Chris Hayes: "ALL IN" Keeps the Mortgage Scandal in the Public Eye

Death by foreclosure: This week’s real scandal. See Chris’ report on Death by Foreclosure and then his interview with group in Boston that is coming up with creative solutions:
http://video.msnbc.msn.com/all-in-/51923455 — you can just wait through the commercials to see the interview or click the link below:

See Chris Hayes on ALL IN: Death by Foreclosure

There are only two suggestions I would make to Chris and those who are seeking to provide creative remedies like the Boston Group he interviewed:

1. Do not assume that Wells Fargo owned the loan of the man who died in the courtroom. The odds are, especially since it was a high risk “pick-a-payment” loan, it was securitized — or more correctly stated subject to false claims of securitization, wherein Wells Fargo never had the risk of loss on the loan, because they were using the money of pension funds and other investors. Wells has a history of denying securitization and then admitting it later on in litigation — something which has led to them being cited for contempt of court.

2. The group that is buying the homes through short sales and then selling them back to the homeowner at fair market value is doing a good thing with a good business model. But I would suggest that they get more aggressive with their efforts and demand proof of payment and proof of loss before they make a payment to a bank or other entity that is more than willing to accept the money and execute a satisfaction or release, but who doesn’t have any money in the deal, thus leaving the actual creditor out in the cold in an undisclosed transaction.

I would suggest going into select cases that are in court with financing plans like the hedge fund I am organizing, and disclose that you are willing to refinance 100% of the mortgage with the party seeking foreclosure IF they can come up with a canceled check, wire transfer receipt etc. showing that they are indeed the creditor and that the chain of money  leads and ends to and with them.

If you select your cases properly, the outcome will be that they can’t do it even if the Judge orders them to do it. They will then try to salvage the situation  by making offers which you should refuse because they are in no position to offer anything. This in turn will hopefully lead the Judge to dismiss the foreclosure with prejudice and enter an order declaring the rights of the stakeholders (quiet title).

Under prior agreement with the homeowner, the fund actually loans some money to the homeowner for payment of attorney fees and other expenses and the homeowner executes a mortgage in favor of the fund for an amount that is 75% of fair market value, fixed interest, 30 years, self amortizing — in another words a traditional mortgage.

The mortgage received by the fund is quite a bit more than the amount of the loan funded but pays off the fees and other expenses and risk undertaken by the fund. It also leaves the homeowner with a completely affordable mortgage with equity restored in his home. And it provides the fund with capital to do it again and again, using either the existing plan of short-sales or calling the bluff of the foreclosing party who at least 80% of the time is just playing games aiming for a free house.

The reaction of the party foreclosing is going to be interesting, because the goal is the foreclosure sale and not necessarily getting the house — as they often abandon the home after the foreclosure sale let it get bull-dozed.

They will be forced into the position of arguing against getting paid and demanding that the foreclosure proceed! Why, because the backlash from their previous actions is going to bite them very hard — they might owe the insurers and credit default swap counterparties a truckload of money if those homes don’t go into foreclosure as assumed, and the value is pegged as low as possible — thus maximizing their apparent loss and justifying the maximum recovery of insurance and credit default swap proceeds.

Tags: All In, Boston, Chris Hayes, Death by Foreclosure, MSNBC
Posted in Corruption, securities fraud |