIRED me to hold my payments. You ignored me for months and months while I recordertr lies to revolting,I laugh sometimes, (as that’s all there good for) Wait until every house is invester (you better see who the investers REALLY are and you will see why the only deal you will ever see is more of the same. Just research elected officials and appointed regulatory heads, see what they and their spousers are ‘invest in’, but only if you really want your blood to boil. Thanks for the favors, but whatever I do has to do with the ‘good guys’ exposing the participants and costing them in every way I possibly can. My neighborhood is 90% bank owned and they sit empty as more and more degrade. People move in on the sly or if it can be rented, pay once, add to the ‘rental’ appearance, then move in the dead of night. I am fighting to the end, but not for the investment and is long gone, but for the voice that says I didn’t “invest” in this as it was my home for 33 years. I paid until I couldn’t give up anymore, then I applied for HAMP, the nail in the fraud.Sure, I’m staying for the fight, but for those of you who ‘think’ you get it, I want you to know this, “I’M NOT LIVING HERE FOR FREE,” and that’s just the money part.
    Dead beat?…yeah, for 33 years!

  3. @Joyce Louise: We’ll miss you, counselor!

  4. Joyce Louise

    Will miss your posts. Supported 99% of your views!!

    Good luck to you.

  5. This is a special thanks to Neil for all of the great information that has been provided by his site.

    Also special thanks to Anonymous who has supported for the most part, some of my views. This is encouraging for those of us who are desperately trying to not only help ourselves, but others who need help in their defense as well.

    Now that Neil has decided to put together the organization that is vitally needed sooner, rather than later, perhaps some giant steps can now be taken. Good Luck to all.

    signing off – Joyce

  6. Joyce Louise

    Thanks. Congrats to you!! More of this (fraud on the court) coming.

    Neva, — agree – way too soon to start negotiating with the “investors.” And, by “investors” — I mean distressed debt buyers (including Banks own divisions and servicers for themselves or others) — not MBS security investors — who have already been paid — and do not own current collection rights.

    Everyone — read Massachusetts decision. Quote — “Where, as here, mortgage loans are pooled together in a trust and converted into mortgage-backed securities, the underlying promissory notes serve as financial instruments generating a potential income stream for investors, but the mortgages securing these notes are still legal title to someone’s home or farm and must be treated as such.”

    Once the current income stream ceases, the MBS is dead.

  7. In the immortal words of Randy Quaid in Independence Day – “IT’s PAY BACK TIME”.

    Here’s an idea. Go to your local courthouse, get the names of all the Judges, City Attorney’s. Go to your local Recorders Office, look up their property and see if they have a mortgage or if paid off. Send them all a letter saying you are their new loan servicer, send payments to so and so. If home paid off, send them a default notice from copied BAC, JPM, etc letterhead cut and paste their address/name. For that mattter, do the same to all the people in Congress, your local mayor, state governor, state AG’s, etc. We send them all letters from several people, swomp them. If they send back a QWR letter – respond with the immortal words of Arnold in the Terminator – probable response, xUCK YOU xSSHOLE. Or famous line from Big Trouble in Little China – Jack Burton to Wang – you’re crazy, that’s your problem, isn’t it?

    You get the idea. If enough on these people got the same BS, maybe they would wake up. If anything, having them all call BAC, JPM, GMAC, ALLY, etc would certainly cause a headache for them & themselves.

  8. Dying Truth:

    I simply cannot agree with your analysis of this situation. The government should be out!!!!! Which investors are you talking about anyway? I am talking about the investors that purchased the securities in the first place. If they want to do something with the homeowner group, fine. If not that is fine too. But it is the homeowner against the bank (whoever the real and current creditor is).

    I have already been in on these kinds of deals back in the 80’s and the 90’s but never to the extent that we are experiencing now. The investors made an investment just like the homeowner purchased the home. So they can do theirs and as I understand it Neil and his group will help the homeowners – this is great and also thanks to A Man for his good comments about Neil’s site.

    Go get em now that you are getting closer to an organized effort.

  9. Radian Insurance Company guidelines on Heloc’s:

    http://radian.force.com/servlet/servlet.ImageServer?id=015800000012sVxAAI&oid=00D80000000auGU

  10. […] SEE investors-and-borrowers-could-share-common-interests-and-solve-the-problem […]

  11. I appreciate Neil coming up with something constructive in this horrible scenario. However, I think some prosecutions will have to take place in order for certain banks, lenders, regulators, directors, etc. to actually cooperate and do something that is good for the homeowner. I have said this before: this is war, and the homeowner is losing big time. http://www.challengingforeclosure.com Sirak@challengingforeclosure.com

  12. Anonymous

    Just used the fraud on the court in two other cases and both got what we asked for. Thanks for the confirmation. The first Judge wouldn’t even look at it over a year ago and gave an MSJ to the bank anyway. WE requested a new trial, got it and then picked up another year waiting for that. But all said and done now, the Judge knows what they did and he has egg all over his face. He was not a happy camper by any means.

  13. Dying Truth:

    I have been working as an independent for a particular clients over the past two years. We never gave up the fight and just last week, the Judge held off the banks on the foreclosure of this single mom’s house with the 12 year old daughter. They bank either produces what is needed, (and they have not been able to do so) or they or out. Two long years and now finally, the Judge is going to pay attention. I feel really good about this one. And, both MOM and Daughter are still in the home and will be for a while and she does have the promise of a job. She wants to pay her mortgage and that is why she is fighting to keep it. I am sure a job is just around the corner for her. By the way, that is something else we do. Try to help some of these people get jobs and then buy some time on the house. Something will break and many of the homes will be saved. I am not quite aligned with all that is going on so perhaps I am one of those foolish people that keep trying to negotiate with the bank. We will see.

  14. dying truth

    I am not sure what you want us to do then. I have been working for 5 years 24/7 for free, absolutely not one dime and have helped over 500 families keep their homes. I am an independent, and have done a great deal taking on the banks on behalf of all those I tried to help. Only one was not able to do so and I used what little income I have to keep that operation going. I know very well what people go through and how they have suffered and why would we try to do anything without specifically taking care of these people first. I have had referrals from legal aid, NAACP, The Red Cross and only work on very complex mortgage issues for those who cannot afford to pay. I have not accepted donations or grants from the government as I want to be able to depend on myself and be able to call a spade a spade when necessary. Non profits could not accomplish anything so that most money thrown away on them. Try working all night long reviewing cases and then talking all day long on the phone trying to give people a comfort level so they are not scared to death by the notices they get in the mail from bankers. Do I sound like someone who does not want to protect the people. If we don’t get a grip, then all will be lost.

    It was my understanding you wanted to help all of these people and they would decide what they want to see happen. People with knowledge can help them get that done. Please don’t compare me with the AG’s. I don’t know what they are doing and I am already disappointed that they have not told us what they were doing. People who went to them for help ended up coming back to us for help while they did nothing.

    The only reason I thought we better get up front and center is to make sure that all of the homeowners get some justification for what was done by the bankers, etc. and such representation could come from people who are working in their best interest. Believe me, I have been one of them.

    I will help do whatever you all of you want. You are the only one besides a few others that have told us what that is. Just let me know if I can do anything. Seems like we never get to the point of taking action, just talking about it all the time.

  15. usedkarguy,

    Not so sure about AGs yet — much happening that is not publicized. Will reserve judgment — but keep pressure.

    Joyce Louise.

    The “paper” is dead. The current creditor only owns what is left – collection rights. That is the only party homeowners should now be conversing with. One major trick in debt collection, including foreclosures — is to state the PAST creditor as the current creditor – and longtime practice intended to confuse all. But it is more than confusion — it is a is a violation of federal law — fraud on the court, and, perjury by many. It is this practice that is causing invalid modifications and invalid mortgage title – never mind – fraudulent foreclosures.

    As far as servicers — much fraud — and THEY may be the current creditor if they purchased collection rights.

    pelucheven,

    Good post — but the RMBS are gone — need to buy your own collection rights (impossible).

    Dying Truth and Joyce

    Committee is a good start — much to be shared that is not published here. Dying Truth — have to start somewhere

    The A Man

    It may those that are still paying– but have no valid mortgage title — that will cause the final blow to the fraudsters. But — those paying have to use what they know.

