Why the Deck is Stacked Against Homeowners

First we need to acknowledge that the purchase or refinance for a home is the largest financial transaction that the average citizen ever enters.

Second we need to acknowledge that the purchase or refinance of a home is the largest financial transaction that an average citizen CAN enter.

Third we need to acknowledge that collectively the purchases and refinancing of a home is the largest part of consumer commerce in our economy and the largest driver of our economy which is 70% driven by consumer purchases.

Fourth we need to acknowledge that therefore the purchase or refinance of a home is the largest target for predators and well intentioned business people alike — if they like to think about big plans.

So it should come as no surprise that the moral hazard is stretched to extremes when it comes to all the sectors of the economy that rely on housing for profit opportunities. And that is why TILA — the Federal Truth in lending act was passed — to protect consumers in complex transactions far beyond the knowledge, training and comprehension of the average citizen. Unfortunately judges don’t take TILA seriously. I am going to do something about that. Reg Z says that any pattern of conduct involving table funded loans is PREDATORY PER SE. it isn’t just wrong, it is predatory which means that it is misrepresented to the borrower on a number of levels. AND IT SCREWS UP TITLE.

The sheer size of the homeowners and prospective homeowners taken collectively is both an opportunity for prosperity and an opportunity for disaster. Unless the playing field is leveled, citizens don’t stand a chance against the knowledge, sophistication and clever manipulation of the markets related to housing — financial, brick and mortar, services etc.

When prices get inflated far beyond actual value the market is out of balance. The price- value discrepancy occurs for many reasons but the reason it happened this time is that Wall Street cornered the market on the most basic commodity — MONEY. They took money under false pretenses from managed funds containing the pensions of citizens and loaned that money to citizens at inflated rates to cover up the fact that they had stolen the money from the managed funds.

Instead of putting the money in REMIC TRUSTS they kept the money, funded some mortgages and kept the rest. They covered up the theft by what they referred to as proprietary trading.

The proprietary trading is based upon fictitious sales of loans in transactions that never took place. The origination or purchase of the loan took place when investor money was used to fund the loan. The brokers diverted title to the note and mortgage to their own controlled entity and then sold the low quality crap to entities purporting to represent the investors — I.e., the REMIC TRUSTS. But the REMIC TRUSTS HAD NEVER BEEN FUNDED. So no such transaction could ever have occurred.

Nevertheless the broker dealers who took money from the managed funds using false pretenses (sale of bonds issued by the REMIC TRUSTS) created fictitious accounts in which they sold low quality loans with non existent underwriting to the REMIC TRUSTS whose accounts should have been with the TRUSTEE but instead were merely fictitious entries on the books of the broker dealer. The broker dealer then recorded a profit by selling low quality or non existent loans ( because they had already been purchased by others) to the accounts they created for the REMIC TRUSTS. THE PRICE WAS SET AT THE PAR VALUE OF THE NONEXISTENT HIGH QUALITY LOANS PROMISED TO THE INVESTORS.

Thus the broker dealers stole the money, stole the title, and eventually succeeded in most cases in stealing the house with inflated claims of balances due. Those balances were not merely inflated by circumstance but by design — by refusing to credit the investor and the borrower with third party payments that the broker dealer also insists were proprietary transactions.

Now the Federal Government in a misguided attempt to control the moral hazard of citizens (minuscule to the overreaching of the sophisticated banks) has skipped the bankers and loaded homeowners with the full weight of a scheme that was sold to them by predatory tactics and outright lies and manipulation of the players.

So now when a non profit offers to stabilize a community by buying the homes at the illegal auctions of property the Federal Government is actually trying to stop this healing step. It seems these neighborhood non profit organizations out to save their neighborhoods are being barred from exercising their right to buy property because they intend to sell the property back to the foreclosed homeowner at fair market VALUE instead of huge fictitious inflated prices used in the origination of the loan.

Massachusetts sees a problem with this. And the theory or ideology behind it is that citizens will flee from all their debts, thus collapsing the entire financial industry and our economy. Despite numerous reports and studies showing that homeowners would continue to pay a reasonable price based upon verified real income — the way the underwriting should have been done at origination, the government has decided that there is more moral hazard at the bottom, where most of the victims reside, than up at the top where sophisticated investment bankers and CDO managers and traders know every step.

Who believes that? Lots of people close to the levers of power in State NAND federal government. And even if they don’t quite believe it they don’t want to take the chance of being wrong and see the banks that created this problem, the ones that are now too big to fail and too big to jail bring down a financial industry dominated by 6 banks in a financial marketplace that is home to more than 7,000 banks and credit unions working off the same electronic funds backbone that the big banks used.

