Obama Still Has it Wrong

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Editor’s Comment: The only thing I would add to this article is the LAW. The law is that the responsibility for the viability of a mortgage is that of the lender, not the borrower, and that is simply because these transactions are so complex that only a lender with superior knowledge could properly evaluate the prospects for a loan. Legally, the borrower is entitled to rely upon and must abide by the decision of the loan underwriter. But in this case the loan underwriter was not underwriting. It was selling.

And THAT is why a forensic loan analysis emphasizing TILA compliance is so important will become more important as more information surfaces each week about the depth of the false declarations, false authority and outright fraud and forgery committed by the banks and servicers for their own benefit, to the detriment of both the investors who advanced funds into a black hole, and homeowners who put their entire future at the mercy of “fiduciaries” who were out for one thing — the signature of the borrower . They were willing to say and do anything to get it and they did exactly that.

Remember that in Florida alone, an army of 10,000 felons convicted of economic crimes was recruited as loan brokers or originators to pull the wool over the eyes of these naive borrowers. 60 Minutes ran an expose on how these sales people lied, mislead, and used every trick they could imagine to pressure the borrower into taking these loans.

In some cases, we have seen that the loan originator, hungry for his commission would appear at the doorstep the of the prospective borrower at midnight, demanding that they sign immediately. A significant percentage of these deals were foisted upon homeowners who had substantial equity or even homes with no encumbrance at all. Obama is wrong.

by Alan Jenkins, obamas-wrong-note-foreclosures

As Election Day nears, President Obama is regaining his populist mojo. His State of the Union speech was mostly pitch perfect, evoking core American themes of opportunity and optimism, and calling for “an economy where everyone gets a fair shot, and everyone does their fair share, and everyone plays by the same set of rules.”

But the President has repeatedly hit a wrong note in talking about the foreclosure crisis. Not only is his story inaccurate, but he is promoting a harmful narrative that will make it harder to fix the problem.

The President said in his State of the Union address that “we’ve all paid the price for lenders who sold mortgages to people who couldn’t afford them and buyers who knew they couldn’t afford them.” He repeated that theme a week later at a speech in Falls Church, VA, contending that people who did the “right and the responsible thing” were hurt by “lenders who sold loans to people who they knew couldn’t afford the mortgages; and buyers who bought homes they knew they couldn’t afford; and banks that packaged those mortgages up and traded them to reap phantom profits, knowing that they were building a house of cards.”

According to the President’s narrative, then, large numbers of Americans who are struggling beneath unsustainable mortgages willfully chose that fate and deserve roughly equal blame as do the lending and financial giants who cooked up the subprime scheme, targeted vulnerable communities, engaged in deceptive and discriminatory practices, chopped up and distributed faulty loans, and forced fraudulent foreclosures. A different class of “innocent, hard-working” people are the only ones paying the price in this narrative.

Let’s be clear. The foreclosure crisis was caused by reckless misconduct by the lending and financial industries, inadequate rules and enforcement, and staggering long-term unemployment. America’s long history of overwhelmingly successful homeownership went to pot because regulators looked the other way and unscrupulous corporations took advantage, not because working Americans suddenly became wildly irresponsible. Indeed, conscientious lenders like Self-Help Credit Union in North Carolina successfully made loans to the same group of working Americans over the same period with negligible default rates.

Am I saying that no American homeowner ever applied for a mortgage without a realistic plan to repay it?  Of course not. A key purpose of proper underwriting standards and regulations is to help lenders and buyers determine what’s mutually sustainable. But to divide American homeowners into “responsible” ones who’ve managed to stay current on their payments and supposedly “irresponsible” ones who’ve fallen behind is inaccurate and harmful.

After confessing that he and the First Lady—two Harvard-trained lawyers—had trouble deciphering their own first mortgage, the President has nonetheless failed to convey how many Americans were victimized by deceptive and predatory practices; how many families sacrificed all to pay the mortgage after one or both parents lost a job; and how many people facing foreclosure today would be successful homeowners if fair rules and vigilant regulators had been in place. He also leaves out how much each of us benefits when we help our neighbors avoid foreclosure, even if we’ve personally managed to stay current on our own mortgages.

The President’s flawed story erodes the public will to aid struggling homeowners and bolsters those who say that the foreclosure crisis should be allowed to “run its course”—why rally to help people you’ve told us are irresponsible? Yet, without a more ambitious policy agenda than we have now, we’ll see millions more Americans lose their economic security, families uprooted from schools and communities, senior citizens thrown into uncertainty or destitution, and the economy in continued chaos.

