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EDITOR’S COMMENT: We’ve been saying here for 4 years that ultimately the ONLY way out of the economic crisis is to use real data and skip the ideology, blame and politics. Nocera, pouring over data accumulated by intensive analysis, states that the data proves this point and more. What we need are economic policies that are based upon reality. Since housing is the leader in any recovery for dozens of reasons — from direct jobs and commerce to psychological (confidence) — the ever-increasing bubble in housing inventories flooding the market and driving down prices must be popped.

The principal driver of new defaults is the futility of paying on a loan for property that will never be worth the amount of the loan — i.e., underwater property. The foreclosure crash is causing the number of housing units waiting for a market to buy them to increase at a rate that few would have predicted because of their closely held belief that the mortgages were, in the end, valid debts. Whether true or not, the only tool available to stem the tide and fix the problem is to change the amount due from borrowers.

Last night, Beau Biden, Attorney general of Delaware who sued MERS last week, cast doubt on that assumption along with other suits by other attorney Generals, the principal regulators of banks and many lawmakers. In Biden’s words, the recording system in this country was “privatized” and with that went any possibility of a reliable method for tracing title. Biden, son of Joe Biden, VP, states that at least 25% of all foreclosures occur with the wrong party initiating the foreclosure. He predicted that without correcting the problems created by the Banks we will be “talking about the same problems in 5, 10, 15 and 20 years.”

The real facts are leading inexorably to the question of whether some, many or even all of the loans claimed to be securitized — mortgage, credit cards, student, auto and other consumer loans — were ever perfected and specifically whether the paperwork matches up with the deal and the obligations of the parties (according to law) at the time the loan transaction was consummated. If we do what is right for the country the problem is fixed. If we do what the Banks want, we stay with the problem indefinitely with no prospects for recovery.

Analysts, economists and finance experts are now arriving at the same conclusion — along with the only tool available to stop the foreclosure crash. In order to fix the economy we need to fix what ails it — principally housing. In order to fix housing, as prices continue into their death spiral, we must stop the glut of “defaults” and foreclosures. If we don’t do it now, we are condemning future generations to a world of hurt. It isn’t about ideology, it’s about survival.

It no longer matters what rationale is advanced to correct principal balances claimed as due — we just need to do it. But a key factor that Nocera and Goodman miss is that the balances claimed are not the balances due. The balances have been reduced by actual payments received by the creditors and their agents and then hidden and booked as Bank assets or Bank profits, cheating both the investors and the borrowers.

In fact, we have repeatedly seen in the distribution reports for investors, the same loan that is declared in “default” has the payments made by the servicer under separate contracts never revealed to the borrower and obscured to the investor. While foreclosure on the “default” proceeds, the creditor continues to get paid on a loan reported as “performing.” Hence the default was declared without any factual basis. And the foreclosures were processed based upon a defective assumption of delinquency and default from the servicer’s perspective — but not from the creditor’s perspective.

While complex, this is not beyond the understanding of bankruptcy and probate courts that tend to take a close look at the loan’s status as perfected lien, priority of liens etc. The payment by the servicer decreases the principal amount due from the borrower and cures or eliminates the default because the creditor has been paid. Since the creditor has been paid it can no longer claim the balance that was due before receiving the servicer’s payment. The same holds true for other payments received by the creditor or its agents on insurance, credit default swaps and other contracts without rights of subrogation.

These third party payments do not decrease the overall obligation of the borrower but they change the character of the obligation. No longer secured by the note and mortgage (if they were ever valid or perfected) these third parties  have unsecured claims in the same amount as the amount of the reduction of the payments and principal alleged as due.

Just applying normal rules of accounting and law, part of the borrower’s obligation changes from secured to unsecured, with the secured portion decreased by the same amount that the unsecured portion is increased.

More importantly, the parties change from the creditor who advanced the money to fund the loan to a third party who has covered that obligation. Hence, a principal correction (or reduction, if you must call it that) with the investor-lender may not be nearly as great as the current estimates of 30%-50%.

