Frank Louis
Opening doors for more economic corruption
Now they are using eminent domain to "end foreclosures," what's next?
By Frank Louis
In the housing crisis, there is a much overlooked demographic that are continually ignored. I continue to report on them. These are the people who made substantial investments in the real estate they purchased in the early to mid 2000's. The people who made down payments on their property and lost it overnight along with their good credit.
Unbeknownst to most Americans at the time, the banking mindset that shaped the housing crisis was that the primary purpose of a mortgage was no longer to buy a house. Buying property had taken the backseat to the production of Mortgage Backed Securities (MBS). The mortgage had become the integral ingredient required in packaging the real product, Mortgage Backed Securities. Buying/selling the property was just a byproduct of creating mortgages to make the Securities.
Those who "invested" in real estate by purchasing property using "No Income, No Job, no job Application" mortgages (called "NINJA" loans), were used to produce more mortgages and commissions for the industry. They assisted in creating an unprecedented fraudulent, unsubstantiated, and unsustainable raise in housing prices. A Keynesian experiment in modern monetary theory gone awry. Now, with some cities looking at the use of "eminent domain" as a cure for the ills done to the American working people during this economic debacle, there seems to be no end to the stupidity that will be attempted in trying to turn housing around. The people who were robbed in the process will still be overlooked and the folks who made these toxic mortgages will be at the hear of the line for this mortgage bailout as well.
Much of this "NINJA" property, we now know, was "bought" by fictitious people known as "straw buyers." While you may hear some in the media mention (rarely) these buyers, they fail to give this element its credit due. These sales played a substantial role in running up values artificially as real estate sales are based on recent comparable sales. Go ahead, call a real estate talk show of agency and ask if they have heard of "straw buyers." Chances are good they will say "no."
A Sarasota Herald Tribune article (Dec. 13, 2009) focused on a condo complex where "Two of every three buyers in the complex stopped paying their mortgages, most without making a single payment." This is not an isolated example. This is just one in a series of a dozen or more articles in that paper on investigations that spanned several months. This happened on a grand scale nationally, pushing prices higher and higher. This article continues by stating that when the few owners who actually paid to live there "began trying to track down delinquent buyers, they discovered other oddities, including the fact that nearly every buyer was Brazilian and six had listed fake U.S. addresses on the contracts they signed to buy units." Foreign "investors?" Straw Buyers! Like I said, the banks didn't want to know and the brokers all kept their commissions. Ask them about that!
So I must ask, is there any government program designed to assist the people in this complex that actually invested real money and have been robbed and defrauded... left underwater? Not!
Some cities in California are now using "eminent domain" as a way to "end" this housing crisis. However, these programs again strategically ignore the demographic I am addressing. These programs are aimed at putting a bandage on the housing crisis while overlooking people who lost their life savings as well as their good credit to this crime. Again, people who invested cash are not the target group. Only those who are "underwater."
If you made a substantial down payment, perhaps you are not underwater enough to qualify for the loan "modification." No, you just lost all of your money and are still underwater. There is never any mention of looking at the closing documents from when the property was purchased to see what was invested or lost. You can still continue to pay because this is the ethic you were raised to know ("The American Dream") and still have no equity in several more years to come. No, this is just another poorly designed, incorrectly targeted program destined to fail.
We hear that these programs are aimed at helping those who only wanted "The American Dream." Aimed at those they call the "hardest hit," the victims. Sorry, they weren't the "victims of predatory lending." Those who invested their cash were the victims. I looked up the definition of "The American Dream." It is defined as "the ideals of freedom, equality, and opportunity traditionally held to be available to every American." (http://dictionary.reference.com). Wikipedia.org further defines The American Dream as the "national ethos of the United States; a set of ideals in which freedom includes the opportunity for prosperity and success, and an upward social mobility achieved through hard work." It clearly does not say anything about "no money down real estate with cash back at closing." The definition clearly states "upward social mobility achieved through hard work," not subprime. The term has been hijacked along with many other words we hear bantered about these days. We need also, among other things, to take back our language while words still have some absolute meanings!
Adding insult to injury, a 2010 report written by The Center for Responsible Lending (CRL) titled Foreclosure by Race and Ethnicity, focuses on depreciation in real estate values in neighborhoods that are primarily made up of Blacks or Hispanics since the peak. No mention of actual money invested or money lost. No depreciation compared to money invested. The report just focuses on declines in the (fraudulently achieved) high property values of the mid 2000's in these neighborhoods until now. Tell me; if you bought a home with a no doc, no money down loan and perhaps got cash back at closing to pay off your credit cards, did you really "lose" anything in the foreclosure? I don't think so. However, you would be first in line to qualify for any government loan modification program designed to date. I am surely not claiming that nobody in these neighborhoods invested or lost money. But wouldn't you agree that those who paid should be first in line to return their faulty mortgages? Shouldn't a report from the CRL focus issues like this?