The President’s current story is also deepening the feelings of shame that keep too many Americans from seeking the advice that could help them save their homes or, at least, make a successful transition. Housing counselors say the stigma attached to foreclosure keeps many people in the shadows instead of accessing the services that exist. It doesn’t help when the Commander in Chief labels them irresponsible.

It’s time for a new, accurate story about homeownership, opportunity, and the American Dream. It’s a story that places blame where it belongs while recognizing that we each have economic and moral responsibilities. It’s a story about the solutions to the crisis that exist, including many that the Administration can take without any action from Congress. And it’s a story about why, in this crisis as in so many others, we are all in it together. As communicator-in-chief, the President should take the lead in telling that story.

22 Responses

  1. All of you who are seeing this should be aware, the “50 state” $25 Billion “settlement” is now a done deal & will be announced tomorrow. We should commemorate 2/9/12 as the day the rule of law officially ended in America, since property rights no longer exist.
    Russ Susskind’s book “Confidence Men” (which I recently read) includes some very revealing inside info on the Obama WH, including Obama’s take on unemployment. Staffers were shocked to hear his view that the high unemployment rate was due to company productivity and was “natural”. Not much the government can do about it. He also appointed the same people who caused the problems (Goldman, Chase, et al).
    I really think he has no concept of what’s going on. Either that or (1) he doesn’t care, or (2) The neo-cons who stole the election in 2000 are still in charge and he just a figurehead.

  2. WE THE PEOPLE must demand accountability from our government. This may sound trite, but unless we do in increasing numbers, the three-card monty game will continue, and the cop on the corner will continue to get paid off (as was so well said on Yves Smith’s webpages).

    Sadly, WE THE PEOPLE cannot rely on our elected leaders and their appointees. The only concern they have is that WE THE PEOPLE re-elect them so the shenanigans can keep on rolling.

    WE THE PEOPLE want to know and demand to know ALL of the facts, ALL of the misfeasance, malfeasance and fraud. WE THE PEOPLE further demand that the criminal and derelict actions be punished, and example made of and a clear message be sent that these avaricious and heinous behaviors that damaged American citizens, American investors, any and all harmed, that this course of dealing is reprehensible.

    To think what actors like Angelo Mozilo, Dick Fuld, Hank Paulson and scores of others before and presently have done to our economy, our rule of law and to WE THE PEOPLE and our families and individual wealth, that they are seeking this shield, this HALL PASS is beyond the palest of pale and a disgrace to our great country, our laws and faith and trust.

    If any of WE THE PEOPLE break a law, deceive for gain, forge signatures, we rightly are vigorously prosecuted and jailed and fined. How cannot it not be true or even more reprehensible that individuals in the public trust, with more responsibility are not so vigorously held to account?

    State AG’s remember this as you go forward in your discussions. Think of your legacy. Remember WE THE PEOPLE and for your sake, your state and WE THE PEOPLE, do not let them get away with this.

  3. The A Man

    I am not a Democrat or Republican either, but you make an important point. Is Santorum a viable choice?. We have no choice in Obama and Romney.

  4. @neidermeyer

    Good point; I didn’t think it through all the way! They all may have gotten a surprise with Santorum’s three recent wins. I don’t agree with him on some issues but I’m not sure he can be bought as easily as the others. He is very committed to his faith and I think who you see is pretty much who he is. I don’t know that having to take an oath behind the scenes of dishonesty and psychopathic lying to US citizens would go over well with him. I know I’ll get flack here for this comment, but I would rather see him then Barack, Newt or Mitt. Hey, at least Rick is a regular common name. The other three could be a new cartoon show:)
    No offense meant to anyone here with an uncommon name. I was just kidding!

  5. Oops, sorry I should have posted my comment to the Yves article discussion. Please excuse me.

  6. Reuters reported this morning that Oklahoma officially declined the settlement as well.

    Oklahoma is on a roll. This rejection of bank immunity combines with three Oklahoma Supreme Court decisions that effectively shot out the servicers’ fake knees for standing. An Oklahoma pro se litigant, in Dec. 2010, had the first appeal breakthrough on the issue of lack of standing after the foreclosure “clerical errors” became widely known. Then last month, two more cases followed the path this pro se litigant cut.

    Hmmm, now that puts a kink in their chain.

  7. @Katheryn ,

    Wall Street may be funding Romney but you have it wrong in that they see him as a “better cohort” ,, they see it as a win win for them ,, if they can drag Romney over the finish line and make him the republican candidate then Obama odds of winning are huge … if Romney somehow wins then they own him.