  16. Joyce Louise,
    No, no small committee. No negotiations. The rest of the American People would still get screwed in the end. I honestly wouldn’t take that kind of chance even if I had lead such a committee. I’m not going to allow myself to be bought off so I can live comfortably and let the rest of us Americans suffer. You know, there are soooo many people that have never and may never owned a home in their life unless something is done to change the status quo. We’re now just being exposed to what life’s like without the benefit of a stable home. Now we should all empathize with the really poor people who live in ghettos, have to deal with slumlords, work hard for low pay and resort to crime in order to survive or intentionally get busted so they can go to jail and have a place to sleep and something to eat. Our problem is, we don’t do enough for ourselves for eachother. Once we cover enough ground for ourselves, we become content and give up until things turn bad again. We have to go all the way and we ALL need to do it together otherwise someone will be left out and that’s part of the problem (example: we get left out of the AG “settlement” talks with banks).

  17. ANONYMOUS and Joyce Louise,
    The only REAL issue is between us and the Government. Why do you think the “investors” won’t show their faces? Remember that when the issue of BUYBACKS with B of A first came up the Attorneys representing the “investors” wouldn’t reveal who their clients were. Now we know companies like BlackRock, Pimco etc.. are those “investors”. Why did they want to remain confidential? Why was B of A’s immediate defense to require the names and signatures of 25% of the investors who held ownership rights of the pool.

    As I’ve already shown people >
    http://en.wikipedia.org/wiki/Thrift_Savings_Plan
    http://livinglies.wordpress.com/2010/12/18/blackrock-and-fed-conflict-of-interest/
    Government Pensions are stockholders of BlackRock
    Oh look at this >
    http://foreclosureblues.wordpress.com/2010/11/06/bank-of-america-lawyers-demand-names-in-mortgage-bond-fight-with-investors/

    “Bank of America, which own a 34 percent stake in BlackRock, plans to sell at least 34.5 million of those shares.”

    So Judges and Banksters are both in “investors” in a corporation that owns mortgages on a bunch of homes in foreclosure. THAT’S GREAT! NO PROBLEM THERE
    it gets better

    “Bank of America’s lawyers also wrote that they were “taken aback” that the investors were attacking Countrywide “for not foreclosing on homeowners quickly enough and for making loan modifications that may keep borrowers in their homes.””

    Hmmm. I wonder if Judges have that same attitude towards homeowners who come into court seeking legal remedies. What’s the victory/loss ratio for homeowners/banks?

    Think about it, I mean REALLY. Would banks be such a problem to us if Government (judges, cops, FBI, sheriffs etc..) wasn’t there to stop us? Even though they were put in place to protect us, they protect them and themselves. If we obviously can’t rely on them, who can we rely on? OURSELVES. But you have to choose.
    Do I keep these chains, or do I break free from them?
    http://www.ipetitions.com/petition/alter-and-abolish

  18. By the way, for those willing to go, I will request that the President of each entity show up and wait for their response. It will be extremely difficult to get them there and if they don’t show, then we will have our own committee present our case and ask via the presentation that the homeowners of America give us their support.

    Talking about all of this is one thing, pulling it off is quite difficult, but it can be done. I can work with the media if anyone wants to do something about holding this hearing. But it has to be done NOW

  19. Dying Truth:

    Your response was superb and just what I have been trying to get out of so many people. You did a good job. Here is my response to you:

    I do not advocate that we have any relationship with the government. That is not what I would do in a million years.

    I would definitely set up the committee of no less than 10 made up of the participants on this site. We have some really good knowledgeable people, Neil, Anonymous, yourself, and others. Then, we meet in a formal setting with those of the five banks and of course Fannie and Freddie, that will meet with us, plus some media, and get down to it. All regulatory are out, including HUD and members of Congress. We ask and they answer. We all know they will try to give us the runaround, but that is where our guys will have to meet the challenge.

    We submit our plan, why we think it will work, how it will affect them and a time frame for pulling it off. This is a hearing that needs to be heard around the world. It is not one those theatrical jobs that we always see the Congress playing.. We will also need to know what we think the government’s reaction would be to such a plan so we can be ready when they attempt to cry on the shoulder of the feds. The regulatory as we all know has been supporting them totally with respect to consumer complaints and the consumer never had a chance.

    The deal is to come up with a deal that will allow the banks to count the beans and see what an agreement for the people will do for them, in more ways than one. We can do it..

    This would be a one time hearing that will either set the stage for resolution or it will not. Then, if nothing can be worked out, then tell them they will hear from us about our level 2 plan. And that is a plan that we can pull off so they need to understand that.

    I am reading over the Petition – that is always a great resource and puts us on the right track if it says and accomplishes what we need. Yes, we all know what went wrong, what is wrong and we know the government cannot fix it.

    Where are those proposals. The banks will not send their Presidents by any means, but we will be able to get them to the table with a representative and when they don’t answer satisfactorily, we will answer for them. Their presidents will watch the tape and hopefully the rest of the world will too. You fellas know too much not to use your talents.

    Good job Dying Truth. Someone has spoken. Good.

  20. Joyce Louise,
    Why do you think I said we have nothing but ourselves? We could obtain power, but we would have to unite in an organized fashion and agree what the problem is and how to fix it if we’re ever actually going to get anything accomplished. I say the problem is the current structure of and those in Government and getting rid of it would probably solve the problem. Sign the petition, it has its own blog too >
    http://www.ipetitions.com/petition/alter-and-abolish/
    Otherwise what else can we do? Every sector of the Government is corrupt. What good will all the greatest laws in the world do if judges won’t enforce them? What good does a Constitution (which grants our Government power) do, if the Government will not be bound by its strictures? What would we do if we actually do if we all organized, stage a protest against foreclosures and get arrested? That would be a waste of time, as would anything else that involved ASKING the Government for help, pleading with them or depending on them do make the right decisions. So what else is there????????

    I say kick them out, since they kicked us out.
    Make a decision.
    Sign the petition.
    Otherwise we all just look like a large livestock population of head-less chickens too stupid to take the next step.

  21. E. Tolle
    Thank you.. the banking cabal including our BLOATED complicit Gov all need a to meet the fate they have intended for us- indentured servitude and as a vacation to their life sentences for crime against humanity .
    this system cannot last and will not survive.
    starve the monkeys! not another penny for these phony debts OR TAXES ever again.
    http://losthorizons.com/CtCforFree.pdf

  22. I have a feeling that most borrowers who read your posts are more sophisticated than to take a 20% write-down, especially if they are already suing AND the property is unsecured. The rest of the bunch might…those people who continue to make payments because they don’t know any better.

    Smacks of another version of a loan mod. Why would any homeowner want to sign new papers and gloss over the fraud as if it never happened?
    This is, to me, a cop out of some sort. Won’t achieve any lasting changes to our justice or banking systems. Back to business as usual.

    The article is from a realtor’s perspective….who is likely an investor AND a homeowner, too.

    I don’t think I even want to know who the investors are in my mortgages…assuming they can be found. I might want to punch them in their noses for taking part in the mortgage-backed securities scams….

    For those of us who make investments…? Sometimes they don’t pan out. You win some and you lose some. Why don’t the investors go after the crooks who convinced them that investing in our homes was such a good deal?

    It’s more than about greed now, it’s also about the megabanks preserving and keeping a lid on the fraudulent banking system at all costs, even reputation, lest the whole thing blows up in their salivating faces…which I think it is doing now.

  23. Hello People!!!!

    Am I the only one who thinks that this article is bullshit???

    From WSJ:

    WRITING ON THE WALL

    JANUARY 5, 2011

    In the Mortgage Mess,

    Agreement Might Be Part of the Problem
    Borrowers Feel Responsible, and the Banks Agree
    By DAVID WEIDNER

    Banks and borrowers surely can agree that they didn’t have one of their best decades together.

    The difference is that one group clearly learned its lesson, while the other seems content with business as usual.

    As the new year begins, two new surveys show that U.S. consumers are full of regret over their financial mistakes of the last few years. They recognize that they didn’t save enough–and spent too much.

    They are committed to changing, and when it comes to their misfortune, most consumers don’t blame anyone but themselves.

    Financial firms, of course, couldn’t agree more. In their view, it was a failure of borrowers, not indiscriminate or misleading extensions of credit, that led to the financial crisis and Great Recession. It’s a disconnect that has fueled the foreclosure wave rather than stemmed it.

    The majority of Americans concede making mistakes, but Bank of America Corp. Chief Executive, Brian Moynihan, faced with charges that the Charlotte, N.C., bank pawned bad mortgages on investors, promised “hand-to-hand combat” on loan repurchases.

    With his bank accused of sloppy-to-fraudulent paperwork on mortgages gone bad, Mr. Moynihan promised a “diligent” fight to keep the foreclosure machine at Bank of America running.