Perhaps I missed it, but there is never any mention of people who saved money for years, worked hard in a capitalistic economic system, made down payments with that money and had their cash as well as their good credit taken from them in the process. No mention of those people who had their equity and of the life savings stolen in this, the largest wealth redistribution scheme ever in the history of our country.
The investors who bought the Mortgage Backed Securities, it seems, have standing and are able to sue. They are also being protected in these new eminent domain schemes. However, the people who made down payments at the other end of these investments lost their money and are offered no legal recourse. They have been destroyed economically. No, we are told, "they just bought at the top." It was the financial "experts" who created this mess, why should we believe they hold the solution? It is not our responsibility to "unwind" these "complex financial products" that are destroying the economy. Just look at the recent JP Morgan losses due to "egregious mistakes." The money wasn't "lost," it changed hands. We were robbed... again! We're told, just more "misstated financial statements," that's all. And now we are letting them come up with this disastrous "eminent domain solution?"
How about some facts: Civil lawsuits filed in 2011 by the SEC charged that Richard Syron (ex-CEO), Daniel Mudd (former executive director) and others in the leadership of Fannie Mae and Freddie Mac grossly understated these lenders' exposure to subprime mortgage loans. Mudd, Syron and others made tens of millions each from these "understatements" and "misjudgments." The lawsuit states that from 2007 to 2008, Freddie Mac executives said the company's exposure was between $2 billion and $6 billion when it was actually as high as $244 billion. From 2006 to 2008, Washington-based Fannie Mae executives said the firm's exposure to subprime mortgage and reduced documentation loans was about $4.8 billion when it was nearly 10 times greater, according to the regulator. The "conventional wisdom" is that they simply "missed" these facts and figures, "misjudged." I don't believe it for one minute. Not when they walked with millions and left us bankrupt!
This sure sounds like a lack of full disclosure by the banks being made to borrowers who invested their hard earned cash to me. Americans were lied to, sold faulty mortgages. They were robbed. The appraisals that were provided by bank approved appraisers were fraudulent based on fraudulent sales for the most part, and they knew it.
So, give us our money back and our pre housing crisis credit scores. In fact, if there is any eminent domain here to consider, it is the fact that most who made down payments invested more than the properties are really worth. Let them keep it for the trouble this has caused them.
© Frank Louis
July 15, 2012
In the housing crisis, there is a much overlooked demographic that are continually ignored. I continue to report on them. These are the people who made substantial investments in the real estate they purchased in the early to mid 2000's. The people who made down payments on their property and lost it overnight along with their good credit.
Unbeknownst to most Americans at the time, the banking mindset that shaped the housing crisis was that the primary purpose of a mortgage was no longer to buy a house. Buying property had taken the backseat to the production of Mortgage Backed Securities (MBS). The mortgage had become the integral ingredient required in packaging the real product, Mortgage Backed Securities. Buying/selling the property was just a byproduct of creating mortgages to make the Securities.
Those who "invested" in real estate by purchasing property using "No Income, No Job, no job Application" mortgages (called "NINJA" loans), were used to produce more mortgages and commissions for the industry. They assisted in creating an unprecedented fraudulent, unsubstantiated, and unsustainable raise in housing prices. A Keynesian experiment in modern monetary theory gone awry. Now, with some cities looking at the use of "eminent domain" as a cure for the ills done to the American working people during this economic debacle, there seems to be no end to the stupidity that will be attempted in trying to turn housing around. The people who were robbed in the process will still be overlooked and the folks who made these toxic mortgages will be at the hear of the line for this mortgage bailout as well.
Much of this "NINJA" property, we now know, was "bought" by fictitious people known as "straw buyers." While you may hear some in the media mention (rarely) these buyers, they fail to give this element its credit due. These sales played a substantial role in running up values artificially as real estate sales are based on recent comparable sales. Go ahead, call a real estate talk show of agency and ask if they have heard of "straw buyers." Chances are good they will say "no."
A Sarasota Herald Tribune article (Dec. 13, 2009) focused on a condo complex where "Two of every three buyers in the complex stopped paying their mortgages, most without making a single payment." This is not an isolated example. This is just one in a series of a dozen or more articles in that paper on investigations that spanned several months. This happened on a grand scale nationally, pushing prices higher and higher. This article continues by stating that when the few owners who actually paid to live there "began trying to track down delinquent buyers, they discovered other oddities, including the fact that nearly every buyer was Brazilian and six had listed fake U.S. addresses on the contracts they signed to buy units." Foreign "investors?" Straw Buyers! Like I said, the banks didn't want to know and the brokers all kept their commissions. Ask them about that!