  8. I see it more and more , Civil War – who would have ever thought we would see our country come to this , this is why the police are always recruiting and the NDAA was passed , now that we KNOW the truth , they will just toss us into a camp , we will be in the same league as Bin Laden . I do not claim to be in either party anymore , I am an American , doesn’t that mean anything at all ?

  9. Amen Neil. I think this statement released a few hours ago says it all:

    http://www.loansafe.org/attorney-general-koster-makes-announcment-for-his-support-for-proposed-multistate-settlement-with-mortgage-servicing-industry#comment-333180

    “My intention is to settle this portion of the state’s case against the banks,” Koster said, “returning more than a hundred million dollars directly to mortgage holders in our state and adding tens of millions of dollars to the state’s general revenue fund in these difficult economic times.”

    So, on the backs of 36 million+, devastated and financially ruined folks (12-15 million past and eminent future foreclosures x 2.8 per household), the states are going to replenish the general funds lost in bad trust fund investments (Wall Street’s fraudulent securities heist) and leave it to the Banksters to do what is right for its constituents? Yeah, sounds like an amicable plan or escape route.

  10. From Yves Smith’s door to yours… As usual, she calls it like it is. Those women are amazing! What did Aragon, the poet, write again? Oh yes: “Woman is man’s future”.

    Wednesday, February 8, 2012
    Mortgage Settlement Wrangling Continues, Banks Balking at Schneiderman MERS Suit

    The Administration, through the nominal head of the bank settlement negotiations, Iowa attorney general Tom Miller, has moved its final deadline for a deal yet again, this time to Thursday.

    One event of the day was a non-event. New York AG Eric Schneiderman has scheduled a conference call to the media on the settlement for 6 PM, then postponed it indefinitely 10 minutes before the scheduled time. One can presume that whatever he had intended to say was rendered moot by events…but what events? The only thing one can infer is that he is presumably still negotiating. Per Reuters (hat tip Lambert):

    Last Friday New York filed a lawsuit that conflicted with part of the settlement. His office has been in discussions with bank lawyers to move forward with both the lawsuit and the settlement, according to two other sources familiar with the matter.

    According to another person familiar with Schneiderman’s thinking, the tenuous nature of the talks caused the postponement. Schneiderman still is a holdout, that person said.

    So, reading between the lines, it looks as if Schneiderman saw his MERS lawsuit as not inconsistent with the settlement (remember, Delaware and Massachusetts both have filed MERS suits, and the Massachusetts suit targets the five biggest servicers along with MERS) and the banks begged to differ. This is consistent with the report by Loren Berlin in Huffington Post:

    Bank executives argue that New York attorney general Eric Schneiderman is using the lawsuit to go after claims already covered under the settlement, said the source.

    But perhaps the biggest news was that Florida is now among the states not yet signed up. This is pretty surprising, given that Republican AG Pam Bondi had the nerve to hector California’s Kamala Harris last week for not joining the settlement. Although some reports indicated that Florida had gotten a sweetened deal, the HuffPo story says she wants a side deal, which is what California would get.

    So far, the states that are listed as not yet agreeing to the settlement are California, Florida, New York, Nevada, Delaware, Arizona, and Massachusetts. The bad thing about this list, from the officialdom’s perspective, is that it includes the states that were the epicenters of the housing bust.

    But while the claim is that these states will eventually fall into line, it is the banks that now appear to be the serious holdouts, as news reports we highlighted yesterday indicated. From Huffington Post:

    Bank concerns reached fever pitch on Friday when the New York State attorney general’s office sued Bank of America, JP Morgan Chase and Wells Fargo, accusing the banks of deceptive and fraudulent use of a private database used to register mortgages.

    “I think it’s fair to say that the banks are becoming an obstacle to completing this settlement now,” said the source, who spoke on condition of anonymity.

    The banks clearly don’t want to be exposed to MERS litigation. While Schneiderman and Massachusetts’ Coakley face some hurdles in pinning liability on the banks (they have MERS, foreclosure mills, and vendors like LPS as scapegoats liability shields), the bad press and the exposure of document defects would embolden and aid stressed homeowners and thus be damaging to them.

    The other interesting tidbit of the day was the report by Shahien Nasiripour of the Financial Times that the Administration is pushing hard to get this deal closed. That could be inferred by the way HUD chief Shaun Donovan has taken a high profile role, including talking to “progressive” media (yours truly is apparently in a special category, “incorrigible”).