In fact, in some cases, the investor lender may be entitled to money from the Banks received from third parties but remain hidden in an exotic accounting system, for which the auditing firms may have exposure for liability. The principal in such cases would need not be “reduced” or ‘corrected” by fiat, in such cases, it would be reduced by arithmetic. The result is the same for the homeowner — a much lower amount due reflecting true values that should have been reflected in the initial transaction but were hidden by an appraisal process that was corrupt. 

This is why the OCC Review process MUST take into account an accounting for all money received and disbursed in relation to both the loan and the pool claiming ownership of the loan — because regardless of whether the loan ever legally reached the pool, the money DID reach the pool.

By sticking to the facts and applying arithmetic and simple established law, the number of people who consider themselves underwater will change from millions to perhaps a small fraction of that amount, if any. The impending new defaults would be eliminated and the foreclosures that did or are taking place can be corrected, while avoiding future foreclosures. The number of homes on the market or headed to market would vanish, this allowing free market conditions to allow prices to go wherever the market deems fit between arms length buyers and sellers.

To Fix Housing, See the Data


In Miami recently, I met up with Laurie Goodman, a senior managing director of Amherst Securities. I’d been trying to meet her ever since I’d read an article that she had written in March entitled “The Case for Principal Reductions.” But our schedules never seemed to mesh. So when I noticed that we were both going to be at a conference in Miami, I wangled a breakfast appointment. It was one of the more illuminating breakfasts I’ve had in a while.

The idea of helping struggling homeowners by writing down some principal on their mortgages — as opposed to reducing the interest or reconfiguring the terms to lower the monthly payments — is much in the air right now. Banks loathe the idea of principal reduction; they fear that people who are current on their mortgages will start defaulting just to get their principal reduced. They also don’t want the hit to their balance sheets.

But the states’ attorneys general who sued over the robo-signing scandal have made principal reduction the central plank of the settlement they are close to completing. The settlement will force the big banks to begin a sustained program of principal reduction, and will heavily penalize banks that don’t comply. From what I hear, the goal of the states is to prove to the banks that principal reduction will not cause the sky to fall — and is, ultimately, less damaging to bank profits than foreclosures.

Housing activists love principal reduction because they tend to see it as a just solution to an unjust situation — it’s a way of making the banks pay a real price for their sins during the subprime madness while allowing people to keep their homes. Conservatives, on the other hand, hate principal reduction. They believe that borrowers who made poor decisions by taking out mortgages they could never afford have to take responsibility for those decisions. If that means foreclosure, so be it.

Enter Laurie Goodman. One of the country’s foremost authorities on mortgage-backed securities, she is also one of the most data-driven people I’ve ever met; at breakfast, she was constantly pointing me to one chart or another that backed up her claims. “She’s not into politics,” says my friend, and her client, Daniel Alpert of Westwood Capital. “She is using data to tell us the truth.”

Her truth begins with a shocking calculation: of the 55 million mortgages in America, more than 10 million are reasonably likely to default. That is a staggering number — and it is, in large part, because so many homes are worth so much less than the mortgage the homeowners are holding. That is, they’re underwater.

Her second calculation is that the supply of housing is going to drastically outstrip demand for the foreseeable future; she estimates that the glut of unneeded homes could get as high as 6.2 million over the next six years. The primary reason for this, she says, is that household formation has been very low in recent years, presumably because of the grim economy. (Young adults are living with their parents instead of moving into their own homes, etc.) What’s more, nearly 20 percent of current homeowners no longer qualify for a mortgage, as lending standards have tightened.

The implication is almost too awful to contemplate. As Goodman put it in testimony she recently gave before Congress, the supply/demand imbalance means that housing prices “are likely to decline further. This may recreate the housing death spiral — as lower housing prices mean more borrowers become underwater.” Which makes them more likely to default, which lowers prices further, and on and on.

The only way to stop the death spiral is through principal reduction. The reason is simple: “The data show that principal modifications work better” than other kinds of modifications, she says. Interest rate reductions can lower monthly payments, but the home remains just as underwater as it was before the modification. And the extent to which a home is underwater is the single best indicator of whether the homeowner will default. The only way to change the imbalance between the size of the mortgage and the value of the home is to reduce principal.