    Former Citigroup Inc. executive Robert Rubin told the Financial Crisis Inquiry Commission in July that no one on Wall Street saw the risks in mortgage finance. Mr. Rubin also said to the panel that he didn’t “hold significant operational responsibility” at Citigroup, which eventually got a $45 billion bailout and nearly $300 billion in government guarantees.

    Similar explanations flowed throughout 2010 from current and former bankers at Goldman Sachs Group Inc., Washington Mutual Inc. and Countrywide Financial Corp.

    Even James Dimon, the chairman and chief executive of J.P. Morgan Chase & Co. who once admitted that banks did “some really stupid things,” has been feeling less culpable, especially when it comes to his own bank’s practices.

    On Oct. 13, Mr. Dimon laid the blame for the foreclosure wave with borrowers. Mr. Dimon told analysts and investors that “maybe mistakes were made” with foreclosure paperwork, but “not where someone got evicted out of a home that shouldn’t have been.”

    Really? Out of more than 100,000 loans that J.P. Morgan has said it was reviewing, not even one?

    Mr. Dimon’s inflating confidence is a jarring contrast to downtrodden borrowers who feel guilty and take full responsibility for failings in their handling of personal finance.

    According to a survey released Tuesday by online broker TD Ameritrade, more than half of Americans wished they could turn back the clock and do things differently.

    Seventy-one percent said they would’ve spent less and saved more, while 65% said they would have “lived within their means” and 60% would’ve have taken more personal responsibility for managing their money, the survey showed.

    In addition, many responded that they have paid a price for their mistakes. Between 17% and 36% said weren’t able to travel, pay down debt, invest and save for retirement and had to forego purchases.

    A separate survey of 1,000 adults, this one sponsored by J.P. Morgan and U.S. News & World Report, found that most Americans, especially younger ones, made New Year’s resolutions aimed at saving more, spending less and living within a budget.

    If anything, the self-reflection of consumers fits neatly with the narrative presented by big finance firms and some political voices. They argue that a lack of personal responsibility was the main cause of credit woes, including the recent wave of foreclosures, not banks playing fast and loose with credit.

    They argue that it is strategic defaults, which make up as much as 31% of foreclosures, not hardship and falling home prices, that really hurt the housing industry.

    It’s certainly true that some borrowers have “walked away” from their commitments. But many borrowers who sought to salvage their mortgages failed.

    The U.S. government’s loan-modification program has reached 1.4 million of the more than three million borrowers estimated to be eligible. More than half of the modifications have failed, and only 35%, or about 500,000 loans, had been permanently modified at the end of November, according to the Treasury Department.

    Among the banks with the biggest failed modification rates: Bank of America and J.P. Morgan.

    This isn’t to pass judgment on the banks. After all, borrowers blame themselves, too. But as Brent White, a professor at the University of Arizona and author of “The Morality of Strategic Default” points out, double standards are at work.

    Banks operate to maximize profits and minimize losses, but most borrowers have a moral and ethical obligation to pay. Knowing that, it shouldn’t come as a surprise that most Americans feel responsible. They’re the only ones who are capable.

    Here is the link to the source:

    http://online.wsj.com/article/SB10001424052748704405704576064810564103834.html#printMode

    Could some of you homeowners log in and post your comments.

    Lets tell WSJ what we really think!!!

    I always welcome everyones comments at:

    providencegroup@ymail.com

  24. From Karl Denninger:

    You’re Paying Your Mortgage….. WHY?

    Now comes this lawsuit out of Texas alleging that Bank of America not only tried to collect on a PAID IN FULL mortgage but refused to listen to the fact that it had been paid in full and in fact threatened that the owners were “going to lose their home.”

    These banks all claim there is no “real problem” with securitization, there are no pernicious issues with paperwork not being in order, it’s all on the up and up, yet we continue to see filings like this, and these filings – extreme measures, lawsuits even – come only after reasonable attempts to communicate with these institutions and resolve problems are met with STONEWALLING and games – even when, as is alleged here, there is evidence that the loan in question was paid in full and discharged!

    Had enough yet?

    This is all “minor paperwork errors” and “nobody has lost their home” (or been unjustly harassed, dunned and threatened for money they do not owe, right?)

    AGAIN:

    WHY ARE ANY OF YOU PAYING ANY OF THESE BANKS ANYTHING?

    WHY ARE STATE REGULATORS AND ATTORNEYS GENERAL NOT FORCING ALL OF THESE LOANS THROUGH THE COURT SYSTEM AND MAKING THESE SO-CALLED ALLEGED “CREDITORS” COME TO COURT AND PROVE THE PROVENANCE OF THEIR CLAIMED “DEBTS” WITH A FULL AND UNBROKEN CHAIN OF ASSIGNMENTS?

    HOW MANY MORE TIMES DO WE NEED TO SEE THIS BEFORE IT IS STOPPED?

    THE ONLY WAY WE ARE GOING TO GET THESE INSTITUTIONS’ ATTENTION, AND THAT OF THE LAWMAKERS AND LAW ENFORCEMENT BODIES IN THIS NATION, IS WHEN THE PEOPLE OF THIS COUNTRY REFUSE TO PAY ANY OF THESE BANKS ONE SINGLE DIME – OWED OR NOT – UNTIL ALL OF THIS CRAP STOPS AND EVERY ONE OF THESE “DEBTS” HAS ITS PROVENANCE PROVED UP IN A COURT OF LAW.

  25. We need to convince those that are paying their mortgage . That they are getting ripped off.

  26. cubed2k, right on the money.

    Pull back.

    Distance yourself from their products.

    Use local/credit union/banks.

    Write your reps and regs explaining your disdain and disastistfaction.

    Fight to the bitter end. It’s them or us. And I for one believe that life would be a lot better off without them, and with more of us.

  27. Although this sounds like a brilliant idea, the idea was taken from a program that already exists. For those of you who have been fighting as long as me (3 years) you may have been offered one or all of the following: deed in lieu of, short sale, temporary modification, temporary rate reduction, temporary reduced payments or maybe you have been referred to HOPE FOR HOMEOWNERS. It is this HOPE program that, once or if ever approved, you would to an equity share or split with guess who? The Federal Government. So, Mr. Alex from NY Times steals an idea from a program that already exists and puts his own spin on it and calls it a brilliant idea. Neil, you know the banks/servicers/pretentder lenders will NEVER go for this because even you have stated that the equity may never return in this marketplace or even in our lifetime. I believe I’ve read 10-15 years or even 15 to 30 years to get back to where we were which is unlikely since the appraisals were fraudulant. The market and the original equity never existed. The only think that would make them think about this is because they fear lawsuits from the investors and want to work out some deal but the truth is, they don’t want the losses, they don’t want the write downs and they don’t want all of this s%&t on their books. Why not just foreclose and make it all disappear before everyone in America finds out the Truth!! What’s going to help the crisis is exposing the Truth, letting big banks finally fail and throwing a bunch of greedy banksters and wall street pimps into prison. Remember the S&L scandal? Homeowners, time to rise up and demand investigations, stay on top of the AGs offices and don’t let them settle!!!

  28. don’t pay another penny toward any credit related debt from so called banks or any other financial institution – credit cards, loans, mortgages – it’s securitized debt. It is the rot of society, just as compound interest is. When you think about – how stupid to buy anothers debt – this is scam by Wall Street to remove liability or risk from themselves to another, hence a fool, that includes so called big shots managing pension funds, investors, etc – it is a scam on them as well, oh they mock up they are so important. What good does it do society at all. There are playing fields – one is main street, one is Wall Street( and people involved in it by having investments in it – your 401k, pension, etc). The Wall Street game is simply make believe as no Real product of Exchange is exchanged, it is all chasing returns on investment, so corrupted. Don’t play the game anymore, have some fun getting out of it, the debt credit game. Go all cash. Save your money and don’t park it in a bank. Your FICO score is a control mechanisms – 1. to get you to use credit, 2. keep you worried about your credit score to keep you paying. Get off credit period. Who cares – it’s a man made game with no natural laws. Always remember it’s a game, and change your viewpoint, have some fun, laugh at it. We the people do have the power. Don’t show up for the game.

  29. Ian, tip of the hat. All of the previous hand wringing and stumping has done nothing towards pointing towards the truth behind the entire deal.

    It is 100% FRAUD! From top to bottom. The elite will take everything, and leave nothing but crumbs.

    If you folks want to spend the next decade trying to figure out how this artifice should be sequestered, sliced, diced, go for it. There’s only one place that the blame can’t fall realistically, and that’s with the homeowner.

    Any plan that fails to endemnify the millions of homeowners that fell victim to this securitization scheme, that netted trillions to the authors and their subscribers fails the sniff test.

