Supporting, Informing & Connecting People in Foreclosure
RE: “The presentation adds that given the extent of negative equity -- underwater homeowners owe $751 billion more than their homes are worth, according to data provider CoreLogic -- "we have gravitated towards settlement solutions that enable asset liquidity and cast a wide net." The solution is an emphasis on reducing mortgage debt and enabling short sales, thus allowing borrowers to refinance into more affordable loans or to sell their homes and move on.”
CoreLogic’s comments along with Michael Farrell’s “there is not enough money in the banking system to fund our nation's housing stock” (below) is exactly why I think the states should demand to take over the loans as part of the AG Settlement. Homeowners DO NOT NEED to “move on.” That is a senseless remark given that the banks are buying back these homes at less than market value – and if they would give that figure to the borrower in a modification or even negotiate the interest to 2% – the borrower could keep his home.
Doesn’t anyone take into consideration how much it is costing the US in welfare to displace people? Hawaii has 160,000+ folks on food stamps. And why not, the gov’t takes away their home – why bother to work? Before the economic collapse these homeowners has stellar credit. It was the nicotine in their refinance fix. That means they were making payments – until they lost their jobs – because the BANKS COLLPASED THE ECONOMY. Not because these people were deadbeats. They were manic about their credit. The investors sued the banks for inflated appraisals long before the borrowers began to default – neither the borrower nor the investor had control over the appraiser. So, if there is a $751 Billion discrepancy – it belongs to the bank fraud – not on the backs of the borrowers.
So, when CoreLogic says “move on” – get a grip here folks. $21,000 isn’t going to come close to covering up the bank fraud and clouded titles – and there is plenty of it. Simply put: The banks wrote more loans than they can handle. There is no place for all of the loans to go and be occupied as mortgages – unless the states take over the loans from 2003-2008.
The states can reconstruct the mortgages with the borrowers – collect the income and split it with the counties and investors if they haven’t already been paid by TARP or insurance.
It’s only a matter of time before the fact that these banks collected insurance and TARP on these loans and then continued to try and collect from the borrowers starts to come to light – and that would appear to be insurance fraud… probably the main reason for the foreclosures in the first place.
This is exactly what I have been saying. If 500,000 mortgages = $80 Billion (source: Taylor Bean complaint)… what do 67 million MERS mortgages equal? Is anybody doing the math in Washington, DC?
In testimony before the House Financial Services Committee in February 2010, Michael A.J. Farrell, Chairman, CEO, Annaly Capital Management, provided an excellent overview of the current market for RMBS. People involved in the discussions about housing market reform should read Farrell's testimony carefully. He notes that of $7.5 trillion in RMBS funded by private investors, $5.5 trillion is held by rate sensitive investors in Agency MBS, with about $2 trillion in credit sensitive private label MBS. He also stated that:
"The balance, or about $2.5 trillion, is held in raw loan form, primarily on bank balance sheets. Since our country's banks have about $12 trillion in total assets, there is not enough money in the banking system to fund our nation's housing stock, at least not at current levels. It is thus axiomatic that without a healthy securitization market our housing finance system would have to undergo a radical transformation."
And this is why the states should takeover the loans from 2003-2008. The banks HAVE to foreclose. They cannot hold all the mortgages. They wrote more than they can hold.
By using MERS and other special purpose vehicles to hold mortgages rather than keep them on the banks' books, the banks lived in a fantasyland. They insured their risk which was a double edge sword; however, they took no responsibility for the volume of loans they wrote.
It's akin to taking the pill, having numerous partners and thinking you can't get VD. Only the banks weren't naive - they were greedy and irresponsible.