Will widespread principal reduction cause homeowners to purposely default on their mortgages? Goodman has some ideas about how to reduce that likelihood, but she is also realistic: “A borrower will make a decision to default if it is in his or her best interest.”

One wishes that the country could make economic decisions that are in its best interest, decisions that use Laurie Goodman’s data-driven approach instead of being motivated by ideology. Goodman’s case for principal reduction is powerful precisely because it is not about just or unjust, or who’s to blame and who’s at fault.

It is about cold, hard economics. Three years after the bursting of the subprime bubble, principal reduction isn’t just a nice-sounding way to help homeowners. It is our only hope of finally ending the housing crisis.

43 Responses

  1. […] SEE data-irrefutable-principal-correction-reduction-is-the-only-way-out […]

  2. by no hedge i believe the writer is referring to the fact the investment bankers needed suckers to “bet” that interest rates would not rise on ARMs —and so in ignorance became counterparties to bets that the rates would rise—and the investment bankers controlled the fed reserve[ this is not conspiracy theory–that is in fact the structure] so it was a pretty safe bet and the lender investors really were engaging in loan deals that were unconscionable as another writer put it in legal terms of art—not intended to be beneficial to the borrower–lousy unenforceable contracts

  3. @boots
    have you laid out an order to actually effect a quiet title?

  4. no, i am not an attorney. i am representing myself. pro per.
    i am not offended at all. this blog is for sharing knowledge and i learned a lot from neil and from the bloggers. but i have to admit, my days are spend for research about different foreclosure cases. i read a lot about court cases and court decision and learned to know the procedural aspect of each court cases. reading and researching is all what i’m doing everyday. its fun but i have to admit it was overwhelming. its very challenging.

  5. very sadly–its hard to conclude otherwise—if they are going to keep on stealing every thing they can lay hands on from larger and larger groups—-what are we buying but a death by a thousand cuts–let it collapse and see if a shiny Phoenix does not rise from the ashes–after every existing representative of an INvestment bank is permamenently barred from financial businesses–and their assets seized–

  6. @ boots —-no offense intended either way–but are you an atty?

  7. @dcb, you are correct that Quite title is not a cause of action but instead a remedy.

    in my fraud case, i rather not discuss it fully at this time while waiting for defendants to answer the complaint.

  8. @ marie,
    marie, i filed an opposition to defendants demurrer and the judge overruled the demurrer. i also opposed the judicial notice that defendants wants the court to considered. in regards to tender it was not part of their demurrer because in tender you could plead that in wrongful foreclosure and wrongful foreclosure action has been sustained without leave to amend.

    marie, when you plead wrongful foreclosure, you have to offer tender and how that tender be distributed like for example while the case is pending you offer tender in this amount to be put in third party such as escrow or tile co. to protect both of you and the defendants interest in the property while the case is pending. at the same time you plead that the entities who are foreclosing your property has no standing to foreclose and has no evidence to proved that they are the real party in interest. this tender rule that the lender are using is only a bluff for the homeowners. believe me once you plead that the pretender lenders will not challenge that in their demurrer or will never discussed it. but sometimes they will mentioned that in their demurrer but i would counter them that on pg. such so and so of my complaint i offer tender. it is a bluff because we know pretty well that these entities are a debt collectors and they have no money to put up even a bond. remember these third party debt collectors are only using the names of the banks such as deutsch bank,b of a , wells fargo, gmac, ahmsi and many more.

    I wish i could help more.

  9. @ALL
    I know people are not gonna want to hear this, but for many–it would seem that the servicers just picked up a new defense –failure to exhaust administrative remedies—–has any one looked really hard at the fine print of the OCC rules to determine if the process supplants state law –or will the judges simply kick over there as a matter of judicial deference to collateral federal relief procedures????

