Thank you! It is nice to know that some one gets it. We are well beyond a financial crisis. Unless we wake up to demand that Congress restores rule of law we will be cooked and in a very dangerous conflict with our foreign creditors. This is borderline treason, was highly foreseeable and preventable.

Yes, not only was I forced out of business, but after due diligence had loaded up on puts/leaps on a few lenders. Providian Financial which was purchased by now defunct WAMU, WAMU and CFC.

I don’t know what business you are in and what possible claims you have, but there are laws for unfair competition, especially when it hurts consumers as well.

In my markets over 35% of loan originations were Option ARMs during relevant times. I am confident that 95% of all these borrowers were NOT qualified for those loans. I have alleged that these loans were predatory products (below market costs) similar to dumping micro-chips.

Obviously, loans are different than Microchips in that I nor the Defendants own the chips/loans, but we manufacture them with other people’s money. All Defendants have stopped originating Option ARMs.

I would estimate that 50% of all borrowers who obtained any financing in relevant markets during relevant times 2004-2007 were NOT qualified. This clearly had an impact on prices and my ability to uphold fiduciary duties or to supervise my agents to see that they did the same.

As evidenced in prior posts I was one of the only brokers in the Nation warning of these fraudulent loans instead of exploiting clients and the American Dream of Homeownership.

There are numerous on point cases that provide ruling supportive authority.

There was no market in the Nation that was as inflated as my county, especially for the average wage earner.

I am happy to debate my claims with anyone who is interested : )

Redeye: Good god man/woman; what on earth are you talking about?!?

Two consenting parties?

Taxpayers have not agree to bail out homeowners and the banks are insolvent. They have NO say in this per taxpayer funds.

As servicers they do have flexibility with investors funds, but there are numerous law suits against Countrywide and other servicers by investors who claim they did not agree to settle law suits and or modify loans.

My biggest fear and most likely the reality is that GIANT PONZI schemes exist in the mortgage pools. Once a loan is repaid via sale or refinance the investors are supposed to be made whole. Given the mess we are in; it is highly possible that loans have been paid off, but NOT paid in full to investors; only used to make interest payments.

In addition, it appears that loan mods allow the investors to amortize that loss over the life of the loan instead of taking the immediate hit like when a REO is sold.

Losses at the banks will continue for many years and this will wipe out trillions in pension and insurance funds once this is all done.

Bottom line: The bank will take the path of least loss when faced with a non-performing asset. This is a case-by-case decision, not some rigid ideology. The rigid ideology of making loans to anyone with a pulse is what got them into trouble in the first place. When foreclosure represents the least loss then they will foreclose. When modification represents least loss they will modify. When principal reduction represents least loss they will reduce principal.

That’s how the free market works. If we could just get you, W, Barak and the rest of the “I know better than the market” socialists out of the way, the market will find true value. And yes, you may not think so, but you are a socialist. You want to impose your social values of “not giving people bundles of cash” on an agreement between two consenting parties.

That’s the thing about the free market. It’s not important that you agree with it, only that you respect it.

Great post, white collar criminals have been getting a slap on the wrist for decades for stealing tens or hundreds of millions of dollars while drug dealers get far worse sentences. After plea bargains, it looks to me as though white collar crime pays pretty well.

Unless the nation realizes white collar crime can be far more damaging than a drug dealer, we are not going to have change. If your house gets burgled, it is recoverable. If your life savings gets ripped off through investment scammers, I am sure that those who got scammed would have settled for a burglary to replace a TV or jewelry.

Here we have people who got ripped off in housing where the banks were creating false markets at both ends of the spectrum. When someone puts a down on a house, it pretty much constitutes their life savings. The investors in MBS have gotten wiped out as well. Where is the line of people who are going to be doing time for this?

Homeowners are just plankton in the grand scheme of things, the big fish who have the level of responsibility are just going to walk. Sure some people lied on their documents and I believe they should be penalized as well to some degree. At the same time, banks should have not accepted these loans without performing due diligence.

What you hit on is rule of law which I have said from the beginning is missing from society. Prosecuting drug dealers is easy compared to white collar, yet as we can see, white collar can destroy a country.

This crisis is going to destroy insurance companies along with pension funds that had invested in financials and the secondary hit of insurance companies. That leaves us paying for the following.

Bank losses.
Insurance company losses.
Pension fund losses.
*** Your personal housing hit if you have one.
*** Your “bad economy” hit via wages/business income.
*** Your new state taxes, personal, sales tax and business. These are additional kick ins above recapitalizing pension funds which we will bear.

So even if you are just a renter during the entire bubble years, you are going to be taking a hard hit for all of this.