    But the FT piece reveals that some core constituencies aren’t buying what the Administration is selling:

    Aides to President Barack Obama have in recent weeks courted civil rights groups and borrower advocacy organisations, scheduling meetings and calls in an attempt to gain support for the expected settlement and muffle criticism from key political allies…

    The meetings have occasionally served as a “gripe session”, as one participant called them, because many of Mr Obama’s most ardent supporters have criticised the pending deal’s terms for the degree of relief provided and the extent of the release from legal claims it provides for banks desperate to minimise mortgage-related liability…

    Janis Bowdler, a housing expert at the National Council of La Raza, the largest US Hispanic civil rights group, said the settlement would be a good start for the White House as it seeks to prove it is doing all it can for homeowners.

    “Wrapping up the settlement now is the right thing to do, but it’s only going to be a win for them politically if they follow up with the financial crimes task force,” Ms Bowdler said…“Otherwise, if this is it, and they’re satisfied with just $25bn, I don’t think that will be enough to convince voters that they were doing all they could to fix the housing market.”

    Oh, they plan to do more: put some small and maybe even mid sized players in stocks in the town square, the closer to the elections, the better. As we know all too well, the Administration only wants to appease voters, not fix the problem. What it seems to fail to recognize is the the housing market is in such distress that token measures and gimmickry are unlikely to do the trick.

  11. This is exactly so. It’s time to just perform a citizen’s arrest of these criminals. We aren’t going to get any justice because it’s just us against an extensive criminal cartel which we are funding with our mortgage payments, enabled by a corrupt government made of of their cronies and colleagues. There isn’t any incentive for them to stop doing as they please because there are no consequences to fear. We need to impose consequences, and force out those cronies who protect them. This perception manipulation is a large part of the problem, and we need to start doing some of our own. Get a major network up and running, like Alex Jones did and spread the antidote to these carefully contrived pieces of psycho babble meted out by liars and thieves. Forward this article to everyone in your contacts.

  12. I am not republican or Democrat. But Rick Santorum who won 3 states yesterday.

    One of his main issues is that he Claims to be anti Banksters in his campaign.

    Some encouraging news. I still think that the American People are not dumb and will not vote a pro banker given a choice.

    NEVER AGAIN

  13. Since attorneys Barack and Michelle admitted they could not understand the contracts they signed (and obviously signed them anyway), surely this is a matter of unenforceable contracts of adhesion. Superior knowledge and a pack of high-priced attorneys prepared a contract to the unsophisticated borrower’s disadvantage. For instance, how could the average or even above-average borrower understand what the required waiver of notice of dishonor could mean? Yet it is very important, in that such notice determines the holder-in-due course status, which allows immunity from liability.

    Requiring the unsophisticated party to relinquish the means to assert a legal right is one of few reasons a “take it or leave it” contract, or contact of adhesion, is unenforceable.

    Also, ONLY the borrower (and notary) signs the documents at closing, yet the so-called lender supposedly is bound also to certain actions stipulated in the contracts. Who says the lender agrees? The borrower? Not a single person representing the other party was at the closing table with me.

    I think not enough legal attention is given to this sliver of time just before the undated indorsement in blank is stamped on the note and the heist is accelerated.

    Why are more defendants’ attorneys not going for fraud in the factum? Especially now that so much has been exposed.

    Here is Wiki’s definition:

    Fraud in the Factum is a type of fraud where misrepresentation causes one to enter a transaction without accurately realizing the risks, duties, or obligations incurred.[1] This can be when the maker or drawer of a negotiable instrument, such as a promissory note or check, is induced to sign the instrument without a reasonable opportunity to learn of its fraudulent character or essential terms. Determination of whether an act constitutes fraud in the factum depends upon consideration of “all relevant factors.” Fraud in the factum usually voids the instrument under state law and is a real defense against even an holder in due course.

  14. @chas404,

    I’m not a repugnican. I’m not a democrite either. I see very little difference between them. Same greed, same hypocrisy, same lies, they all shamelessly profit from their position to enrich temselves at our expense and they all shamelessly do banks’ bidding.

    As you said, anyone who is elected can be taken out of office later. The only thing is: do we want to give anyone of them even the slightest chance to cause more damage? The choice is tough. I wouldn’t put Gingrich anywhere near the rd phone. I wouldn’t put Romney anywhere near… a dog. They’re all up in arms against Iran, China and Russia. They all poke their noses where it doesn’t belong and they’re all getting ready for “some” war. It’s itching them. They really, really want to wage a war. Doesn’t matter where and against whom: they just want a war. Because, historically, war is the fastest way to unite a country and solve the economy. They haven’t learned much but that, by golly! they’ve bid everything they own on it! (And everything we used to own but they took it away to raise the ante).

