Frank Louis
Housing crisis: too big to fail defined
By Frank Louis
Something occurred to me recently while listening to a conservative talk show host (Sean Hanady) tell a caller how they have a responsibility to pay their mortgage because they had "signed their name" on the loan. Isn't this the same advise that the mortgage Bankers Association gives us while, at the same time, they have walked on their own $71 million mortgage? Sean, I beg to differ.
Most of the mortgages that are upside down or in default (or soon will be) were written during the "housing bubble." There you go, the first flaw in this host's articulation of his conclusion. These mortgages were written in a market that was fraudulently inflated through a massive, "Too Big To Fail," Ponzi Scheme that is so big no one can seemingly see it for what it is. It was not a "housing bubble," it was a "housing fraud." Let's get terms straight.
What is the difference between being defrauded by someone who sells you a bill of goods "fraudulently" by "fraudulently" jacking up the "value" through other fraudulent sales then "overcharging" you and the housing fraud that was perpetrated on the entire nation? Scale! That is all. The fraudulent housing fraud was just so large that it became "too big to fail." Think about it. It is true. Fraud on a grand scale, as a way of life!
People who spent their hard earned money on real estate during this fraudulent housing bubble were set up and robbed. Yet, still not one person in the media has been able to see this to date. So, foreclosures continue and will continue and these experts continue to not see this fact because it is just fraud on such a large scale it cannot "fail." Housing will continue to fall (despite an occasional bounce in the data) as property values are continually being beaten down one house in a neighborhood at a time. No end in sight. Wake up America!
Property that was bought at these fraudulently inflated prices cannot compete in the marketplace with the ones next door that are now being sold for pennies on the dollar. How can you afford to competitively own property on which you owe $500,000 when the property next door just sold for $125,000 or less? How can you sell it? How can you rent it? You can't. Even if you continue to throw your money away for the next 10-years and then die, the property will still most likely be upside in value and your estate will pay it all up or go bankrupt leaving your family with nothing but a goose egg.
You were lied to about the appraised value when you bought it and your feet are being held to the fire. You were trusting that those whom you paid to perform the transaction for you were holding to the fiduciary responsibilities they had to you and they weren't.
Doesn't this talk show host realize that even he, at some point, will come to the realization that he, if he bought property during the fraudulent housing market, was defrauded and that even his property is likely worth less that the down payment he made. (Unless he was a "Friend of Angelo.") Maybe he has such a large income that he can just take the hit like some "he-man" who has an ax fall on their foot and says "I'm alright" while the bleeding pools in their shoe. At some point however, they must throw up their hands and admit they are dying.
Drop the "he-man" stuff and admit to being a mere mortal. Anyone who can sit there and tell you that they are continuing to pay on property they overpaid for because they were defrauded when they bought it is just nuts if you ask me. Pay and pay some more and the property becomes worth less and less. The "buyer beware" of folklore does not affirm corruption.
However, these same people will return a shirt if it was not well made but marketed as being quality. Like cheap shirts, these mortgages were not well made. We all know that. These loans we paid hundreds of millions of dollars for were defective. They need to be returned and refunded!
Millions of people who "bought" property truly had no business doing so. I agree with that. However, the fraudulent real estate and mortgage "industry" had no business making these fraudulent loans for which they received huge commissions for at the moment they closed. Where was it mandated that no-doc loans should be made using out and out lies and often fake, non-existent "straw buyers?" Where was that clause? I must have missed it. Why do they keep their commissions? I do not get it.
However, nobody will disavow the fact that housing prices were artificially (I like to use the correct word here and call it "fraudulently") propped up due to these fraudulent activities. This fraud was unbeknownst to most honest, hardworking Americans no matter how much due diligence they did. These Americans put the $100,000 or so they had saved during their lifetime down on a retirement home that was never worth the $500,000 or so they were informed (rather officially by the bank's appraisers) it was worth. And just think, we paid these appraisers to tell us this. As I have written about several times; these Americans who once had cash in savings, good credit scores, and a future are now facing bankruptcy when they retire. This is the American way? I do not think so.
Too Big To Fail scam? I think so.
Recently, I made mention of an interview on the Fox Network Huckabee program with Greta Van Susteren in which she called him on some point he was making about lawyers by telling him that it was politicians who had been at work ruining this country; not lawyers. Why didn't Mr. Huckabee remind her that at lease 46% of those in congress are lawyers? Are they no longer lawyers once they are in politics? I think not. What does this have to do with what my point here? Simple: Routine misinformation and the ignoring of facts in the media. Greta, they are lawyers and Sean, we have been robbed. Both of you get your facts straight!
Every month I offer what I believe is the solution to this crisis. I call it the "short keep. " Nobody gets another commission off of the property. It is simple. If you made a traditional down payment and were defrauded on the appraised value (which was based on fraudulent sales so it was a fraudulent appraisal) then you deserve to get your money back, transaction voided, or be offered to keep the property for its short sale or foreclosure value. That is what it is really worth. That is what they will give it to someone else for. If you put money down on the property and it is worth less than the amount you paid, you own it! If I am wrong, tell me why.
Foreclosures will stop the day this solution begins. If not, foreclosures will continue and real estate will take decades to be worth spending your money on. Data shows that the sub-primes have, for the most part, already been foreclosed. Foreclosures today are primarily being perpetrated on people who made honest investments in their families' futures. Who knows, maybe this is all part of a push to make real estate yet another depreciating asset like cars, washing machines, and lawn mowers. Wealth redistribution?
So when will we fight back? No one else will it seems. When will anyone in the media pick up on this? When will anyone in the political and/or legal leadership in this nation defend the millions of individuals and families that have been ruined by this fraud? I am beginning to think never!