It is impossible for the system to fail if we let the banks fail, as they should with their moribund balance sheets filled with smoke and mirrors. But it is very possible for the system to fail if we ignore the damage to the core of our economy and the hardworking people that created that core.

11 Responses

  1. The deck always was stacked; before the “loan” the banksters took advantage of unsophisticated borrowers and failed to divulge the true nature of the contract and after the pretend “default”, the courts just let the banks have the houses and operate in violation of the laws.

    Enforcement of the law will be required to fix anything, and the courts are so corrupt who knows if that will ever happen. In my case, the bank’s attorney filed a claim to collect on a discharged debt, cut and pasted pleadings, filed an old photocopy of a Note that was made out to another bank without any assignments, mailed pleadings to the address they locked us out of, perjured herself repeatedly and even testified about events without any first hand knowledge and then had the audacity to deny they had locked us out extrajudicially despite the 8 x 10 glossy photographs of their padlock attached to my complaint.

    The judge told me to hire an attorney if I expected him to take my case seriously, called it a “screwy case”, was not only okay with the criminal trespass and theft crimes the bank had committed, but encouraged the defendants to go ahead and foreclose on my house! His comment is recorded in the hearing transcript. He then dismissed my complaint after three years of litigation in an attempt to get a trial, on the grounds that I failed to adequately respond to Discovery requests made by the criminals, who stole all my documents when they robbed me and locked me out. He also discussed my case with the bank’s attorney in an ex parte communication, behind my back.

    This particular judge helped the son of another attorney who was a former partner evade arson charges and knowingly tried to convict an innocent man for the fires. He is the top superior court judge in a “good old boy” network of power drunk, corrupt judges who all really should go before a Grand Jury.

    Our courts are criminal, like the banks. Birds of a feather.

  2. I am trying to find out if RASC Series 2006-EMX1 Trust is still active. I got as far as the SEC Website which states on 1/12/07 a Notice of Suspension of Duty to File Reports form 15 was filed under Rule 15d-6. I called the SEC to find out what that meant and all they could tell me was that after that date they have no idea what happened to the trust or if it even still exists. I need to find out if this Trust is still active. I am currently in an active Bankruptcy and this could help me greatly if I can find out if the trust still exists. I can be reached at 443 677 2799 or jsmith5915@msn.com. James Smith

  3. From NG:

    ” I am going to do something about that. Reg Z says that any pattern of conduct involving table funded loans is PREDATORY PER SE. it isn’t just wrong, it is predatory which means that it is misrepresented to the borrower on a number of levels. AND IT SCREWS UP TITLE.”

    When are you going to read Reg Z and Table Funded loans? Also the Fed Commentary? if you have read it, then you have a serious lack of ability to understand what you are reading?

    It is just like in your “handbook” that you provide with your seminars. You state that 226.34 requires a Fiduciary Duty on the part of a lender to a borrower. No exceptions.

    226.34 only applies to HOEPA loans, not anything else. Of course, that would defeat your narrative to admit that.

    People, be careful of what NG states and especially using it in your arguments before the court.

    Would love to see cases where NG has testified with his theories and “won”……..

  4. Reg X. Zzzzzz …. But then again, its unsecured debt to the estate. Borrower loan c.o. Bye bye in 36 to 60 under a 13. What goes up will eventually come down. As for myself, I prefer to cram the cash up their ass or the trust down their throat. Their Choice! Scratch!!

  5. UKG, its $10.00. 🙂

  6. TILA — the Federal Truth in lending act was passed
    Big Deal, What good is a law when there is none to enforce it ?

  7. Java: you stated the solution. You sell me your house, I sell you mine. We become renters, and then our real property is subject to a cram down because it’s not your primary residence!
    Ya wanna start playing dirty? This will rile their asses.
    Mother-father in trouble, move out and rent the house to their kids. They downsize, file a plan, and the BK court has to cram down the mortgage because it’s investment/rental property now.
    Start using the system to your advantage.
    Everybody goes and files a copy of a mortgage against each other’s property. Consideration for one dollar, just the assignment of mortgage.

  8. So why do the homeowners not stick together. Strategic default is mass and at once , will end this fraud and disgusting charade once and for all. Stop being afraid !!!
    Worse that can happen , I buy your house for $1 and you buy my house for $1. And live happily ever after.

  9. It all flys in the face of natural law – man will innately strive for his right to benefit from the fruits of his labor with out interference. Freedom or at least a feeling of. No one will be enslaved unless they are tricked into believing they are, and I think the cat is outta the bag. And to our judges the fear of doing the right thing. ( Arthur Shack excluded) is just that, it’s an illusion and an illusion defines your power to administer justice???

  10. Fraud on the face of contract and fraud in the inducement.

  11. The banksters are still running the show. The entire purpose is debt enslavement and then taking the property of the homeowner and then death for the homeowner.

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