Now They See the Light — 40% of Homes Underwater

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Editor’s Comment:

They were using figures like 12% or 18% but I kept saying that when you take all the figures together and just add them up, the number is much higher than that. So as it turns out, it is even higher than I thought because they are still not taking into consideration ALL the factors and expenses involved in selling a home, not the least of which is the vast discount one must endure from the intentionally inflated appraisals.

With this number of people whose homes are worth far less than the loans that were underwritten and supposedly approved using industry standards by “lenders” who weren’t lenders but who the FCPB now says will be treated as lenders, the biggest problem facing the marketplace is how are we going to keep these people in their homes — not how do we do a short-sale. And the seconcd biggest problem, which dovetails with Brown’s push for legislation to break up the large banks, is how can we permit these banks to maintain figures on the balance sheet that shows assets based upon completely unrealistic figures on homes where they do not even own the loan?

Or to put it another way. How crazy is this going to get before someone hits the reset the button and says OK from now on we are going to deal with truth, justice and the American way?

With no demographic challenges driving up prices or demand for new housing, and with no demand from homeowners seeking refinancing, why were there so many loans? The answer is easy if you look at the facts. Wall Street had come up with a way to get trillions of dollars in investment capital from the biggest managed funds in the world — the mortgage bond and all the derivatives and exotic baggage that went with it. 

So they put the money in Superfund accounts and funded loans taking care of that pesky paperwork later. They funded loans and approved loans from non-existent borrowers who had not even applied yet. As soon as the application was filled out, the wire transfer to the closing agent occurred (ever wonder why they were so reluctant to change closing agents for the convenience of the parties?).

The instructions were clear — get the signature on some paperwork even if it is faked, fraudulent, forged and completely outside industry standards but make it look right. I have this information from insiders who were directly involved in the structuring and handling of the money and the false securitization chain that was used to cover up illegal lending and the huge fees that were taken out of the superfund before any lending took place. THAT explains how these banks are bigger than ever while the world’s economies are shrinking.

The money came straight down from the investor pool that included ALL the investors over a period of time that were later broker up into groups and the  issued digital or paper certificates of mortgage bonds. So the money came from a trust-type account for the investors, making the investors the actual lenders and the investors collectively part of a huge partnership dwarfing the size of any “trust” or “REMIC”. At one point there was over $2 trillion in unallocated funds looking for a loan to be attached to the money. They couldn’t do it legally or practically.

The only way this could be accomplished is if the borrowers thought the deal was so cheap that they were giving the money away and that the value of their home had so increased in value that it was safe to use some of the equity for investment purposes of other expenses. So they invented more than 400 loans products successfully misrepresenting and obscuring the fact that the resets on loans went to monthly payments that exceeded the gross income of the household based upon a loan that was funded based upon a false and inflated appraisal that could not and did not sustain itself even for a period of weeks in many cases. The banks were supposedly too big to fail. The loans were realistically too big to succeed.

Now Wall Street is threatening to foreclose on anyone who walks from this deal. I say that anyone who doesn’t walk from that deal is putting their future at risk. So the big shadow inventory that will keep prices below home values and drive them still further into the abyss is from those private owners who will either walk away, do a short-sale or fight it out with the pretender lenders. When these people realize that there are ways to reacquire their property in foreclosure with cash bids that are valid while the credit bid of the pretender lender is invlaid, they will have achieved the only logical answer to the nation’s problems — principal correction and the benefit of the bargain they were promised, with the banks — not the taxpayers — taking the loss.

The easiest way to move these tremendous sums of money was to make it look like it was cheap and at the same time make certain that they had an arguable claim to enforce the debt when the fake payments turned into real payments. SO they created false and frauduelnt paperwork at closing stating that the payee on teh note was the lender and that the secured party was somehow invovled in the transaction when there was no transaction with the payee at all and the security instrumente was securing the faithful performance of a false document — the note. Meanwhile the investor lenders were left without any documentation with the borrowers leaving them with only common law claims that were unsecured. That is when the robosigning and forgery and fraudulent declarations with false attestations from notaries came into play. They had to make it look like there was a real deal, knowing that if everything “looked” in order most judges would let it pass and it worked.