    As for BOOTS below;
    Fraud is a tough proof–intent—although in civil action the intent may be found based on a prepondernance rather than beyond a reasonable doubt. If you havent got it based on insider testimony—you are gonna see some difficulty getting it out of discovery unless you already know who did what when–and you are just documenting what you already know by leaks.

    Also–and id like comments on this pls—is not Quiet Title a remedy rather than a cause of action? Or am i splitting hairs–it is a matter of some significance I think???

    boots, on November 6, 2011 at 10:50 am said:
    @carrie, cause of Action : Fraud in regards to Loan Modification promise. the other cause of action, quite title, wrongful foreclosure, ca rosenthal act were sustained without leave to amend with other defendants t.d., mers, power default, but i could still appeal that decision in appellate curt if i received the final judgment of that dismissal.

    in the meantime, i will just wait for the 2 defendants to answer my complaint for Fraud but i think it is a mandatory to go on mediation, if no settlement occur then we could proceeds to discovery and then jury trial. my thinking is that i want a jury to hear my case. i really don’t want to settle the case and shut off my mouth and it sounds like i am not helping the homeowners esp. the pro-se’s who struggle hard to expose this

  10. @marie

    did you notice the ruling in favor of FHA that ahmsi is not the owner of the loans [ie the insured lender] nor the owner of the foreclosed properties—-and cannot get FHA to pay over mortgage insurance–im curious why ahmsi did not submit letters of authority from the trustees that are the supposed –nominal lenders [on behalf of trusts] ? ? it seems like this is a significant point vis jurisdiction generally although perhaps not controlling-

  11. boots—how do you get past the” tender rule”???

  12. @marie,

    i’m in ca a non-judicial states.

  13. Boots.

    I have Ahmsi and deutsche. What state ate you in? Nonjudicial?

  14. Does anyone know how long it generally takes for a federal judge to rule regarding the defendant 12(b) motion.

  15. @carrie, cause of Action : Fraud in regards to Loan Modification promise. the other cause of action, quite title, wrongful foreclosure, ca rosenthal act were sustained without leave to amend with other defendants t.d., mers, power default, but i could still appeal that decision in appellate curt if i received the final judgment of that dismissal.

    in the meantime, i will just wait for the 2 defendants to answer my complaint for Fraud but i think it is a mandatory to go on mediation, if no settlement occur then we could proceeds to discovery and then jury trial. my thinking is that i want a jury to hear my case. i really don’t want to settle the case and shut off my mouth and it sounds like i am not helping the homeowners esp. the pro-se’s who struggle hard to expose this fraud.

  16. @boots

    What is your complaint and cause of action?


  17. you are baying at the moon—-all this is recycled about 1000 times—–anon–you know this as an old timer here———–yes certainly these are philosophically and intellectually correct–but short of overthrowing the govt–its not happening between now and april 30 2012 which is tthe deadline for filing the claims–and albeit it may turn out to be another hamp feel good –its all we have right now–11/11 is vet day—-despite my pain and your pain–these guys got it worse—wost of all –easy proof of damages–easy proof of injured classes–but im searching papers and see nothing–its a right w/o a remedy—it is incumbent on those of you who understand this to get a handle and toss some support in theirt direction in some manner–step down off the soapboxes for a couple months and figure out how to get the victims that are out of possession —a small piece of their losses back

    there will be masss waivers here unless this happens–there needs to be outreach to press by people who can explain damages and entitlements to claim procedures

    the owls have numbers and can help fill out claims this winter when its too cold to do street protests–and every vet aided becomes their ally and yours–this is an opportunity to pull together masses of victims—what to do after they are pulled together i do not know at this point–but we must overcome the divide and conquer effort

  18. […] SEE data-irrefutable-principal-correction-reduction-is-the-only-way-out […]

  19. @TMT.

    this is an important line in the zero hedge article you post which articulates what I am saying much better. Here is the line:

    “But there were two intrinsic flaws in the skimming operation: while the Wall Street players were hedged (or so they reckoned), the average Americans buying homes with near-infinite leverage were not hedged.”

    And I might add, even if the home buyer put down 20%, he is still not hedged.

    The whole money game system by the Federal Reserve is a one way hedge.

