The Real Solution to the U. S. Mortgage and Foreclosure Crisis

The current "mass-foreclosure" approach by the American banking community will not resolve anything in the long run. Foreclosure-derived profits have encouraged the development of foreclosure mills to generate very substantial revenues from toxic assets (defaulted mortgages on properties with mortgage debt in excess of property value). These mass-foreclosures are discriminatory and "un-American" in concept; designed to help the banks at the unfair cost and demise of homeowners. The real answer is to shut down the foreclosure mills and negotiate realistic settlements with homeowners.

These are the basic reasons:

1. The banking system wants everyone (especially the courts) to believe, and buy into, the disingenuous notion that the homeowner was the primary and proximate cause of the mortgage crisis and collapse of the housing market. The truth, however, is that the typical homeowner was lured into the "mortgage-free-for-all" by the bankers and their Wall Street counterparts who were making mind-boggling profits from derivative financing arrangements based on the highly speculative "securitization" of collateralized debt obligations.
   
   
2. Now that (a) these billions of dollars of fees that were enjoyed by the banking community and Wall street crowd at the ultimate cost to unsuspecting investors in mortgages and mortgage-backed securities are long gone, (b) over half of homeowners' equity in their properties has been wiped out in the past five years, (c) consumer costs are sky-rocketing out of control and credit is unmercifully tight or restricted, (d) there is double-digit unemployment, (e) the national debt is approaching an unsustainable $15 trillion, (f) pension funds all over the country are under-funded, (g) social security is operating in the red, and (h) the banks and Wall Street are making record profits; the banks still want to pin all the blame for mortgage defaults on the homeowner!
   
   
3. The homeowner certainly has to share some of the blame, but the real story here is the extraordinary fraud that is being covered up by the foreclosure mills conducting a vast majority of the foreclosures across the country. These foreclosure mills are hired by the banks to deal with the fact that the pooling, securitization, and sale of mortgage derivatives on Wall Street has, in many cases, actually compromised the legal ability to foreclose on the securitized mortgages. To facilitate the foreclosure on such compromised mortgages, a "cover-up" is typically orchestrated by forcing the homeowner to first apply for a modification or some other type of forbearance; thereby admitting to the legitimacy of a mortgage loan that has been "sliced and diced" on Wall Street. Then, while the homeowner thinks his or her mortgage is going to get modified, that homeowner finds out that a foreclosure is imminent - often by a party (perhaps some trust or government sponsored enterprise) that the homeowner hadn't ever done any business with. Inevitably, the homeowner cannot begin to afford to defend against the sophisticated and complex frauds that often set the stage for the foreclosure on a toxic asset. These hidden frauds often include foreclosures taking place without proper legal standing or based on illegal or missing mortgage assignments (especially in connection with mortgage transactions where Mortgage Electronic Registration Systems, Inc. (MERS) is acting as the mortgagee by being named a nominee for the lender and/or the lender's successors and assigns); the knowing lack of debt validation through improper, missing, or deficient note endorsements; the concurrent conflicts of interest by foreclosing attorneys who are running the particular foreclosure mill (who sometimes represent the mortgage servicer, foreclosing bank, and buyer at auction - all at the same time!). One of the primary reasons that foreclosure mills are able to "get away with the fraud" is that the financial community has been successful, for the most part, in convincing many judges that, if a given mortgage is in default, it "really doesn't matter" whether the foreclosure is legal or illegal. However, many of the courts around the country are starting to take a closer look - but there is still a long way to go in getting many courts to even acknowledge the legal short-comings and greed-driven motives of the almighty and all-powerful banks.
   
   
4. The bottom line here is that ALL homeowners (especially homeowners who have sacrificed their home equity and other assets without going into default) should be afforded the same type of consideration that was given to the banks by the federal government - especially since it was NOT the homeowner that caused the housing crisis in the first place. Rather than giving any more money to the banks, Uncle Sam should consider reimbursing homeowners for a percentage of their equity lost at the hands of failed fiscal policies and market manipulations by the Fed. At this point in time, Congress should (a) require mortgage holders to negotiate equitable settlements with defaulted borrowers who can sustain a reduced payment with a clean slate - so that they can return to the ranks of being productive workers and family members, and (b) make sure any homeowner who has lost home equity in the housing crisis is compensated in some reasonable fashion (tax break, cash, or other appropriate benefit). Banks will fight this like the plague, but either America is going to have a government "of the people, by the people, and for the people" or America is going to have a government "of the banks, by the banks, and for the banks." We all know which one of these options is right.
   
   

For additional information:

Edward H. Smith
PMB 296 at 816 Elm Street
Manchester, NH 03010

Phone: (603) 867-1022
Fax: (603) 218-6624
Email: edsmith@ehsportal.com
Web: www.ehsportal.com