Another thing Michael, I was reading years ago on OTC derivatives. They were used to insure assets to allow them to qualify to be on a balance sheet where without the insurance, the assets would not qualify to be there or discounted. If the asset was guaranteed, they would be able to carry the asset at full value or higher than normal. By increasing the value of the asset on the balance sheet, I assume that they were able to lend more.

I am taking it that you were forced out of business because you refused to engage in a dishonest practice? I have competitors that do it all the time.

Stop right there. That is bullshit to suggest that foreclosure is more expensive. FIRST: if the house is sold at current market value, that means that reducing the principal to current market value would be the EXACT same thing, cost-wise. SECOND: only a fraction of people are walking away. A much larger amount of people would apply for principal reductions. Use common sense, think about it. Principal reductions are exactly like giving people bundles of cash. Who would NOT partake in that that is eligible? They all would.

Principal reductions would cost an ungodly amount compared to foreclosures.

This is not directed at anyone in particular, but no matter what Mark/Mr. M writes about the thread always ends up being a discussion about whether or not America should bail out homeowners who are facing foreclosure.

I don’t mind this debate, but we should keep on point. Mark (MR. M) provides some great information that should be discussed.

The title of this article is
The End of Large-Bank Wholesale Lending – Time For the Mortgage Banker

As a 2nd generation real estate and mortgage broker who closed down his office in Jan 2004; this article hits a very sensitive issue for me. To those of you who believe in “free market” capitalism and our Constitution this should be extremely important to you as well.

Corporate America has run rough shod over consumers and small business for decades. Their ability to do so has been aided by our laziness and ignorance. More intentionally and directly lobbyists have been well paid to convince/bribe our representatives that unrestrained outsourcing is for the greater good of America via lower consumer prices.

I say BS; outsourcing was more to influence foreign investors to accept IOUs for their citizens hard work and their Nation’s raw materials.

The recent/continued success of America has been about Ponzi finance/data manipulation; manufacturing debt instead of products. Wages have been declining for almost a decade, GDP is a fantasy and inflation has been grossly distorted. (owners’ equivalent rent)

Do I blame borrowers for this crisis NO.

Our government has been a terrible role model about living beyond its mean and prosecuting white collar crimes. In addition, loan officers who were contractually obligated to qualify borrowers began coercing their agents how to commit fraud.

Never before has Corporate America been able to get away with such horrendous crimes and the destruction of an industry. This was a perfect conspiracy by the Lenders, i-banks and rating agencies. Establish incredibly reckless guidelines and enlist agents and borrowers to do the dirty work.

All they had to do was to let borrowers and agents “state” a borrowers income and look the other way when fraud was exposed – on occasion the fraud needed to be concealed. Unfortunately, most agents and millions of borrowers joined the conspiracy and became the perfect scapegoats.

Now it is the End of Wholesale Brokers; next will be Bankers and along the way the Lenders will be pushing to be able to sell real estate.

In many bubble markets unless you as an agent peddled fraud and or encouraged buyers to purchase homes that were grossly and fraudulently inflated you could not compete.

My industry has been destroyed despite my countless warnings to regulators, legislators, law enforcement, media, prospects, clients, etc.

Unlike prior industries or careers that have been destroyed by outsourcing and Congress’ approval; real estate professionals have been done in by a conspiracy and fools from within the industry.

SideNote:
Am I the only who thinks this is a bit odd that the insurance companies became so involved and exposed to this trash. Could it be that insurance companies were insolvent before they ever sold a CDS or purchased MBS? Were Pension funds going to be able to handle longer life expectancies? Hmmm

The focus should NOT be bail outs; it is rule of law. America is already bankrupt; no more cash out refi’s

For me, you’ll be paying for 25 % of my loan value and/or my wife will be buying our house from WaMu for half we paid for it! A win-win.

But all the people homeless, and former S-Class-driving piggies putting around in Hondas?

There will be plenty of faces in the mats. You’ll feel right at home.

I thought OB said we need responsability, and collective effort… where is my 100K????.. TARP for renters and new buyers!!!

YOU MAY SAVE SOME..DELAY THE PROCESS (A MAYBE).. but in our economy where demand is not there.. PRICES WILL CONTINUE TO DROP!! while tax payers foots the bill.. and food prices will continue going up…

WHERE’S MY BAILOUT?? 100K… I WILL HELP AND PROMISE TO BUY TODAY.. YES I CAN AFORD THE NEW PRICE

… HELLO EX OWNERS CALLING!!! 100k BAILOUT, AND WE WILL BUY HOMES TODAY!!!!

meanwhile (because no alternative, and learned a lesson)
I’m SPENDING 0!!
I’m saving 40%
my 401 k is in INFLATION!!! THAT’S RIGHT.. we’re going to see it.. (AND NOT IN ASSETS.. you get the point).. expect your home to quadriple in price.. in 2035!