    This debacle has NOTHING to do with homeowners. Anyone still believing that bankster dole about low lifes buying when they should have been renting deserves what fate awaits them.

    Anyone who believes the Republican stance that Fannie and Freddie are to blame, and that shadow banking and Wall street shouldn’t be mentioned in gov reports deserve a Palen/Bachmann ticket.

    Wake up people. This is not excess from Main Street. It’s Gordon Gekko at his best. Rape America, and the world, then blame them one and all for wearing skimpy regulatory outfits. Then Wall Street lines up at the Fed teat exactly like little sows on the mother pig. That’s what we’ve become America. A banking lifeline to fraud.

    Don’t even mention trying to talk or meditate with these banks. They’re all crooks. They destroyed our economies, our jobs, our homes, our children’s educations, and our futures of rocking on porches, instead, we’ll be working till we’re eighty+. Screw the banks!

    And don’t put your faith in your local AG. I’ve dealt with that gig for a number of years. You WILL GET SOLD DOWN THE RIVER. The state AG will make a handsome profit, at your expense.

    Keep your own powder dry. Await the moment to attack on your own. Trust no one, save for Neil garfield. :’)

  30. Neil

    I am going to remain positive in all of this and trust your judgment because it will enable me to do bigger and better things with my life. However lets make sure your serious too I e-mailed three times and told you I was ready to settle if it meant I start paying right now I am able to settle pay or whatever so whats your next move as you made the offer?

  31. after you read the article I just posted you will read between the lines why the regulators will not do crap against the thieves, they will never prosecute, they will always settle for pennies. They would be going against their future employers and their future golden parachutes.

    Guess what your financial future and the country’s is in the hands of these government prostitutes and the wall street PIMPS.

    For you it is your retirement, your kids college, your savings, your health, your marriage, for these criminals is the cost of doing business.

  32. JPMorgan Legal Bills Soar in Financial Crisis Aftermath, Menacing Profits
    By Linda Sandler – Jan 6, 2011 9:17 AM ET

    JPMorgan Legal Bills Soar in Credit Aftermath

    JPMorgan, the second biggest bank by assets, reported $5.2 billion of legal costs in the first nine months of 2009, compared with a gain of $10 million in the same period a year earlier. Photographer: Jin Lee/Bloomberg

    (Corrects year of costs in second paragraph.)

    JPMorgan Chase & Co. and the biggest U.S. banks face billions of dollars in legal costs related to their role in the financial crisis, threatening their profits and the stock price gains they made in 2010, analysts said.

    JPMorgan, the second biggest bank by assets, reported $5.2 billion of legal costs in the first nine months of last year, compared with a gain of $10 million in the same period a year earlier. The costs would rise if the bank reserves for multibillion-dollar lawsuits by Lehman Brothers Holdings Inc. and the trustee liquidating Bernard L. Madoff’s firm.

    Bank of America Corp., the largest U.S. bank, and Citigroup Inc., ranked third, are also besieged by lawsuits stemming from the credit crisis, brought by plaintiffs ranging from foreclosed-upon homeowners to institutional investors whose mortgage-backed bonds turned out to be money-losers.

    “They’re under legal attack,” said Richard Bove, an analyst at Rochdale Securities in Lutz, Florida, who rates JPMorgan’s stock a “buy.” “They’re similar to the asbestos or the tobacco industry, and they’re going to be repeatedly sued in the next few years.”

    JPMorgan rose about 1.8 percent in 2010, while the Standard & Poor’s 500 Bank Index climbed 18.7 percent and Citigroup gained 43 percent. Both banks are based in New York. Bank of America, based in Charlotte, North Carolina, fell 11.4 percent, while San Francisco-based Wells Fargo & Co. rose 14.8 percent, according to Bloomberg data.

    Cost of Business

    JPMorgan’s third-quarter net profit of $4.4 billion, up 23 percent from the year earlier, would have been larger if it hadn’t set aside $1.3 billion of pretax income for lawsuits and $1 billion for mortgage repurchases. Banks haven’t yet reported their results for the fourth quarter.

    Litigation “ain’t going away,” Chief Executive Officer Jamie Dimon told analysts on an Oct. 13 conference call. “It’s becoming a cost of doing business.”

    At least JPMorgan’s shareholders are more likely to be informed about legal expenses than some other bank investors. The bank, which used the word “litigation” about 50 times in its latest 10-Q filing with the Securities and Exchange Commission, discloses more about lawsuits’ effect on results than Citigroup or Wells Fargo, and has been taking larger reserves than some rivals, according to company filings.

    Array of Suits

    Stephen Cutler, JPMorgan’s in-house lawyer and a former SEC enforcement chief, declined to comment through bank spokesman Joseph Evangelisti.

    Bankrupt Lehman is claiming $8.6 billion in collateral from JPMorgan plus tens of billions of dollars in damages, while Madoff trustee Irving Picard is demanding $6.4 billion on the grounds that JPMorgan aided and abetted the biggest Ponzi scheme in history.

    Almost nine pages of JPMorgan’s third-quarter 10-Q deal with legal issues. They range from home foreclosure investigations by state officials, to shareholder lawsuits against Bear Stearns Cos., which JPMorgan bought in 2008, to suits from nine different Federal Home Loan Banks demanding compensation for mortgage-backed securities bought from JPMorgan, Bear Stearns or Washington Mutual Bank, also purchased in 2008.

    Investors concerned that they aren’t getting enough information to assess litigation risks spurred the Financial Accounting Standards Board to issue proposals last year that would make banks estimate legal losses and say how much they’re putting aside. The FASB, based in Norwalk, Connecticut, sets accounting rules for public companies under authority delegated by the SEC.

    Expensive Season

    The coming year may be the most expensive litigation season since 2005, when JPMorgan and Citigroup each spent about $2 billion to resolve a lawsuit accusing them of helping energy trader Enron Corp. hide billions of dollars in debt from investors. JPMorgan said in its 2009 annual report it got some money back from insurers for the two settlements.

    This year, though, the usual fraud and mismanagement suits are dwarfed by the potential liabilities stemming from the collapse of the housing market. Litigation may force banks to pay back about $134 billion for so-called private-label mortgage loans, said Chris Gamaitoni, a bank analyst at Compass Point Research & Trading LLC in Washington. Such loans are considered riskier than mortgage loans issued by Fannie Mae or Freddie Mac.

    Book Value

    For JPMorgan, its $24 billion share of the potential losses would equal 13 percent of its book value, Gamaitoni said. Bank of America’s $35 billion of possible losses would be 17 percent of book value, he estimated.

    While bank stocks rose about 3 percent this week after Bank of America paid $2.8 billion to settle loan disputes with Fannie Mae and Freddie Mac, the banking industry’s liability could be almost five times greater on private-label mortgage loans, Gamaitoni estimated.

    “Private-label losses on loans are much higher and therefore the liability from lawsuits is a much larger percent than in the agency market,” he said. “On a book value basis it would be more negatively impactful. If there is a large private- label settlement or court case, the stocks will react negatively. There will be an earnings headwind.”

    Bank of America reported $1.2 billion in litigation costs for the nine months through Sept. 30, excluding fees to outside law firms. It is suing or being sued in 5,696 legal proceedings in federal court, compared with JPMorgan’s 3,757 lawsuits, according to data compiled by Bloomberg.

    Litigation Expenses

    Cases for which Bank of America has already reserved some money may wind up costing the bank $400 million to $1.9 billion more than it has set aside, according to its 10-Q. The bank’s nine-month litigation cost of $1.2 billion compared with $477 million a year earlier.

    “Our litigation-related expenses are cyclical and are not attributable to a single factor,” said Bank of America spokesman Lawrence Grayson.

    Citigroup, now dealing with 1,713 federal court proceedings according to Bloomberg data, tries to settle lawsuits, the bank said in a filing. Shannon Bell, a spokeswoman for Citigroup, declined to comment.

    Wells Fargo, the fourth biggest bank, is involved in 2,758 lawsuits, according to Bloomberg data. Mary Eshet, a Wells Fargo spokeswoman, declined to comment.

    JPMorgan’s litigation reserves are an “estimate” that, “if wrong, could cause unexpected losses in the future” from lawsuits, fines or penalties not covered by insurance, according to its latest 10-K.

    Fight for Right

    Dimon articulated the bank’s approach to lawsuits in the October analyst call.

    “When we’re wrong, we’re going to settle, and when we’re right, we’re going to fight,” he said.

    JPMorgan was the last major underwriter of WorldCom Inc. securities to settle suits started in 2002 after an $11 billion fraud sank the long-distance telephone company and sent Chairman Bernard Ebbers to prison.

