Abused Homeowners
By Victor M Adamus
“Bank of America is now bigger and more dangerous than ever. It controls more than 12 percent of America’s bank deposits (skirting a federal law designed to prohibit any firm from controlling more than 10 percent), as well as 17 percent of all American home mortgages. By looking the other way and rewarding the bank’s bad behavior with a massive government bailout, we actually allowed a huge financial company to not just grow so big that its collapse would imperil the whole economy, but to get away with any and all crimes it might commit. Too Big to Fail is one thing; it’s also far too corrupt to survive”. -Matt Taibbi << Rolling Stone
We learn from countless news reports that Wall Street thugs put together a mortgage instrument called the “No Doc Loan” meaning people who could not qualify for a home mortgage could do so with no check on their income or credit worthiness. A Taco Bell manager in Florida making $26,000 a year bought a $350,000 pool home with no money down. The mortgage monthly which included principal, interest, taxes and insurance was $2454 per month. The managers take home pay was $1733. There was no way this person could survive that mortgage as written unless he/she had a second income stream or used a portion of the property as income, renting a room, renting two rooms. This type of math was used widely nationwide. It was called “junk paper” but reported to the world’s investment banks as triple “A” paper and even offered as a swap if the notes turned sour.
Not only did the notes turn sour, the enormous amount of unpaid mortgages caused the housing market to crash, making the value of the property 30 to 40% less leaving the unsuspecting homeowner with no way to turn a profit, get out from under the investment.
The mortgage crisis was caused by Wall Street greed. And rather than the government bailing out the people who were hoodwinked into thinking they would make huge gains by purchasing a property with literally no background checks and no money down, the government bailed out the banks. They bailed out the crooks who caused the market to crash.
This corrupt business model was based on the wealthy Wall Street investors relying on taxpayers to bail them out if the bet didn’t work. If they couldn’t continue as reckless as they had been the government would pay, and pay they did to the tune of billions of dollars from both the Bush Administration and later the Obama Administration. What was left was a market crash that pushed down the value of properties dramatically for the first time in 70 years.
People who already were homeowners and counted on the equity in their homes to supplement their retirement or pay down their bills were also compromised by the crash. They had little equity to work with and were sitting on a worthless investment if they even had a small mortgage.
Leading banks, holding the dead paper, are Bank of America, JP Morgan, Chase, Wells Fargo, Citi Group, and Ally Financial. The Fraud Task Force appointed by the Obama Administration has been working with these banks to either write down these notes or face criminal charges. The fraud is so egregious that most authorities believe wealthy executives have been operating with impunity for so long that they’ve put the U.S. financial system permanently at risk. The task force has demanded the banks write down $25 Billion in bad paper or face arrest and conviction. These threats were made months ago and only recently has the task force issued a statement to those parties involved that without writing down the money, they will seek a conviction and send the powerful to jail.
When these banks have the ability to wreck the U.S. economy for self profit the government has to put away political sweetheart contracts and deny bailing these banks out even if it means the banks themselves go into insolvency. It’s a risk that now must be taken.
Look for updates here as the task force either pulls the plug on banks holding foreclosure notes and refuse to write them down or they do write them down and allow homeowners who have been abused to stay in their homes.
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