Mortgage Meltdown: The American Proactive Way to Curing the Wounds

A lot of people are asking me what I think of the current proposal to bailout of the economic mess we are in. The Wall Street Journal and other mainstream media are now explicitly referring to us as a subprime government. Nobody is impressed with a plan that will cost, in actuality, at least the equivalent of the entire annual gross domestic product of the United States. Putting $700 billion (which will quickly turn into two or three times that) into the hands of a government that has been either so inept or so complicitous in this meltdown is clearly not the right thing to do even if for some reason there was some basis to trust them. The best anyone can say about the economic stewardship is that it was wrong so many times that we need to look elsewhere for the good ideas.

The bailout is aimed at the infrastructure instead of the victims. The mere announcement has resulted in a pounding of the dollar’s value, an unprecedented increase in the cost of fuel, and a further disillusionment with the United States government around the world. The resulting inflation, while ameliorated by the inevitable recession that will follow, will punish the middle class and poor citizens mercilessly into an emotional stupor.

If we can all agree that saving our country from being taken over by foreign interests is preferable to current events, then we must drop our ideological views and start thinking practically and proactively. In my opinion, the mortgage meltdown crisis and the crisis of the dollar can better be helped without spending spending tax dollars and in fact, by avoiding spending tax dollars. The money is right there already in the system — in what should be equity in home ownership. Many people had it until the slick salesmen called on the phone or came knocking on the door. We need to restore that equity, let those in the infrastructure fall if they can’t meet their obligations and let the rest of the infrastructure, which is largely unaffected by this meltdown, take their rightful place as the new leaders.

The choice is really much simpler when you take out the goal of saving the investment banks and lending banks who engaged in massive fraud. Sure we can find ways to help them, but not at the cost of ruining what is left of of the value of the American dollar.

There are two proactive routes we could take that would restore order and provide a solid foundation that everyone around the world would agree is real. That should be the goal, because for 30 years we have been creating vapor and calling it money. Now it has come home with a vengeance.

The first route is that which is proposed on this blog. In my opinion, in Florida, and probably all the other states, the mortgages and notes created during the 2001-2008 meltdown are invalid, unenforceable and represent no encumbrance on any home.

• Through the use of existing laws and existing judicial procedures and rules of evidence, nearly everyone of them can be knocked down, leaving the country with millions of homes that are unencumbered with mortgages and notes, and restoring the wealth of the middle class and poor populations that were cheated, robbed, lied to and coerced into deals they didn’t understand.
• It can even be used for foreclosure sales that have already occurred and homeowners that are distressed but not yet delinquent in their payments.
• No taxpayer money spent, no blank checks, just recognizing that the wild ride of inflated appraisals and secret “gotcha” terms must be turned around — for the purpose of restoring wealth to the people it was taken from. Let’s stop pretending it didn’t happen. The word is out and each day we pretend that we didn’t lie, we didn’t cheat, we didn’t create fake money our credibility goes down further and further.
• In simple terms, let then word go out that we are a nation of laws, that our leaders make mistakes, that we the people correct them, and we make good on our promises.
• Now before you knock this down, keep in mind, that websites like this one are springing up all over the country, mortgage audit review services, lawyers, and former mortgage brokers are all getting into the act creating a cottage industry of saving homes from foreclosure. This movement, with your help, is reaching critical mass and it will happen whether you like the political ramifications or not.
  

The second way is more nuanced, but possibly more politically palatable.

It is pretty clear how this all evolved. Target areas were established. Target demographics were put on teh radar. And off went the armies of convicted felons who were now licensed mortgage brokers, spewing forth lies and collecting appraisers who would say anything for a buck, and getting title agents who would look the other way, and Trustees or “lenders” who would act without conscience, all conspiring to create the appearance of a booming economy in certain areas of the country, some more than others.

One idea that has been floated by Barnie Frank, the Clinton duo, and others, but which so far has not received much attention is adjustment of the mortgages to deflect the impact of the artificial conditions perpetuated by the big players. They didn’t just artificially inflate the price of one house, they did it to entire neighborhoods and cities. Now Cleveland and other cities are decimated.

It IS possible to identify those areas that were the target of this game and it is possible to assess the specific impact on each area. Thus it IS possible to reduce the mortgage principal, the terms of repayment and the other terms of the mortgages to conventional fixed rate mortgages that people can pay. The taxpayer again pays nothing. The effects are virtually the same as the first option. This can play out in bankruptcy courts with greater rights of “cram-down” or legislatively at the federal or even the State level.

The ONLY argument I have heard against any of these ideas is that some borrower is going to get some advantage he/she doesn’t deserve. Personally I don’t care whether they deserve it or not. I care about our country, our economy, and our standing in the world.

I care about being an American and being proud of it. Right now I hang my head in shame because we the people allowed our leaders in government and finance to fleece pensions funds, investment groups and wealth funds around the world with paper that the American issuers knew was worthless. I don’t care about who goes to jail or who gets some benefit they didn’t bargain for. I don’t care about who walks away with millions in their pockets. I care about the Flag of the United States of America, and to the Republic for which it stands. Don’t you?

Tags: mortgage meltdown
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