Reaction to President Obama’s Plan to Slow Foreclosures
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After reading about President Obama’s plan to cure the foreclosure epidemic, I wish I could say, “It’s about time!” For far too long, the federal government here in the United States has been focused on bailing out Wall Street rather than Main Street. I was hoping President Obama would reverse the trend. Unfortunately, his plan looks like more of the same.
Obama is setting aside $75 billion… of whose money? According to a treasury official, $50 billion will come from the remaining $350 billion in Troubled Asset Relief Program funds, and $25 billion will come from Fannie Mae and Freddie Mac. This is taxpayers’ money – Main Street money.
And where is that money ultimately ending up? To “subsidize” lenders and investors – that’s Wall Street – for doing what they need to be doing anyway – modifying loans.
The fact is that loan modification is a good business decision for lenders and investors. According to various estimates, lenders stand to lose an average of about $50,000 to $80,000 per foreclosure. A loan modification does not wipe out a lender’s profit. To the contrary, it helps lenders avoid taking a huge loss on foreclosure while at the same time allowing them to keep a performing asset on their books. As a result of a loan modification, the lender keeps collecting interest. The loan remains profitable, albeit less profitable than it would have been had the homeowner been able to afford the originally agreed-upon payments, but still profitable. So why are taxpayers going to subsidize lenders?
Last Sunday (February 15, 2009) 60 Minutes ran a segment entitled “World of Trouble,” in which investigative reporter Scott Pelley interviewed Paul Bishop, a former loan originator for World Savings Bank which, at the time, was the second largest savings and loan. Bishop reported witnessing rampant fraud throughout the organization in the origination and approval of mortgage loan. And as I have been reporting over the past two years, what was going on at World Savings Bank was the rule rather than the exception in the mortgage lending industry. Everyone knew what was going on. The few people who tried to stop it were silenced and either demoted or fired.
Mortgage lenders were well aware that they were approving mortgage loans that never should have been approved in the first place. Loan originators and banks were raking in profits leading up to the mortgage meltdown, and they weren’t exactly spreading the wealth to American taxpayers. Now that the time has come for them to pay the price for irresponsible lending practices, they are calling on the American taxpayer to subsidize their losses? This is absurd.
Don’t get me wrong. I applaud President Obama for focusing efforts on bringing relief to Main Street, but the government shouldn’t be using Main Street money to do it. I think a more prudent move would be in the form of an executive order demanding that banks modify loans to a level of affordability and end foreclosures until they have cleaned up the mess that they themselves have contributed so much to creating.
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Ralph R. Roberts, GRI, CRS |
[...] Here is the original: Reaction to President Obama’s Plan to Slow Foreclosures | bLoan/b b…/b [...]
“I think a more prudent move would be in the form of an executive order demanding that banks modify loans to a level of affordability and end foreclosures until they have cleaned up the mess that they themselves have contributed so much to creating.”
That is exactlly what it is going to take. Much of the money we gave the “creators”, those greed mongering executives could have gone to do exactlly that.
The banks and Wall Street made literally billions and billions of dollars. They sold MBS’s, CDO’s and Cedit Debt Swaps. Basically they sold the same mortgage three times. Let me explain.
the MBS was the mortgage pool sold as bonds to investors world wide.
The CDO’s were sold to other investors but were nothing more then future income streams from the MBS bonds sold to others. In other words, they sold a piece of the pie they did not own. Then, they sold Credit Debt Swaps - insurance that these bonds would not fail and if they did they would pay them off.
The same product - a mortgage - sold in three different packages. If you look at it for what it was it is nothing more then a PONZI scheme. Makes Madoff look like a kindergardener.
NO ONE has asked any of the “banksters” this question: “Where did all your money go?” They made record profits - never before seen profits.
They have no toxic mortgages - THEY SOLD THEM OFF IN PIECES AS THE MBS. The lenders got paid for all those loans they made.
So yes Ralph, they need to be held accountable. They need to bring back all that money they made - hidden outside the counry probably in their foreign subsidiaries and partnerships - and PAY DOWN THE MORTGAGES OUTSTANDING.
Foreclosures are a travesty. Under normal circumstances I would nevere take this position but this is different. Almost all were victims of fraud - as the LO from World attests to. If the lenders did their job they would have denied the loans they knew were no good. It matters not how many loan packages a mortgage broker submitted - they could have denied allthe ones that were fraud or just did not qualify. It was their call, duty and responsibility.
For an interesting insite as to how the courts are acting in one county in Florida go to http://www.TheMortgageCorner.blogspot.com. “Where is the JUST in Justice”. A report on a Wall Street Journal article that shows the disregard for the average citizen and their rights to due process of law. It is disgraceful for our court system to operate like this.
Great post Ralph!
I wanted to emphasize the need for home owners to take some responsibility if they are facing a possible foreclosure. Like Obama said in his inauguration speech, we take more initiative in our destiny. As a practicing law attorney with over 17 years of experience, I have witnessed many things. The people who genuinely succeed in keeping homes or winning cases are the ones who show proactive attitudes towards securing their goals.
So do your home work, study the battlefield before war time and the scams and frauds will most likely dispell right in front of your eyes.
Here are a few more resources for those interested.
http://www.prlog.org/10175522-the-parsa-law-group-can-help-you-save-your-home.html
http://express-press-release.net/58/Parsa%20Law%20Group%20Helps%20Thousands%20Stay%20In%20Thier%20Homes.php
http://www.free-press-release.com/news/200901/1233462222.html
http://sandiego.craigslist.org/csd/vnn/1027834030.html
James M. Parsa
Attorney at Law
Parsa Law Group / National Loan Modification Center
1-800-585-1179
http://www.NationalLoanModificationCenter.com
Better Business Bureau Rating:
http://www.labbb.org/BusinessReport.aspx?CompanyID=100076772