Now we have (courtesy of the cloak of MERS and robosigning, forgery etc.) a completely corrupted and suspect chain of title on over 20 million homes half of which are underwater — meaning that unless the owner expects the market to rise substantially within a reasonable period of time, they will walk. And we all know how much effort the banks and realtors are putting into telling us that the market has bottomed out and is now headed up. It’s a lie. It’s a damned living lie.

One in Three Mortgage Holders Still Underwater

By John W. Schoen, Senior Producer

Got that sinking feeling? Amid signs that the U.S. housing market is finally rising from a long slumber, real estate Web site Zillow reports that homeowners are still under water.

Nearly 16 million homeowners owed more on their mortgages than their home was worth in the first quarter, or nearly one-third of U.S. homeowners with mortgages. That’s a $1.2 trillion hole in the collective home equity of American households.

Despite the temptation to just walk away and mail back the keys, nine of 10 underwater borrowers are making their mortgage and home loan payments on time. Only 10 percent are more than 90 days delinquent.

Still, “negative equity” will continue to weigh on the housing market – and the broader economy – because it sidelines so many potential home buyers. It also puts millions of owners at greater risk of losing their home if the economic recovery stalls, according to Zillow’s chief economist, Stan Humphries.

“If economic growth slows and unemployment rises, more homeowners will be unable to make timely mortgage payments, increasing delinquency rates and eventually foreclosures,” he said.

For now, the recent bottoming out in home prices seems to be stabilizing the impact of negative equity; the number of underwater homeowners held steady from the fourth quarter of last year and fell slightly from a year ago.

Real estate market conditions vary widely across the country, as does the depth of trouble homeowners find themselves in. Nearly 40 percent of homeowners with a mortgage owe between 1 and 20 percent more than their home is worth. But 15 percent – approximately 2.4 million – owe more than double their home’s market value.

Nevada homeowners have been hardest hit, where two-thirds of all homeowners with a mortgage are underwater. Arizona, with 52 percent, Georgia (46.8 percent), Florida (46.3 percent) and Michigan (41.7 percent) also have high percentages of homeowners with negative equity.

Turnabout is Fair Play:

The Depressing Rise of People Robbing Banks to Pay the Bills

Despite inflation decreasing their value, bank robberies are on the rise in the United States. According to the FBI, in the third quarter of 2010, banks reported 1,325 bank robberies, burglaries, or other larcenies, an increase of more than 200 crimes from the same quarter in 2009. America isn’t the easiest place to succeed financially these days, a predicament that’s finding more and more people doing desperate things to obtain money. Robbing banks is nothing new, of course; it’s been a popular crime for anyone looking to get quick cash practically since America began. But the face and nature of robbers is changing. These days, the once glamorous sheen of bank robberies is wearing away, exposing a far sadder and ugly reality: Today’s bank robbers are just trying to keep their heads above water.

Bonnie and Clyde, Pretty Boy Floyd, Baby Face Nelson—time was that bank robbers had cool names and widespread celebrity. Butch Cassidy and the Sundance Kid, Jesse James, and John Dillinger were even the subjects of big, fawning Hollywood films glorifying their thievery. But times have changed.

In Mississippi this week, a man walked into a bank and handed a teller a note demanding money, according to broadcast news reporter Brittany Weiss. The man got away with a paltry $1,600 before proceeding to run errands around town to pay his bills and write checks to people to whom he owed money. He was hanging out with his mom when police finally found him. Three weeks before the Mississippi fiasco, a woman named Gwendolyn Cunningham robbed a bank in Fresno and fled in her car. Minutes later, police spotted Cunningham’s car in front of downtown Fresno’s Pacific Gas and Electric Building. Inside, she was trying to pay her gas bill.