    Banks have leeway under current accounting rules to report litigation costs, or not. Citibank and Wells Fargo don’t give a dollar amount for legal costs; JPMorgan and Bank of America do.

    Among other things, the FASB proposal would force banks to report the basis for the legal claim, the amount being claimed and how the company will defend itself. Banks will have to regularly update their estimated loss, and when it might occur; and in cases where they are “reasonably” likely to lose, they have to estimate their possible range of loss and say how much they’ve put aside to pay for it.

    Mission of FASB

    “The mission of the FASB is to establish financial accounting and reporting standards that provide useful information to investors,” said Bill Hildebrand, a FASB staff member, in a telephone interview. Hildebrand couldn’t say when the proposal might become a rule.

    JPMorgan currently is fighting Lehman’s lawsuit, which alleges the bank and Dimon helped cause its failure by siphoning off badly needed funds.

    JPMorgan twice asked a judge to dismiss the suit, saying it took the $8.6 billion in collateral from Lehman under a contract to clear trades for Lehman’s brokerage. So-called safe harbor laws protect a clearing bank from being sued if a brokerage client fails, the bank said in court papers.

    U.S. Bankruptcy Judge James Peck in Manhattan, who hasn’t yet ruled on JPMorgan’s request for dismissal, has at least three times rejected the safe harbor defense in other cases. Bank of America was ordered to return $500 million of deposits to Lehman, and pay $90 million in interest.

    Madoff Trustee

    Madoff trustee Irving Picard sued JPMorgan on Dec. 2, saying the bank aided the now-imprisoned con man’s fraud from its position “at the very center of that fraud” when it acted as the Madoff firm’s banker.

    The trustee unraveling the remains of a $3.5 billion Ponzi scheme run by Thomas J. Petters has also accused JPMorgan of gaining about $280 million from that scam.

    Bank of America’s legal proceedings cover five pages of its latest 10-Q — and 11 pages of small print in a footnote to its latest annual 10-K filing, under Note 14. Like the other banks, it says it may be exposed to losses “in excess of any amounts accrued” for legal liabilities.

    Like JPMorgan, Bank of America inherited lawsuits from companies it bought: Countrywide Financial Corp. and Merrill Lynch & Co. Together, they’re facing lawsuits alleging they misled investors in offering documents for more than $375 billion in mortgage-backed securities, the bank said.

    Allstate Corp. sued Bank of America and Countrywide on Dec. 28 over $700 million in mortgage-backed securities the insurer bought.

    Current Accounting Rules

    Like other banks, Citigroup said it follows current accounting rules in setting up litigation reserves “when those matters present loss contingencies that both are probable and can be reasonably estimated,” adjusting the reserves as new information comes in.

    Citigroup still faces 14 billion euros ($18.4 billion) of claims for damages resulting from the 2003 bankruptcy of Italy’s biggest dairy company, now called Parmalat SpA, according to the bank’s 10-K annual regulatory filing.

    Citigroup in another Parmalat case won $431 million by countersuing, it said in the filing.

    Lehman’s case against JPMorgan is Lehman Brothers Holdings Inc. v. JPMorgan Chase Bank NA, 10-03266, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The Madoff case is Picard v. JPMorgan Chase & Co., 10-ap-4932, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

    To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net.

    To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

  33. ANONYMOUS- I believe that all these well-intended comments toward a possible solution are obscuring the main problem- that every securitized loan, except for perhaps the early ones, are fraudulent. Once the salesmen realized that they could sell the same billion dollars worth of loan receivables for a billion dollars to 30 different pension funds the world over, and get 30 billion dollars total for 1 billion worth of loan receiveables for which they didn’t put up any cash, then the extent of the fraud becomes apparent. All the loan-level data in the pools has been removed, so that no one could find out that the loans in the pools were the same. This led to the assignment problem. Which trust do you assign them to prior to foreclosure? 5 years after the closing date,of course. There is no clear title, except perhaps in the eyes of a judge who doesn’t have a clue as to what is going on. I think it is just a frantic dash by all involved to get rid of every single loan. Destroy the evidence, beat down and demoralize the homeowner. That is why it is most critical now, of all times, to stay on point. Everyone.

  34. I can’t believe that people do not yet understand what is going on. Get the courts and the government out of our business and target the banks with our own committee. Some of these suggestions are very much appreciated but they simply cannot work. The closest thing you can come to this is to get an investor to buy the stuff back for pennies on the dollar and have him sell it to you for a lot more, your own home. We have taken the rewards of many and put them in the hands of a few. The senators do not have a clue and should back off. The AG’s should let us know what they are doing because we cannot count on them either. The investors that are purchasing the distressed loans are making out like bandits and selling your home to someone else. How they are getting good title is questionable.

    If the people do not go back to the creditor of record in full force and effect with a stratgy or deal, then there is no sense in continuing all of this conversation. Anonymous is right. There is no one that is going to do the work for the people as the investors are way ahead of the game. But as I said, the power is in the people, why not use it.

  35. i know this potential solution is one way out, but how do we get the alleged investors to come to the table and how do we get the middlemen thieves out of the picture if they have virtually locked down the system. they prefer to have a constipated system. they designed it and they will kill each one of us first before they allow us and the investors to share notes, let alone negotiate anything of substance.

    For those people who are in arrears, there may be another interesting option out there. As I understand there are investors who are buying distressed NOTES and Mortgages, and then either foreclosing or negotiating with the home owners.

    What about us buying RMBS on our own loans, that will give us access and may be we can even block the foreclosure. I am not sure if this is really possible. Also what about buying our own note back and servicing ourselves?

    There are firms offering this this of service, and they are buying these notes pennies on the dollar. They are doing it for institutions like PennyMac, Kondour Financial, etc.

    There has to be a better way than the one being shafted down our throats. I have done almost everything, and now I am in court fighting for my rights but in Virginia and other states where the legal system has been fellating the bankers for years, hope is far.

    Can this buy your note back work if there was a vehicle to do it?????

  36. Herein lies the problem; it’s called the U.S. Treasury

    Senators Urge Geithner to Tackle Mortgage Process `Forcefully’
    By Rebecca Christie – Jan 6, 2011 Treasury Secretary Timothy F. Geithner and federal regulators need to fix the mortgage foreclosure process so that it doesn’t derail the economic recovery, Senator Jack Reed and 16 other senators wrote in a letter yesterday.

    “Mortgage market issues point to an emerging threat to financial stability that should be forcefully addressed now,” wrote Reed, a Democrat from Rhode Island. The letter, obtained by Bloomberg News, was also signed by Senator Bernie Sanders, an independent of Vermont, and 15 other Democrats including Senators John Kerry and Dick Durbin.

    The letter shows increasing concern from lawmakers that the Obama administration hasn’t done enough to stem the housing crisis. Home prices may decline 5 percent this year as the housing market starts to stabilize, Jan Hatzius, chief U.S. economist at Goldman Sachs, said in a Dec. 31 Bloomberg Television interview.

    The senators’ letter was also addressed to the Financial Stability Oversight Council, often referred to as FSOC, created last year to guard against future financial crises.

    The oversight council discussed foreclosures at its November meeting and is waiting for the findings of an Obama administration foreclosure task force.

    “The reviews are ongoing,” Treasury spokesman Steve Adamske said today. “We are awaiting the conclusions of the reviews.”

    ‘Poorly Handled’

    The financial system faces “serious” problems from “poorly handled, if not illegal” foreclosure processing that has created headaches for state and federal governments, according to the 17 lawmakers.

    The senators called for a “robust and comprehensive solution” that would protect homeowners and investors. They urged the council to respond “promptly” and indicate whether it needs additional tools or legislative changes.

    “The FSOC should determine whether there is a need for some independent referee, whether it is a bankruptcy court or other institution, in finally addressing these foreclosure processing and loan modification issues,” the senators wrote. They said that bankruptcy courts are increasingly involved in “creatively and proactively” addressing foreclosure issues.

    Geithner and the council, which includes the heads of the Federal Reserve, the Securities and Exchange Commission and other regulatory agencies, also should lead and coordinate efforts among state and federal authorities, the senators said. They said homeowners should be “quickly and fairly” evaluated for loan modifications to prevent foreclosures.

    Claims of wrongdoing by banks and loan servicers triggered a 50-state investigation last year into whether hundreds of thousands of foreclosures were properly documented as the housing market collapsed. The probe came after JPMorgan Chase & Co. and Ally Financial Inc. said they would stop repossessions in 23 states where courts supervise home seizures and Bank of America Corp. froze U.S. foreclosures.