  20. […] SEE data-irrefutable-principal-correction-reduction-is-the-only-way-out […]

  21. The Collapse Of Our Corrupt, Predatory, Pathological Financial System Is Necessary And Positive

  22. I fully second Anonymous in opening all Fannie/Freddie records. They have been closed to scrutiny and everyone needs to know how much we have, thus far, paid for with our tax dollars.

    My position is that we all paid forward, the minute we allowed taxes to pay for banks bailout and obscene bonuses. Let the banks actually prove what they were paid for and/or ask them to reimburse what they can’t document.

    Let’s go after those bonuses. Incidentally, we were told they HAD to be paid because of pre-existing contracts that couldn’t be broken. 3 years down the road, I still have problems with that. In fact, I’ve had a lot more problems with it since we learned of the fraud committed over 6 or 7 years. Contracts between homeowners and lenders and between servicers and investors long pre-existed any bonus promises. They should have precedence. We need to get back all our money.

    Straight and simple.

  23. fact or fiction?

  24. the film echoed contemporary fears of a declining economy, within a culture of greed and conspicuous consumption common among Americans in the 1980s. In They Live, the ruling class within the moneyed elite are in fact aliens managing human social affairs through the use of a signal on top of the TV broadcast that is concealing their appearance and subliminal messages in mass media.

  25. You need to put the sunglasses——————

    it’s the quantity of money that banks control via loans, and the federal reservse controls via loans, like duh, the federal reserve controls interest rates, that means borrowing………….that means lower interest rates to get you to borrow, or raise rates to get you to not borrow,,,,,,,,,,,,,why are interest rates still so low on home mortgages…………..?

    Put on the god damn sunglasses………………

  26. @Anonymous,

    you said

    “Who is preventing access to records??? And, to boot — doing nothing to help to the victims??? All are aware of the fraud — at multiple levels of government. But, only one has the real power to say no more — Mr. President. But, he refuses — and why?? He need those bank/debt buyer campaign donations for 2012 election.”


    and you said-

    “the effect of THAT fraud upon numerous Americans and the economy.


    Well, I tell you, the actual fraud is this, we have a debt based monetary system. Which means debt is money. Debt equals money. There is no money unless a debt is created or a loan is taken out by somebody. The fraud you are actually talking about has occurred since 1913 when the Government gave up the power to coin money and the value thereof to the Federal reserve System of Banks. Except coining money was converted debt money, hidden. While the Government still coins money, it is small compared to the debt dollars in circulation.

    You cannot solve any problem in our current system until you give back the banking function to the government.

    Until you understand how money is actually created, you will never understand nor will anybody else. You must read web of debt, research Ben Still, research how money is created………..

    Why is every country that has a central bank in trouble with their debt? Why does a country have to go into debt to borrow money when it can create money? All countries created their money at some point in time, they created the yen, the british pound, the us dollar, the ruble, and so on. Who convinced these countries to get involved with central banking and who runs central banking in all these countries? How are those central banks connected? How come our federal reserve lends to another countries central bank? It’s all BS and all run by banks and all run and designed to get people to pay taxes and to pay interest on something called money which is created from book keeping entry and not lent at all. But it is designed to get you to think you borrowed, when in fact it is all IOU’s and collateral. It is all a control mechanism.

    Today was move your money day from big banks to local credit unions………………I watched Neil C, on Fox interview some lady who has a website and promoting the move, but Neil Cavuto grilled the woman. What a scam Neil is as well. Ever look at the commercials for Fox News on TV. It’s credit cards, and financial institutions like fidelity investments………..

  27. to all,

    i have a good news to all pro se, the defendants AHMSI and Deutsche bank as trustee for xxxxxxxxx trust demurrer was overruled and the defendants have 14 days to answer my complaint. the remaining defendants MERs and power default were sustained without leave to amend. ahmsi and deutsche bank are the only surviving defendants with my Fraud claim in one cause of action.

    FRaud is the only action thats survive against the defendants hopefully, by early 2012, we could conduct full discovery and i have a HOLY GRAIL evidence against these defendants. our case management was postpone until dec. 30 2011 instead of nov. 18.

    this is all for now.