So I must ask, is there any government program designed to assist the people in this complex that actually invested real money and have been robbed and defrauded... left underwater? Not!
Some cities in California are now using "eminent domain" as a way to "end" this housing crisis. However, these programs again strategically ignore the demographic I am addressing. These programs are aimed at putting a bandage on the housing crisis while overlooking people who lost their life savings as well as their good credit to this crime. Again, people who invested cash are not the target group. Only those who are "underwater."
If you made a substantial down payment, perhaps you are not underwater enough to qualify for the loan "modification." No, you just lost all of your money and are still underwater. There is never any mention of looking at the closing documents from when the property was purchased to see what was invested or lost. You can still continue to pay because this is the ethic you were raised to know ("The American Dream") and still have no equity in several more years to come. No, this is just another poorly designed, incorrectly targeted program destined to fail.
We hear that these programs are aimed at helping those who only wanted "The American Dream." Aimed at those they call the "hardest hit," the victims. Sorry, they weren't the "victims of predatory lending." Those who invested their cash were the victims. I looked up the definition of "The American Dream." It is defined as "the ideals of freedom, equality, and opportunity traditionally held to be available to every American." (http://dictionary.reference.com). Wikipedia.org further defines The American Dream as the "national ethos of the United States; a set of ideals in which freedom includes the opportunity for prosperity and success, and an upward social mobility achieved through hard work." It clearly does not say anything about "no money down real estate with cash back at closing." The definition clearly states "upward social mobility achieved through hard work," not subprime. The term has been hijacked along with many other words we hear bantered about these days. We need also, among other things, to take back our language while words still have some absolute meanings!
Adding insult to injury, a 2010 report written by The Center for Responsible Lending (CRL) titled Foreclosure by Race and Ethnicity, focuses on depreciation in real estate values in neighborhoods that are primarily made up of Blacks or Hispanics since the peak. No mention of actual money invested or money lost. No depreciation compared to money invested. The report just focuses on declines in the (fraudulently achieved) high property values of the mid 2000's in these neighborhoods until now. Tell me; if you bought a home with a no doc, no money down loan and perhaps got cash back at closing to pay off your credit cards, did you really "lose" anything in the foreclosure? I don't think so. However, you would be first in line to qualify for any government loan modification program designed to date. I am surely not claiming that nobody in these neighborhoods invested or lost money. But wouldn't you agree that those who paid should be first in line to return their faulty mortgages? Shouldn't a report from the CRL focus issues like this?
Perhaps I missed it, but there is never any mention of people who saved money for years, worked hard in a capitalistic economic system, made down payments with that money and had their cash as well as their good credit taken from them in the process. No mention of those people who had their equity and of the life savings stolen in this, the largest wealth redistribution scheme ever in the history of our country.
The investors who bought the Mortgage Backed Securities, it seems, have standing and are able to sue. They are also being protected in these new eminent domain schemes. However, the people who made down payments at the other end of these investments lost their money and are offered no legal recourse. They have been destroyed economically. No, we are told, "they just bought at the top." It was the financial "experts" who created this mess, why should we believe they hold the solution? It is not our responsibility to "unwind" these "complex financial products" that are destroying the economy. Just look at the recent JP Morgan losses due to "egregious mistakes." The money wasn't "lost," it changed hands. We were robbed... again! We're told, just more "misstated financial statements," that's all. And now we are letting them come up with this disastrous "eminent domain solution?"
How about some facts: Civil lawsuits filed in 2011 by the SEC charged that Richard Syron (ex-CEO), Daniel Mudd (former executive director) and others in the leadership of Fannie Mae and Freddie Mac grossly understated these lenders' exposure to subprime mortgage loans. Mudd, Syron and others made tens of millions each from these "understatements" and "misjudgments." The lawsuit states that from 2007 to 2008, Freddie Mac executives said the company's exposure was between $2 billion and $6 billion when it was actually as high as $244 billion. From 2006 to 2008, Washington-based Fannie Mae executives said the firm's exposure to subprime mortgage and reduced documentation loans was about $4.8 billion when it was nearly 10 times greater, according to the regulator. The "conventional wisdom" is that they simply "missed" these facts and figures, "misjudged." I don't believe it for one minute. Not when they walked with millions and left us bankrupt!
This sure sounds like a lack of full disclosure by the banks being made to borrowers who invested their hard earned cash to me. Americans were lied to, sold faulty mortgages. They were robbed. The appraisals that were provided by bank approved appraisers were fraudulent based on fraudulent sales for the most part, and they knew it.
So, give us our money back and our pre housing crisis credit scores. In fact, if there is any eminent domain here to consider, it is the fact that most who made down payments invested more than the properties are really worth. Let them keep it for the trouble this has caused them.
© Frank Louis
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