  37. Herein the problem lies……

    Senators Urge Geithner to Tackle Mortgage Process `Forcefully’
    By Rebecca Christie – Jan 6, 2011 Treasury Secretary Timothy F. Geithner and federal regulators need to fix the mortgage foreclosure process so that it doesn’t derail the economic recovery, Senator Jack Reed and 16 other senators wrote in a letter yesterday.

    “Mortgage market issues point to an emerging threat to financial stability that should be forcefully addressed now,” wrote Reed, a Democrat from Rhode Island. The letter, obtained by Bloomberg News, was also signed by Senator Bernie Sanders, an independent of Vermont, and 15 other Democrats including Senators John Kerry and Dick Durbin.

    The letter shows increasing concern from lawmakers that the Obama administration hasn’t done enough to stem the housing crisis. Home prices may decline 5 percent this year as the housing market starts to stabilize, Jan Hatzius, chief U.S. economist at Goldman Sachs, said in a Dec. 31 Bloomberg Television interview.

    The senators’ letter was also addressed to the Financial Stability Oversight Council, often referred to as FSOC, created last year to guard against future financial crises.

    The oversight council discussed foreclosures at its November meeting and is waiting for the findings of an Obama administration foreclosure task force.

    “The reviews are ongoing,” Treasury spokesman Steve Adamske said today. “We are awaiting the conclusions of the reviews.”

    ‘Poorly Handled’

    The financial system faces “serious” problems from “poorly handled, if not illegal” foreclosure processing that has created headaches for state and federal governments, according to the 17 lawmakers.

    The senators called for a “robust and comprehensive solution” that would protect homeowners and investors. They urged the council to respond “promptly” and indicate whether it needs additional tools or legislative changes.

    “The FSOC should determine whether there is a need for some independent referee, whether it is a bankruptcy court or other institution, in finally addressing these foreclosure processing and loan modification issues,” the senators wrote. They said that bankruptcy courts are increasingly involved in “creatively and proactively” addressing foreclosure issues.

    Geithner and the council, which includes the heads of the Federal Reserve, the Securities and Exchange Commission and other regulatory agencies, also should lead and coordinate efforts among state and federal authorities, the senators said. They said homeowners should be “quickly and fairly” evaluated for loan modifications to prevent foreclosures.

    Claims of wrongdoing by banks and loan servicers triggered a 50-state investigation last year into whether hundreds of thousands of foreclosures were properly documented as the housing market collapsed. The probe came after JPMorgan Chase & Co. and Ally Financial Inc. said they would stop repossessions in 23 states where courts supervise home seizures and Bank of America Corp. froze U.S. foreclosures.

    To contact the reporter on this story: Rebecca Christie in Washington at rchristie4@bloomberg.net;

    To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

  38. Anonymous:

    As far as I am concerned, the deal is between the creditor and the homeowner. If it is an unknown investor, then they can join in the suit for buying the paper in the first place. Fannie is the only one that I believe supposedly cannot be held responsible for mistakes of the seller. FNMA however, did not support the homeowenr from a servicing aspect and that is why they would be sued or included in a suit or as I prefer, a negotiation. Why doesn’t anyone go after the servicing aspect.

    At any rate, whoever owns the note and lien rights will have to settle and that includes satisfying the collection rights that were sold to someone else. Again, that is the creditor’s punishment for selling the loan in the first place. Although there are no representations and warranties printed in our deed of trust that says these are specific representations and warranties, they are there and the homeowner can go after whomever owns the lien rights. Isn’t that true or not? That is why we need people like you to keep us on track.

  39. ANON, I’m a homeowner in the trenches, I think you know. The investor actions are being settled while the homeowners are left out in the cold, literally.

    I am afraid AG actions will result in NOTHING for the homeowners. They’ll collect a big pile of cash and distribute some of it to credit counseling agencies.

    The investor issues are being resolved under our noses. When they’re done collecting, the issue goes away.

  40. Joyce Louise

    Agree with 99% of your last post. Except –deal is not between “homeowner (group) and the banks” — that is what they want you to believe.

    The banks have long removed themselves. The “deal” is between homeowner (groups) and some unidentified “investors.” Investors in debt collection rights — this is what many are just not getting.

  41. BRIAN DAVIES,

    Yes — but need decision.

  42. Anonymous:

    The deal is between the homeowner (group) and the banks with a committee to oversee. And it will be that way because the Homeowners must take charge of the situation. We have no voice except that of the AG’s but that is our own doing.

    Involving the courts is only feeding the greedy hand of the attorneys who thank God every night for their windfall? They love it – Get rid of the Courts

    Homeowners need to require the banks to put up and paste on their public boards, their New Bill of Rights – Obviously, they threw them in the garbage after 1998, with the statement that “I shall not commit fraud” as being the first one on the list.

    At any rate, I really wish if anyone is going to submit an idea to Neil’s program which I think is a good way to get people to come forward, to at least let us know if anyone on this blog is going to do it.

    I am betting 10 at the most? I think we are a few short? And this will prove that the people will remain “silent” and the foreclosures will continue.

  43. Joyce Louise

    Banks are giving in because they do not want discovery — or admission of guilt. Investors have far greater resources and influence than homeowners.

    Tea Party was/is harmful to homeowners — they advocate no help to anyone — banks or victims. Problem is the bailout went to banks — but victims got nothing.

    Investors are not victims in the same way homeowners are victims. Investors are on a much higher plateau — according to courts — as to sophistication. Investors gamble — homeowner victims “TRUST” — despite “targeting”, fraud, and predatory lending.

    But, the only agency that has the right to stand up for homeowners in general — is the Attorney Generals. Blame Eric Holder — for doing little. Hope the 50 state AGs are still working — despite no guidance from Mr. Holder.

    Most investor lawsuits are initiated by private parties or the SEC — not AGs.

    But, SEC should be interested in homeowner fraud complaints — because their complaints affect investors. That is where the fraud is derived — from homeowner complaints. Investors would have no claim if homeowners were not being harmed and defrauded. All would be OK.

    Investors just beat homeowners to the punch — with powerful law firms – and pressure on banks. Banks cannot survive without distressed debt investors who take bad loans OFF the banks’ balance sheets. THEY NEED THEM..

    Banks are not in the business to foreclose — banks are in the business for profit. They are not concerned with everyday foreclosures — they are not involved — they are protecting their proprietary relationships with the hands that feed them. And, in turn, who the banks will feed.

    It is about profit — and banks long dispose of non-performing loans — because there is no profit in it for them. They do not have the interest or expertise to foreclose — they leave that to others — to whom they have turned over collection rights.

    Just wish more of the truth was told here. Keep trying.

  44. Money talks. If the deal that is cut is better than the repurchse of all of those loans, don’t think for a minute the bank will hesitate if they can resolve the issue – This thing is getting out of control with all of these scenarious. Where is our committee and the petition that we can get signed that instructs the banks to do the right thing in payment for the damage done to this economy by victimizing the homeowners of America who help them keep their doors open.

    Banking with any of the big five banks is not and will never be a consideration – another way to hit them in the pocket book and penetrate their wall of arrogance. This is my final say as I am sure you are all tired of my comments. The investors can only win, if the homeowner wins first. I do believe however that we should come up with some kind of an alliance with the investors. These investors could not have known the risk but that is the chance they take. The Homeowner did not go into the deal of buying a home as an investor and I am sick and tired of everyone saying that. Family first and then if it aappreciates, great and it probably would have in normal economic times.

  45. The investors are out there trying to cut deals and they are getting them because they hammered them with the facts. The banks are giving in because they know it is true. Not only do we not have a hammer, we don’t even have a nail. The Tea Party people are a perfect example of how the people can get things done. I have mentioned them before – what is your thought.

    The most important issue is going to be – what happens to the homeowner after his loan is repurchased by the Bank. That means it is wholly owned by them and it depends on the losses they took and how they think they can recover them. I know the banks got greedy, but I will never not believe they didn’t factor in potential losses.

    It is what every bean counter in every corporation does when deciding the risk of doing something. It is not an unknown and the banks ought to stop acting like it is for them.

    If the AG’s settle on the side of the investors, with little for the homeowners, then somebody had best be asking why?

    But what is more important to everyone at this point and time – exposing each and every bank and the manner in which they committed the fraud or forcing them to give it all back. I have a lot of very hurt families out here who would love to keep their homes or get another one in its place. YOu be the Judge. I already think the whole world knows what they have done. And if any of them get thrown in jail, that will be known as well.

  46. Dying truth:

    I wouldn’t be too sure about your statement that about homeowners can’t do anything, investors have all the power. What the investors have going for them is that the people may choose to do nothing but talk. I think as a homeowner, we have all the power we need. So why don’t we use it?