  28. There has not been one reasonable solution out there to stop the flood of fraudulent foreclosures. Mr. Beau Biden is great —- but, “25% of all foreclosures occur with the wrong party initiating the foreclosure” — is a gross understatement. .

    The first place to start to address the foreclosure fraud is by opening up all Fannie/Freddie records to authorities. Not just for current Fannie/Freddie loans — but for PAST Fannie/Freddie loans. The records exist. Only then will the true nature of subprime mortgage fraud be exposed —- and, the effect of THAT fraud upon numerous Americans and the economy.

    Regulation (or lack there of) and investigation (or lack there of) — is the primary reason fraudulent foreclosures continue. If borrowers had access to these records — would be a slam dunk in courts.

    Who is preventing access to records??? And, to boot — doing nothing to help to the victims??? All are aware of the fraud — at multiple levels of government. But, only one has the real power to say no more — Mr. President. But, he refuses — and why?? He need those bank/debt buyer campaign donations for 2012 election.

    Neil is right — principal reduction is the only solution. But, how does the administration “save face” for all the fraudulent foreclosures that have already gone through????

    As Linda stated —- $178.00 is supposed to provide restitution??? These peoples lives have been destroyed — and they will likely NEVER recover. And, the perpetrators??? Still walking free — still amongst us trying to scam some more. Where is the peoples voice???

    STOP BUYING. The only thing that is really preventing the government from doing SOMETHING — is that the economy is still slowing “ticking” along — and stock market does not have a clue as to the real economy. Once consumption STOPS — the economy is finished — the only solution is to then save the housing market — and its victims. But, as long as we love our dinners out — and continue to purchase — government thinks all is okey-dokey—

    In reality — it is only okey -dokey for those who are already wealthy. Everyone — each time you spend — you support the wealthy — who have earned their wealth — on your back.

    This is not to criticize the wealthy — they have a right to their wealth. BUT, they do not a have a right to wealth by fraud– UPON YO U.

    And each penny we spend — allows government to think all will naturally correct — go back to what it was. We cannot go back to fraud — we must FIX the fraud. There MUST be restitution.

    NEVER AGAIN —- (thank you — The A Man).

    SAVE YOUR PENNIES — every possible way you can. STOP allowing “investors” to cheer your spending. Your spending has hindered a real mortgage fraud investigation.

    We are a least 25% —– we can cause another rescission — and believe it or not — THAT is in your best interest.

  29. In an old court of equity the double recovery would be taken into account –especially if the counterparty that paid the loss-is a pension trust—so the average Joe on the street takes it on both ends–double recovery is inequitable and encourages fraud–it is against public policy for that reason–the house should revert to the state by escheat–not a free housethough–that doesnt work either.

  30. >Okay all, the President is asking for help…this is your opportunity to demand that he issue an executive order to make principle corrections for ALL homeowners to current market value with an automatic transfer to a 30 year fixed loan at 3% regardless of a prior bogus modification or being forced into bankrupcty…and no money down, no approval process. Let’s see how many people walk away then!<

    This methodology is not fair to those who have paid on loans for 10-15 years and have lost considerable equity due to job loss, medical emergencies, etc.

    To be more equitable, a total forensic audit must be done to determine how much has been paid towards the "debt" which could/should have been used to reduce the principal of the "original note."

    Then, an property appraisal analysis should be done to determine what percent loss has been incurred in the "fair market value" of the neighborhood where the home is.

    Finally, the "lender of standing" should make a signed offer to refinance a new note with the principal equal to the original principal amount less the loss of "fair market value" adjusted to reflect credit fo the actual homeowner payments.

    The only remaining terms to negotiate should be the time for repayment and current interest rates for fixed mortages.

    No "variable" interest schemes should be allowed. The 3-4% interest rate suggested sounds fair to me. The term of repayment and escrow arrangements for insurance and taxes should be decided by the borrower.