The list goes on: In October 2011, a Phoenix-area man stole $2,300 to pay bills and make his alimony payments. In early 2010, an elderly man on Social Security started robbing banks in an effort to avoid foreclosure on the house he and his wife had lived in for two decades. In January 2011, a 46-year-old Ohio woman robbed a bank to pay past-due bills. And in February of this year, a  Pennsylvania woman with no teeth confessed to robbing a bank to pay for dentures. “I’m very sorry for what I did and I know God is going to punish me for it,” she said at her arraignment. Yet perhaps none of this compares to the man who, in June 2011, robbed a bank of $1 just so he could be taken to prison and get medical care he couldn’t afford.

None of this is to say that a life of crime is admirable or courageous, and though there is no way to accurately quantify it, there are probably still many bank robbers who steal just because they like the thrill of money for nothing. But there’s quite a dichotomy between the bank robbers of early America, with their romantic escapades and exciting lifestyles, and the people following in their footsteps today: broke citizens with no jobs, no savings, no teeth, and few options.

The stealing rebel types we all came to love after reading the Robin Hood story are gone. Today the robbers are just trying to pay their gas bills. There will be no movies for them.

13 Responses

  1. Interesting that useless Obama now offering HARP 2.0 allowing high LTV loans to refi. This is something that I could have used maybe 4 yrs ago. 6 to 8 months ago I saw they were coming out with this and I was current and probably could qualify but thankfully I decided to bite the bullet and stop paying and hire a lawyer.

    In the end 4% interest on house 30% or more upside down is useless anyhow. Too little too late and besides what is the percentage that get approved for HARP anyhow??? like 5%?

    Seems like they are constantly moving the goalposts to keep people paying/hoping (hope and change?). Before I was overqualified and could not get assistance. Now I am not current I can not qualify for this program. Haha.

    Silly scam the whole thing.

  2. @ Tolle+ re Javaheri v. Morgan/Chase which answered: “In response to paragraph 41 of the Complaint, JPMorgan admits that it is not the Lender, present holder in due course, or beneficiary of the subject Promissory Note executed by Plaintiff.” Then with pages of crap it went on to claim that banks should steal the house anyway… But, good news is on 4/10/2012 case is set for pretrial discovery & other matters , (but will probably settle before trial…)

  3. @Jonathan,

    sorry about that.

  4. @Jonathan,

    Pretty much every significant case has been posted at

    You can check by state, by date, by names, etc. And there are a slew of articles by chronoligical order.

    Good luck.

  5. @ Johnathan, it’s hard to keep abreast of the ever changing fraudscape, but if my memory serves, Chase would have to be in possession of an assignment for your particular mortgage from the FDIC in order to foreclose. The FDIC put out a directive on this awhile back.

    There’s some background here (not exactly your issue, but close):

    But if you search around the terms FDIC – Chase and WAMU, you’ll find evidence of what I’m referring to. Chase has a nasty habit of foreclosing on anyone anywhere. But then again, don’t they all?

  6. @Rabi: confirmed @P-43 of this

  7. A little off topic, but I must express this occurrence I observed. I do believe that we as citizens are in serious trouble as sinister forces within our borders get traction. I witnessed an incident at a Social Security office this morning and was stunned by the attitudes of the security
    personnel towards a customer whose rights were clearly violated. Three burly security guards with guns handcuffed woman ,County police, Homeland Security police….I do believe the FEMA camp thing is real. Freedom of speech is disappearing. We better shut up and shuffle along. This is not the America I grew up seeing. Banks, MERS, Wall Street…..Beware of the enemy within.

  8. Neil ,

    Although not touched upon in the article that you posted the depression era bank robbers ,, were smart enough to use high tech … fast cars and automatic weapons to achieve their goals… but their biggest assett was the goodwill of the townfolk … everybody knew where they lived , where to find them … and yet nobody turned them in… WHY? because people despised the banks they robbed … the banks forced farmers into default by denying loans for seed , tractors and other equipment… while the federal government burned crops and shot farm animals that were “too abundant” in a bid to raise prices. People were forced into a desperate situation and the motorized bank robbers WERE THE GOOD GUYS! They robbed the bank , took cash AND MORTGAGE NOTES from the vault and nobody stopped them because they knew those notes would only be destroyed/burned when they had successfully escaped.