  47. usedkarguy

    Really cannot tell where you stand on this. But, homeowners deserve a “settlement” — just as much— if not MORE — than investors — who perpetrated the fraud.

    This is not about investors in MBS who were falsely led to believe the securities were triple A rated — this is about investors who saw opportunity in subprime mortgages — and were waiting in the wings for collection rights (and by the way — many large banks have their own distressed debt buying divisions).

    Let’s get mortgage title fixed first — proposals are far too premature. And, victims are not just those under-water — some have equity — but no valid mortgage title.

    Did you see who wrote this artlcle?? — Alex Perriello is the president and chief executive of a REAL ESTATE FRANCHISE organization.

  48. StellarOne Corp., the parent of a community bank based in Charlottesville, Va., has entered into an agreement with an undisclosed bank investor to resolve repurchase and indemnification claims related to loans originated by the company’s retail and wholesale channels prior to 2009.

    See what I mean, it’s happening.

  49. Let’s be really clear – the homeowners know the fraud has been committed and as such, the lenders are the ones who performed the act ultimately – they need not only admit fraud, but defeat . Every homeowner must get a fair deal. All of this court business is just too much at a point in time when we need to resolve the issue. This is not just about taking care of the investors, but addresses the very issue of why millions were trying to get modifications that could never be. This whole thing had to come to fruition before we could ever begin to turn it around.

    It is clear to me that we can begin now that they know we know, that to keep the government involved, and the Courts and answer to any lender about equity positions simply will not work.

    This is about the homeowner and the lenders and Wall Street fessing up. We are not going to get free houses, except those perhaps that have already been foreclosed on, but most certainly the deal needs to be cut to to show the lenders that are going to be forced to buy back these loans, that there is a much betterw way After they buy them back, they still have to deal with the issue of non performing loans plus tremendous pressure from the homeowners who will keep them in Court one way or another.

  50. fraud-lent. Yes, I like it.
    Hope everyone is making it this new year. Keep up the fight.

    Joyce, I think getting the borrower and lender in front of a magistrate, allowing a borrower to present the affirmative defenses and counterclaims, and said judge ordering a set-off to create a new loan, although the best opportunity for the borrower, would also make it too subjective for the judge.

    If the judges could do this, it would be happening. Holder in due course law protects the predatory lender. And even then, some are subjected to the bias of the judges. They (we) are all deadbeats.

  51. Joyce Louise,

    Agree — need proposals. But, before any proposals can even be put forth — need to have “investors” show their faces — and admit fraud in origination and fraud in foreclosure. Without this admission — it is just another cover-up — and any proposal implemented will be structured to doom the homeowner — again — and again — and AGAIN.

    Need exposure of fraud — before any proposal can be put on table. We are not here to bail out the investors — who have lost much — by their own fraud.

  52. LOST, that’s the rub. Everything collapses, and the top 1% are the ones that take the hit. That’s why they won’t enforce the law.

    Money and Power, my friends, Money and Power. Guys like “TRUTH” get persecuted for their candor in a public forum like this. But the top 1%, the ruling class, as I care to refer to them, is where the wealth is concentrated. They are the losers if you get your house for free. There are many other smaller investors facing losses, but if Wall Street, the National Banks, and the EUROPEAN Banks that were in on the deal, were all held accountable, and they indeed “clawed back” the ill-gotten gains of the fraud, the losses would be reduced considerably. Extinguishing the fraudulent mortgages has already occured, it’s the cleansing of the balance sheets that is needed. The FED has to keep the printing press going to hide the backdoor restitution being paid to the Banksters.

  53. Neil

    There are several big problems with your suggestion. One, the investors refuse to come forward and show their face. This is not pass-through security investors (as they are not the creditor) but, rather “investors” in distressed debt. At the very most, there are likely 2 or 3 investors, for a particular loan, — and this is by swap of collection rights out of MBS “tranches” — tranches that swap out collection rights from the trust due to charge-off current receivables.

    Two, no one wants to share equity with parties that are not held accountable by anyone – and are only motivated by their own ‘Investment.” And, no one wants to risk “readjusting” rates — every seven years or so — when interest rates could be sky high. We already know the trouble adjustable rates got us into.

    Third, title issues remain. What would prevent “investors” from further “assigning/selling” their “equity” participation. Thus, further complicating already non-existent mortgage title???

    These are – or were – MORTGAGES — and should not be compromised by investors looking to restore themselves to a Investment — that was fraudulent to begin with.

    Proposal will not work. Maybe, just maybe, if all fraud is flushed out FIRST — there could be some “negotiation” with the current “investor” distressed debt creditor. Until that happens — proposal will NOT work. AND NO READJUSTING OF RATES — dangerous to homeowner.

    Have heard these proposals bantered about before — did not “buy” it then — do not buy it now.

    Disappointed in the post.

  54. I did not realize my comments were so lengthy. Pull it down Neil. I guess I got carried away. Sorry.

  55. We are know the games that were played by all of the participants, lenders, trustees, depositors, homeowners, appraisers. I can’t name them all. But let’s try to come up with something as Neil was talking about. Submit real ideas rather than continue to talk about what was. Otherwise, it is now and will be in the future, taken out of our hands for a fair and just way to resolve it. And the homeownrs of America will continue to do lead us down the path of their choosing. Try this next idea on for size. I know it is lengthy, but it means that everyone can win and feel justified. You can’t please everybody. An economist in China also had came up with a similar program and his ideas were similar. We are not sure why it can’t work.t.

    I do not believe either of these plans are viable BUT I cannot know that of course for sure. I hope they are, so we will have a place to start.

    I provided a plan shortly after Bush’s recovery plan (that was supposed to save 400,000 homes), but ended up with about 45 APPLICANTS. That program also called for sharing of any equity but with the government. I can’t remember all of the details, but I do remember, it was doomed to fail and it did. To make matters worse, Obama comes along and amends it to an even worse degree.

    All that I ask is that someone take a look and let me know what, if any, the reasons were that this is not a good plan. Silence.

    All we needed was about 40B to save as many as 2M homes during the period 2008-2009 and that would have bought us time to come up with a plan of action and one that would have allowed most homeowners to remain currrent and stay in their homes. This plan is based on homeowner being eligible for a certain portion of his monthly payment. Never would we have had the financial disaster come into play that was clearly on the horizon had we been more responsive with a good plan..

    We threw hundreds of billions of dollars to lenders to help resolve issues for the lender for not only the losses they were taking with respect to the mortgage industry, but for other losses which they incurred as a result of the “betting” game per se. But let’s talk about the 40B that would have basically saved the mortgage industry or at least bought us some time.

    The mistake, I believe, was the direct result of tarp money, etc., being used to pay lenders, Fannie and Freddie, as they tried to pass through the full monthly payment to the investors. When the bottom fell out, this method could not be sustained and as a result, lenders found themselves trying to foreclose to cut their losses which only compounded the problem. Foreclose, foreclose and foreclose, they knew nothing else. And if they had to buy back the loans, as they are now being pressured to do, the lenders would have to payout trillions.

    Can you imagine how far the money would have gone if we had just kept the homeowner in the loop with him paying a portion of the payment and subsizing a portion? The money would have gone a lot further and perhaps so many people would been able to keep their homes and not have lost their jobs which added to the future failure of so many homeowners to make their payments. Profit sharing accounts would remain higher with little loss in value, so much could have been preserved. Here is what we needed to do.

    Partnership Subsidy Plan

    Lenders put up an agreggate amount of the $40B – for example five biggest banks would each put up $8B for the fund. Let the banks get together and pool their own funds, but take care of the homeower and stop the foreclosures: It has to be a lot cheaper this way than what they are doing now. Looks like everyone running around scratching their heads trying to do this and that and homeowners are being victimized the whole time this charade is going on.

    I agree that a partnership is needed. If a person’s payment is $1500 amonth and originally it was 1000 per month, then the partnership would pay the $500.00 per month (accrue this on a separate schedule) and the borrower would have paid his regular monthly payment of $1,000.00 Thus, the investors would have gotten their full $1500 per month. No complaints there. No reason for the investor to sue anyone except those that have already been harmed. At least this step would act in the capacity of a “blowerout” preventor, would it not. The homeowner stays in the pool until he is able to resolve his hardship or has successfully worked out an arrangement with the lender. The lender’s assigned servicer must pass a reasonableness test since they have proven in the past they had acted in such a way that they now own the title of “doing more harm and causing the meltdown than anyone”. The borrower would have had 3 years to resolve his issue and assuming that values would not have dropped to the extent they did, refinance options would be surely be available.