    The borrower should retain the right to sue for other losses incurred by the abuses of the lender and/or the lender's mortgage servicer. Punitive penatlies should be allowed to mitigate against a repeat of the behavior of the banks involved.

  31. Okay all, the President is asking for help…this is your opportunity to demand that he issue an executive order to make principle corrections for ALL homeowners to current market value with an automatic transfer to a 30 year fixed loan at 3% regardless of a prior bogus modification or being forced into bankrupcty…and no money down, no approval process. Let’s see how many people walk away then!

    This will open up jobs from those who are working 2 or 3 jobs to stay in their home.

    The link is

  32. […] Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: Amherst Securities, bankruptcy, borrower, countrywide, Daniel Alpert, defaults, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, housing prices, investor recovery, Laurie Goodman, LOAN MODIFICATION, modification, OCC REVIEW, PRINCIPAL CORRECTIONS, principal reduction, quiet title, rescission, RESPA, securitization, The Case for Principal Reductions., third party payments, TILA audit, trustee, underwater, WEISBAND Livinglies’s Weblog […]

  33. @Carie,

    My lawsuit is a typical Tila, Respa, and unjust enrichment/conversion federal action againt the last servicer for having failed to apply several payments to my account, added late fees I didn’t owe, added fees that weren’t listed nor explained, etc. It is completely documented with all the receipts for payments I made at the branch of the bank, date stamped and on time, payments I made in excess of the minimum but the difference of which was never applied to my principal, evidence that they pocketed my money, etc. The bank originally “offered” to modify but I refused, stating that they didn’t have that power and authority since the transfer had never been effected nor recorded and they couldn’t prove they owned anything.

    I wish I could give you more info but I’m a little concerned about giving too much and there is a pending court order not to discuss anything. That’s part of the reasons why I absolutely want to go all the way to trial: I resent having to keep my mouth shut and i sure as hell want to be able to talk later on when the case is over. If I ever agree to settle, I know that it will be conditional to a confidentiality agreement and I’ll be damned if I ever agree to it.

    The thing I’ve said from the very beginning stands: if you follow the money, you’re on a much more solid ground and you can then argue a lot more than if you stay vague and on the defensive. It hasn’t been thrown out by the judge and the bank had to admit, in view of my evidence, that my money couldn’t be accounted for. That’s what you want: get past the initial motion to dismiss. And the only way to accomplish that is by following the buck. Judges don’t like to see homeowners who played by the rules being screwed by sloppy accounting from banks. When they see that, they are much more willing to listen to everything else you have to say. Because the thing is: I found the accounting screw ups first. I then investigated the transfer/assignment (non-existing), I questioned the servicer about the accounting and about standing in a QWR, I got ignored, so I stopped paying and then, I attacked. There is a rationale behind everyone of my actions. That’s what you want to convey: a rationale and not a simple refusal to pay for the hell of it.

    The good thing about attacking first is that, of a non-judicial case, you’ve turned it into a judicial case.

    I hope that helps a little.

    Good luck.

  34. @enraged

    Can you say exactly how you worded your servicer lawsuit? Thanks…I’m meeting with a lawyer on Monday.

  35. @Alessandro,

    The interest reduction hasn’t been the solution since the banks completely ruined our entire economy and caused 16% unemployment nationwide (officially 9.6% but so many people have stopped looking that they aren’t counted any longer). 3 years ago, it might have helped. Nowadays, it won’t.

    My income was slashed by 46%. I work the same hours as before. The thing is: people pay half the amount they used to for the same service. So, no: interest reduction won’t cut it anymore. For me to get to 31% means lower interest rate + principal reduction. Further, the contracts have to be completely rewritten from scratch since the parties are not the proper ones to grant or deny a modification/reduction/etc. I wouldn’t even know whom to pay… and on what basis.

    I know that I won’t negotiate anything with anyone until satisfied that i am negotiating with the proper party. Funny though how the “proper party” isn’t filing for foreclosure even though i stopped paying the servicer and sued him 2 years ago…

    Now, if people get pissed at me because they keep paying and I stopped, they can always do as I did: stop paying, get the full accounting of their loan, find out who doesn’t have any vested interest in it and sue to get back everything they paid from day one to the wrong entity because they were given the wrong information (Carie knows all about it). However people “feel” about homeowners who stop paying is completely irrelevant: we are not the culprits. They ought to direct their anger against the banks, where it belongs.

