Homeowners Can Afford Those Homes and Should Stay: Largest IPO in History

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THE OBAMANOMICS MYTH THAT BORROWERS NEED TO BE FORCED OUT OF HOMES THEY CANNOT AFFORD:

Therefore, they argue, there should be no stopping the foreclosures. Here is where this writer and other contributors to the blog and the Ivory Tower collide. And here is where the Democrats are going to take a hammering if they go along with the mantra coming from this administration. Caught up in the flood of foreclosures are mostly people who at one time or another in the drama COULD afford the deal they were offered. By focusing on the inability of people to pay for a deal they didn’t know they were getting into, we are avoiding the sordid truth of the continuing fraud accomplished through foreclosure and credit bids from non-creditors.

The foreclosures MUST stop. The destruction of documents was intentional, a cover-up of a much larger fraud. Let the chips fall where they should, Mr. President, and the end of this game will be in sight. Continue on this path and we will be dealing with financial and property title chaos for decades. Ignore the obvious revenues and profits that were never reported, the transactions that were never recorded, and you sustain an untenable deficit of revenues to costs at all levels of government. The benefits flow only one way right now — to Wall Street, the members of which club are making money hand over fist while the rest of the country is mired in false debt. It’s us or them, Mr. President. Either we leave the bank oligopoly in charge of our lives or we take back that control.

The White House is ignoring the fraudulent aspect of this scheme and the further it  goes down that path, the further the disconnect from the American people. The people know it and Washington doesn’t. There was outright fraud on all end of this thing perpetrated by the banks and the question is whether, as Terry Goddard AZ AG said yesterday, whether we have “the gumption to simply pull the trigger.” How is it that the attorney general from one of the most ridiculed (unfortunately my state) states in the union understands the issue and the White House doesn’t?

This is not rocket science or conspiracy theory. The financial loan product sold to the homeowners was essentially an unregistered security sold under false pretenses. The promise was that the house was worth more than the loan and the loan would enable them to gain passive returns through continued increase in market values that were false to begin with. Everyone knew it was a false premise except the homeowner. Now the homeowner is stuck with a security investment that actually has a negative value because it leaves him investing even more in the project than the original deal — through liability in excess of the real value of the property. The risk factors spelled out even in the prospectus given to mortgage bond buyers had more information than what was given to the homeowners. If this was an IPO, which it was in actuality, the SEC would have frozen it immediately, for failure to disclose obvious risks and false premises.

Up until now, the Courts and the SEC, and the agencies regulating banks had no problem with what to do in these cases. You seek to make the victims whole again. Viewed from that perspective, few if any people are living in homes they cannot afford. Rescinding the transaction with the banks who committed the fraud only reverses the money part between the homeowner and the bank. It does not reverse the transaction between the homeowner and the seller from whom he purchased the home. That leaves the homeowner with a house he or she or they can very much and easily afford. If there is an obligation still outstanding after set-offs for the fraud, predatory lending, punitive damages, attorneys and costs, I’m sure we can work something out.

Larry Hagman, star of Dallas, just won an award against Citi for $1.1 million in compensatory damages and $10 million in punitive damages. Thousands of other investors, many of whom went into those fake mortgage bonds are getting the same relief. Why? Because they put Hagman in bad investments. Why should Citi be absolved of guilt for doing the same thing to homeowners? We are treating homeowners as “qualified investors” when they are the persons with the least information, the lowest qualifications, and the least sophistication in assessing financial risks associated with a security. Mr. Obama, you are getting bad advice from people who are making bad assumptions based upon incomplete facts. Just do what we always do to fraudsters and do what we always do for their victims, and the housing market, as well as a large part of the economy will be saved.

Folks, if you do it any other way, you might as well give Madoff back the money he stole. It’s the same thing.

Tags: Dallas, DEFICIT, destruction of documents, fraud, larry hagman, moratorium, security investment, title chaos
Posted in bubble, Corruption, Eviction, securities fraud |