    Assume the person is in the plan for 3 years and that being the case, he would have accrued $500 per month @ 36 = $18,000 over that period of time. The bank in effect is putting something into the deal which offers the homeowner some justification. There are many options about what to do with the $18,000. The bank can then write off the note as payment in full or use various methods that will be fair to both homeowner and the lender.

    I have been in the business for some 45 years and have looked at different methods for resolving certain issues and that is why I think this would have worked and may still yet.

    Are the investors going to complain if they are getting their money for another five years?. No. modifcation mess would not even be an option to this plan. All that money and time wasted to date has been a disaster.

    A simple unsecured note signed by the homeowner would guarantee his $500 (or whatever the formula calls for) and shows good faith on the part of the homeowenr that he really wants to keep his home and is committed to do just that. It gives him time to make decisions about his financial situation and we don’t bring down the whole industry (which is what we did) while trying to find that resolution.

    As a mortgage person, it goes beyond anything heard of that we would allow the lender to subsidize the borrower’s payments. It just is not done but it needs to be done now and quickly and it is so easy because every servicer knows the exact circumstances of the borrower and providing them with instructions from Fannie and Freddie who would instruct all of their servicers to follow, would immediately start the cash flow to the investors, the liabilty would be resolved in part by the lenders and most importantly, people would remain in their homes and hopefully the job market (which was destroyed by the housing crisis) would improve.

    What concerns me is that Fannie and Freddie are so far down now that they are looking to the banks to pull them and that means Repurchase – for billions. The Administration rather than using a workable plan, has continued to fund them with taxpayer money, but they know too, it cannot be done. For the lenders, they need to aggregate the cost and the liability while assuring that the homeowner is taken care of and that includes the investor as well. Run the numbers and you will see, it is far cheaper for the banks to do this, saves the home for the homeowner and cash flows the system so that investors get paid.

    The money paid toward those accounts in 2008 and part of 2009 would have done so much to prevent this fiasco. Now that those notes that were signed several years ago have gone through the rate change and borrowers know what the tax liabiltiies will be, the money paid by the lender on this basis would have been far less than what the current situation in the way of by backs is going to produce for all lenders. The only open end question is: how will values on the properties be treated for those that were way over appraised. First of all, I believe that most of the loans were mainly situated in five states; therefore, this plan would certainly work for all other states and special circumstances to deal with the five that had the fraudulent appraisals, etc. for those homeowners.

    Whereby the homeowner already lost his home, then the lender will have to make amends through special settlement hopefully with the AG’s.

    I have not expressed all of the details of this plan but I do know that it could work as a bench mark as well as the other two, but needs those in the know to come forward and say what has to be done to make it work and to weigh and measure its potential to succeed in resolving the issue.

    The lenders need to put up the funds for the partnership=subsidy plan and that is just the way it is. Homeowners must also bear certain responsibility and be prepared to make the effort as I am sure the lender would require some kind of release. I know this can work. Make constructive criticisms. This plan is already in the hands of certain with an opportunity for me to revise. If you don’t like it for whatever reason as this is the people’s issue and that is what we must keep in mind.

    Such a plan, as with the other two, would result in the loan being a scheduled item for the bank until the borrower stops taking the subsidy. Why do we have to have such a complicated plan rather than something simple. Sometimes less money goes farther than too much money. I have seen this plan work to a degree back in the 80’s. No more servicer cost to deal with, legals fees and other costs our government has paid to assist lenders.

    That money needs to go to the Homeowner and the accrual money option can be worked out as to whom is holding that group of notes at the end of the 5 years. Much more about the plan, but cannot print it here but it is nothing more than procedural. KEEP IN MIND – THIS IS A SUGGESTION OPEN FOR DISCUSSION. DO NOT TAKE OFFENSE, BUT OFFER CONSTRUCTIVE CRITICISM. FOR SOME REASON, PEOPLE GO BANANAS WITHOUT THINKING IT THROUGH. IT DOES NOT MEAN THAT THEY ARE GOING TO DO IT, JUST A SUGGESTION SO EVERYONE WILL HAVE A SAY. I APOLOGIZE.

    Fannie and Freddie need money and the buy backs are how they will get it but they will get it with deep discounts. Then the taxpayers will end up picking up the final tab. I say no.

  56. @usedkarguy,

    I’m not sure it was on purpose or Freudian, but you spelled fraudulent…..fraudlent. I think that sums it up nicely. 🙂

  57. BORROWERS CAN’T DO ANYTHING INVESTORS HAVE ALL THE MONEY AND POWER, WE HAVE NOTHING BUT OURSELVES.

  58. what about the theory that NO ONE OWNS anything…how can these investors negotate something that is argued not to exist by proper asssignmetn to the trusts or transfer of the notes to the trust.

  59. E.T., origination fraud takes so many forms that it’s hard to put together five matching plaintiffs to constitute the racketeering cause. Asset statement, rate bumps, fee bumps, appraisal fraud, application fraud, it all ran unabated. Virtually all securitizations built on subprime (and prime NINJA’s, SASI’s, etc) are in violation fo the PSA’s. These loans were originated to service, not originated to LEND.

    Surely the incestuous relationship created with a Sponsor/Servicer/originator-owned securitization is a conflict of interest/anti-trust issue. Loan files reveal it was fraudlent. There have been many settlements that you DON’T know about; and many new actions that are being prepared. Add to the fact that law enforcement is nearly non-existent until the bubble blows up, it’s a natural that you’re screwed from the get-go.

  60. It may be starting……….

    FDIC Seeks $2.5B From Execs Of Failed Banks
    (From Law360, New York (January 5, 2011) — The Federal Deposit Insurance Corp. has announced that it authorized lawsuits against 109 directors and officers of failed banks through the end of 2010 in an attempt to claw back nearly $2.5 billion in funds allegedly lost to irresponsible loans.

    The FDIC launched suits against 56 of those directors and officers in the final three months of 2010 alone, mostly in district courts, the agency said in a monthly report…

  61. You’re all forgetting Camp 3, the millions of us that have originator fraud in the mortgage. Who speaks for us in these plans?

  62. Neil

    Of course this is the solution. But there are a few issues.

    1) The banks don’t want to resolve it this way. They loose servicing fees, and I believe there must be an econimic reason that they like foreclosures – even if they never get paid the fees (like – they offset these uncollected fees against profits maybe??)

    2) The lawyers who represent the investors want to first exhaust all paths for total loan buy backs. (and the lawyers for the trusts won’t get paid in a scenario where the bond holders work out the loans with borrowers).

    The one guy who could really provide impact is Talcott Franklin. He appears to have the most comprehensive data base of investors, matched by CUSIP’s (and therefore the pools, and therefore the borrowers).

    I’ve emailed him, and also David Grais, and both basically said they think it is a conflict of interest for them to help make this match.

    But they’re 100% wrong, in fact it is the best path to loan buy backs possible.

    Let’s assume there are two simple camps. 1) the camp of borrowers who had honest applications, really did a good faith borrow of money, and now are simply underwater. Well, there never will be a buy back on that loan, so the best possible outcome is as you say, a reset of some kind. Making the match between investor and borrower would accelerate that process, and bring liquidity and value back to the bonds themselves.

    Camp (2) is the very small group of borrowers that lied to get their loans. Making the match should include getting access to the complete loan file. Investors would be able to find issues with the file that the bank should have seen, and there they could have the information they need to force a buy back.

    The loosers in this plan? The people who lied. And frankly, I don’t care about them. AND – it’s a VERY small % of the loans out there. For the most part, we all took out loans against houses we thought were worth the money, and did not expect housing armegedon

  63. To follow up on what Simon indicates, what Niel is missing out of this picture is that in plenty of cases the original “investor” has already been burned, and his claims are either vacated by some “settlement” or are tenuous, limited only to holding a certificate in a trust that has no Notes in it.

    What has since happened? the “Notes” have been “flipped” by the “Bank” to some subsidiary of the “Bank,” e.g. “DLJ Mortgage Capital Inc” of Credit Suisse, and this sub-entity has paid little or nothing at all for the Note, so the “big bucks” comes from the foreclosure and the re-sale of the house. from that flows the big bucks for the big bonuses.

    It is rampant theft, of course, but the sub-entities controlled by the bank employees fully understand that the Courts have no cottoned on to this, so the risk profile (other than being hunted down and murdered by an outraged homeowner) is perceptibly zero. So they do, and will continue to do.

    And this greed, indeed criminal greed, is exactly why Neil’s plan meets with silence.

  64. There is one thing preventing this sensical solution: GREED

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