  36. Over the course of a 30 mortgage, the amount paid out in interest is usually equal to or greater than the actual principle. Maybe the compromise is to greatly reduce the interest rates on upside down loans.

    The result would be similar but then we wouldn’t have a third of the population angry thinking that others got something for free. If people pay back what they owe, they can’t be accused of getting something for nothing or gaming the system.

    If interest rate reductions achieve this goal, then it’s just the ultra rich who will make less money, for a change.

  37. The bottom line is—most of the “housing debt” out there is MASQUERADING as a “mortgage”.
    This has been ESTABLISHED.
    But the government and the banks and Wall Street are continuing to deny this fact and are continuing to cover it up…because they have been able to get away with it.
    Do you want to keep paying or not…it’s your choice.
    If someone told me I signed a fraudulent contract—and you have a choice to keep paying on the fraudulent contract or not…I would say “NOT”.

    And, by the way, PAT—you have no idea nor is it any of your business what homeowners did with the money they thought they legally got out of their house. If they LEGALLY got it out of their house and they LEGALLY are foreclosed on—FINE.
    But that’s NOT WHAT HAPPENED OR IS HAPPENING…and you know it.

    If I took money out of my house just to survive and take care of my kids because my husband was so ill that he couldn’t provide—well, that’s none of your business, is it?

    Guess what Wall Street and the Banksters used all the money they stole from America for:

    MATERIALISTIC CRAP. They bought CRAP. CRAP that they can’t take with them.

    At least I have love. They ultimately will have NOTHING.

    Nothing but their graves…and an eternity in hell.

  38. @angry,

    I know. That was a rethorical question… But it really kills me that our own president used that same line for three years in order to justify his failure to act. He wasn’t going to “help investors”. How many people do you know who can park their butt in several houses at the same time? I don’t know anyone. And yet, that’s how we have been portrayed all along.


  39. PRINCIPAL CORRECTION – i do agree tho- it makes no sense to pay for something WAAAAAAY over priced and more importantly over priced item is also financed so that you cannot EVER pay off!!

  40. Enraged
    it very simple.
    Party-1= who is suspicious of [Party-2]another’s wrongdoing inadvertently reveals what THEY [party-1] WOULD DO IN THE SAME SITUATION.
    Thus [party-1] can only draw a conclusion from what they[party-1]
    knows or relies on as a fact-
    party-1 would default given the same situation – because party-1 is a piece of shit- that is what that smell is!

  41. Why is everyone always assuming that individual homeowners are as sleazy and dishonest as banks?

    No, homeowners will not default for the hell of it. Homeowners will default only in order to reset home prices at the level they need to be in order to make sense and sustain the economy. Banks had they heydays screwing with home values, overinflating them and making money hand over fist.

    Now, it is homeowners’ time to set the prices they can afford to pay so that:
    1) They can afford to keep a roof over their heads. Hard to do when everything was taken away from them, including their jobs.
    2) They can still put food on their plates and that of their kids
    3) They can purchase gas to put in the car they use in order to go to job interviews or to their part-time jobs with no benefits, no health insurance, no pension plan, nothing but a measly $12 hourly wage
    4) They can take care of their teeth (try finding work with your two front teeth missing!), their health, their eyes without going brankrupt.

    Yep, banks made sure that homeowners would only be able to afford the roof over their heads and nothing more. It was THE main payment they had to make. Now, homeoweners will find themselves in the driver’s seat and will decide that, until health insurance is available to everyone and transportation is not a luxury, a mortgage shall not and cannot exceed the proverbial 31% of their wages. For centuries, that was the rule. Let’s get back to basics.

  42. Could the banks legally write down the principals,without owned the notes ?One of the big issue in this fraudclosures crisis is that they are taking home that they don’t own it.

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