    My Bible (that same one that seems to be so different from others’… King James, though. Go figure…) tells me to clean my house before going to clean someone else’s. None of those guys wants to tackle the real problems here and implement the required solution (such as… clean house!) but they’re all ready to go wage war in someone else’s. They’ve been shopping for the new public enemy No. 1 since Ben Laden was killed. Big, tough language against Syria, Iran, China. Norh Korea. Who else? Can you think of another one? I’m sure I’m missing someone. Yeah! Pakistan!

    Won’t happen. We’ll have have a civil war before that. Then, the house will really be cleaned up!

  15. Agreed.

    I noticed that, too, in O’s speech.
    His language was not focused on the problems and came off as ignorant of the facts.
    Perhaps taking the middle road to appease the banks.

    But then he went on to talk about launching an investigation of the banks, I think. Confusing.

  16. Right on Mr. Garfield – it’s the LAW that’s not being followed.
    Re: Who is Not following it, from the tippy top Banksta in gov’t to the bottom… they’re All culpable.

  17. FYI I think Obama could order the FHFA immediately to do principle reductions on their portfolios. He appointed the head there. I dont think he needs approval like he is trying with HARP 2.0.

    Truthfully he is only doing stuff for reelection and sound bites. He could give a crap.

  18. Obama stinks. I confess I am republican. Some of my friends here are left leaning but i think we are beyond being partisan here.

    All I would say is you can’t reelect Obama after his being in bed with Wall Street on this issue and his ineffective approachs.

    I would say vote him out. That may be hard for the liberals here but I will add that we can then turn around and vote the republican out.

    All I am saying is you can’t reward whatever party is in power for doing what they are doing.

    Puts me in a bad position bec Gingrich is a pawn for Freddie Mac and I am fighting Fannie Mae!!!

    Govt will not help. Period.

  19. We all need to believe in something. I choose to believe in what the Bible says, which, incidentally, has absolutely nothing to do with what the “Christians” say. I don’t know where they get their Bible from but it sure as hell isn’t the one I study!

    Case in point: Jesus never said anything about restoring the old Israel (that had been lost by the Jews, fair and square). He never said anything about going to Palestine and stealing their country to give it back, thus completely destabilizing that entire region. He talked about the creation af “A New Jerusalem” and “A New Israel”. Plus, he also said that we can’t make something new with something old. We can’t put “New wine” in an “old skin”. But that’s beside the point.

    In any event, I choose to believe that the temptor is guiltier than the temptee. It’s biblical too. God actually cursed the snake much more violently than he cursed Adam and Eve. Why? Because the snake was the temptor. The snake knew what Eve’s weaknesses were much better than she, herself knew them. Same thing for banks: they knew what the borrowers weaknesses were. They knew borrowers were not conniving. They knew borrowers were honest and acting in good faith. Hell! The borrowers disclosed everything they were asked to all the time! The banks, systematically and methodically, instilled in us all those weaknessesby telling us that social security was insolvent, we would not have any retirement in the future, the only thing we could rely on was stone and real estate for our old age and it was crucial for all of us that we buy a house to compensate for the loss of retirement. The banks set us up by using our innocence by instilling fear. And the media were more than happy to grab that ball and run with it.

    The banks set up the scene and played us all. Then, they discarded the good faith information we gave them and replaced it with lies (my income was strangely trippled when the bank had my written authorization to check on all my tax returns for the previous 5 years. The bank never did…) They sold us contracts no one could read or understand. And we know the rest.

    Obama quotes the Bible quite a bit. The thing is: it also states that the bad teachers will be judged the most harshly.

    He has, coming, what’s due him. Might be in November. Might be afterwards when a civil war erupts, might be even later. It’s coming anyway. i have no doubt about that.

  20. This is true, but last night news reports have it that Fraud Street is throwing it’s millions Romney’s way this election. They threw in millions to help elect O’bama last go around…but now they found a better cohort. The sad fact is; there is no candidate for most of us. The majority of political representation is paid for by the 99% to represent and protect the 1%. Ain’t life grand!

  21. Obama receives large amounts of cash from the likes of Goldman Sachs and other financial fraudsters. We shall see how he is squeezed between the voters and the banks as we get closer to the election.

  22. Obama has it right for his Bankster friends

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