    It is impossible to do that today simply because the fedgov and courts have decided a photo of a note IS a note??? Sure wish I could take photo’s of my cash and hand them out! They have backups of backups of scanned images that will ALWAYS exist… Sure hope the image of your satisfaction doesn’t get lost.

    The excellent documentary on the Wizard of Oz that John Anderson posted touches on Frank Baum (author of the OZ books) being forced out of business (grocer/dry goods) by the banks restricting currency in the 1890’s … his customers had wildly successful thousand acre farms but no cash to buy.

    The only way out I see is to segregate the “assetts” that are mortgage related ,, write them down to actual value at no penalty to the bank , assign them all to a “bad bank” (FNM?) and start treating the clerks office with the respect due it ,, real docs , real signatures , no LIES … All bank lending would have to be based on other assetts that are not in dispute. Notes that have been paid off and are indisputable , everything paid off by AIG for example will be satisfied… all homeowners will be given a 12 month window to refi at the current rate at 100% of the actual value with the rest forgiven.

  9. Our house would have sold, back to the lender, 3 hours before Auction we filed a Chapter 13, We spent 9 months fighting the bank,
    had no other option, now we have to pay out inflated Mortage, was
    $ $2100. Plus the arrears,We are lost without any support
    from our goverment. which started this with Greenspan’s interest
    rates which can rolling over and over, no one could stop this ?
    1st the predetory loan, than the rise in interest rate, and know one to
    take responsibility, just our house.

  10. @John: in this book I read of a Rothschild who cornered the French stock-market over 100 years ago then told a weeping close friend who had lost all money to that scam: don’t worry my friend, you didn’t lose that money, somebody else got it!!!! Listen to these 1967 recordings:

  11. what defense in bk against Chase claim of standing due to “merger with WaMu and successor in interest…Does anyone have case law for this.Tks

  12. The corruption and evil you see has always been at work.
    As the Rothschild’s banking system has ran the world for at least the last 500 years, you have to study the past to know the future.
    It’s like the four seasons of California, Drought, Wildfire, Mudslide, & Earthquake.
    The Rothschild’s cycle is they make as much money as they can from the economy going up, then they depress the economy, and make as much as they can from from it going down, then when they see opportunity to use their influence to start wars, ranging is size from internal conflicts to world wars, where the big bucks are for the military industrial complex that they own and control.
    And when they pull their next false flag event “sinking of the carrier Enterprise, or a dirty bomb in NYC” You will forget the Kennedy coup, the Gulf of Tonkin lie, the very suspicious 9/11 attack, and the totally phony self caused economic crisis,
    Of course our bought off leaders are fully aware of what will happen. And have established FEMA camps to deal with malcontents. Our dumbed down fellow citizens do not seem to be concerned that they have lost rights gained under the signing of the Magna Carta in 1215 and the Habeas Corpus Act 1679, and somewhere there is a unwritten law that says that stupid people have no rights.
    ” Those who value security over freedom deserve nether ”
    And now of course our paid off politicans who can no longer promise peace and prosperity, instead offer protection from nonexcistant threats, while ignoring the real problems of our system of fiat currancy created by the FED, that is owned/controlled by the Rothschilds.
    Below is a link to the “Secret Of OZ” Winner Best Documentry 2010. At 2 hrs long its the best history of money work ever, and should be shone in every classroom in America.

  13. dont forget to add in the realtors 6% shakedown !!!!!!!!

    i will fight them every step of the way and if they still unfairly beat me in court, i will then go to the foreclosure sale and bid REAL CASH and if they do not accept my bid, i will not leave this house

    why everyone does not do this , is beyond me !

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