© Frank Louis
January 7, 2011
Something occurred to me recently while listening to a conservative talk show host (Sean Hanady) tell a caller how they have a responsibility to pay their mortgage because they had "signed their name" on the loan. Isn't this the same advise that the mortgage Bankers Association gives us while, at the same time, they have walked on their own $71 million mortgage? Sean, I beg to differ.
Most of the mortgages that are upside down or in default (or soon will be) were written during the "housing bubble." There you go, the first flaw in this host's articulation of his conclusion. These mortgages were written in a market that was fraudulently inflated through a massive, "Too Big To Fail," Ponzi Scheme that is so big no one can seemingly see it for what it is. It was not a "housing bubble," it was a "housing fraud." Let's get terms straight.
What is the difference between being defrauded by someone who sells you a bill of goods "fraudulently" by "fraudulently" jacking up the "value" through other fraudulent sales then "overcharging" you and the housing fraud that was perpetrated on the entire nation? Scale! That is all. The fraudulent housing fraud was just so large that it became "too big to fail." Think about it. It is true. Fraud on a grand scale, as a way of life!
People who spent their hard earned money on real estate during this fraudulent housing bubble were set up and robbed. Yet, still not one person in the media has been able to see this to date. So, foreclosures continue and will continue and these experts continue to not see this fact because it is just fraud on such a large scale it cannot "fail." Housing will continue to fall (despite an occasional bounce in the data) as property values are continually being beaten down one house in a neighborhood at a time. No end in sight. Wake up America!
Property that was bought at these fraudulently inflated prices cannot compete in the marketplace with the ones next door that are now being sold for pennies on the dollar. How can you afford to competitively own property on which you owe $500,000 when the property next door just sold for $125,000 or less? How can you sell it? How can you rent it? You can't. Even if you continue to throw your money away for the next 10-years and then die, the property will still most likely be upside in value and your estate will pay it all up or go bankrupt leaving your family with nothing but a goose egg.
You were lied to about the appraised value when you bought it and your feet are being held to the fire. You were trusting that those whom you paid to perform the transaction for you were holding to the fiduciary responsibilities they had to you and they weren't.
Doesn't this talk show host realize that even he, at some point, will come to the realization that he, if he bought property during the fraudulent housing market, was defrauded and that even his property is likely worth less that the down payment he made. (Unless he was a "Friend of Angelo.") Maybe he has such a large income that he can just take the hit like some "he-man" who has an ax fall on their foot and says "I'm alright" while the bleeding pools in their shoe. At some point however, they must throw up their hands and admit they are dying.
Drop the "he-man" stuff and admit to being a mere mortal. Anyone who can sit there and tell you that they are continuing to pay on property they overpaid for because they were defrauded when they bought it is just nuts if you ask me. Pay and pay some more and the property becomes worth less and less. The "buyer beware" of folklore does not affirm corruption.
However, these same people will return a shirt if it was not well made but marketed as being quality. Like cheap shirts, these mortgages were not well made. We all know that. These loans we paid hundreds of millions of dollars for were defective. They need to be returned and refunded!
Millions of people who "bought" property truly had no business doing so. I agree with that. However, the fraudulent real estate and mortgage "industry" had no business making these fraudulent loans for which they received huge commissions for at the moment they closed. Where was it mandated that no-doc loans should be made using out and out lies and often fake, non-existent "straw buyers?" Where was that clause? I must have missed it. Why do they keep their commissions? I do not get it.
However, nobody will disavow the fact that housing prices were artificially (I like to use the correct word here and call it "fraudulently") propped up due to these fraudulent activities. This fraud was unbeknownst to most honest, hardworking Americans no matter how much due diligence they did. These Americans put the $100,000 or so they had saved during their lifetime down on a retirement home that was never worth the $500,000 or so they were informed (rather officially by the bank's appraisers) it was worth. And just think, we paid these appraisers to tell us this. As I have written about several times; these Americans who once had cash in savings, good credit scores, and a future are now facing bankruptcy when they retire. This is the American way? I do not think so.
Too Big To Fail scam? I think so.
Recently, I made mention of an interview on the Fox Network Huckabee program with Greta Van Susteren in which she called him on some point he was making about lawyers by telling him that it was politicians who had been at work ruining this country; not lawyers. Why didn't Mr. Huckabee remind her that at lease 46% of those in congress are lawyers? Are they no longer lawyers once they are in politics? I think not. What does this have to do with what my point here? Simple: Routine misinformation and the ignoring of facts in the media. Greta, they are lawyers and Sean, we have been robbed. Both of you get your facts straight!
Every month I offer what I believe is the solution to this crisis. I call it the "short keep. " Nobody gets another commission off of the property. It is simple. If you made a traditional down payment and were defrauded on the appraised value (which was based on fraudulent sales so it was a fraudulent appraisal) then you deserve to get your money back, transaction voided, or be offered to keep the property for its short sale or foreclosure value. That is what it is really worth. That is what they will give it to someone else for. If you put money down on the property and it is worth less than the amount you paid, you own it! If I am wrong, tell me why.
Foreclosures will stop the day this solution begins. If not, foreclosures will continue and real estate will take decades to be worth spending your money on. Data shows that the sub-primes have, for the most part, already been foreclosed. Foreclosures today are primarily being perpetrated on people who made honest investments in their families' futures. Who knows, maybe this is all part of a push to make real estate yet another depreciating asset like cars, washing machines, and lawn mowers. Wealth redistribution?
So when will we fight back? No one else will it seems. When will anyone in the media pick up on this? When will anyone in the political and/or legal leadership in this nation defend the millions of individuals and families that have been ruined by this fraud? I am beginning to think never!
© Frank Louis
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