Wow... I'm really not sure what to think about this one.
Nice post, Trevor.

-Miss Green
"Fear not the path of truth for the lack of people walking on it."

Both the debt and taxes. That would be interesting and force the Government to take the Public seriously.

Now how can we propagate it into the general public without getting shut down before we make critical mass.

Their would have to be a big enough movement and surge in these two areas alone, or it would give the government the opportunity(and the now legal authority) they are looking for to green light the Martial Law.

FYI.. Mike Shedlock aka: Mish has a great blog and has been all over the housing/mortgage debacle long before the peak and ensuing crash. Correctly predicting the downfall of many homebuilders and Countrywide home loans. He blogs about most all the problems facing our economy and has spoken favorably about Congressman Paul many times.
You want a get a good online educating about this continuously unfolding crisis? This is the guy. He really goes in depth as far as all the market securities etc. and a lot of it is over my head. Great reading nevertheless.

http://globaleconomicanalysis.blogspot.com/

I'm just glad I didn't buy a house, paying other people's mortgages in addition to my own would've just been too costly

Now I can focus on paying for the defaulters. Hey does anyone know of anyone who can't pay their credit cards? Please let me know so that I can send some money to Washington and they'll be sure to send it your way.

In fact, if you know anyone who's made any bad financial decisions, lost money in the stock market, hole in the pocket... just let me know, I'm thinking of getting a second job because all that is actually my responsibility.

THanks!

While we're at it, we should repudiate ALL our debts! Yeah, that's the ticket. No more car payments, no more credit card payments, no more phone bill payments, etc. Hell, they're all propped up by the government now--and these industries own the politicians anyway.

Don't forget to spend, spend, and spend. Max out your credit cards, because you can be bailed out by the government. The government is your role model now--they know they'll never pay their bills, so why should you?

Let's just let Barney Frank take care of us. To hell with our own credibility or integrity--let's just put it all on Barney Frank.

I emailed this to my representative in the house

ANyone who wants to cut and paste this is welcome to use it:

Dear Representative ,

Please do not use my tax dollars to assist irresponsible borrowers and lenders. I am convinced that forcing me to pay the mortgages of complete strangers is wrong and un-American.

I believe that adults are responsible for the decisions they make, including financial decisions. When adults profit from the sale of a house they shouldn't be forced to divide the profits amongst all the citizens. Likewise, when adults lose money in financial transactions be it the stock market, real estate market, or faulty sewing in their pocket lining, the losses shouldn't be backed by taxpayers either.

The recent real estate boom gave rise to many unethical tactics in the lending industry. Those who passed off these devious financial products onto the public deserve to have their efforts corrected by the market. If you send my tax money to the banks and other lenders that partook in these schemes you will be rewarding and encouraging their unscrupolous methods. You will ensure that they stay in busineses to further perpetuate their immoral activities.

You would be acting against my will and that would make me feel angry and less free. Many people share my opinion and some of them vote.

I'm oppossed to helping those irresponsible lenders for two reasons. Philosophically speaking this brings the government closer to Communism and farther away from Capitalism. Practically speaking the market will price any bailout into future transactions. Not only will the architects of this disaster stay in buisness but they will be emboldened to add further risk to their portfolio because they know that the taxpayers will be left to pick up the tab when things go badly.

Private profit taking and communal loss sharing is not the system that I want to live under.

I feel empathy for the homeowners that didn't read the fine print and are caught in the middle. I would be happy to assist them in private if every one of my dollars wasn't already on its way to the oil companies and the credit industry.

Forcing me to give you money so that you can give it to these irresponsible strangers is wrong and I'm asking you not to do it.

Thank you,

What is most upsetting to me about this is that the high-risk sub-prime loans were rated as being equal in risk to a Treasury bond(AAA) and sold by unscrupulous stockbrokers(giving honest folks like me a bad name) to individual investors who requested an income-paying low-risk security.

I had a guy a few weeks ago show me a statement from Merrill Lynch showing that he bought 60k worth of a "utility/income" product that was designed to pay a decent return and preserve capital.

He was informed by said broker that there is "currently no market" for the security=worthless.

"no/bid"=no buyers=no market=worthless. Ask anyone who has ever purchased a "penny stock" and they will tell what "no market" means.

So the client had asked the broker to sell all of his stocks and put him into something more safe.

Now he can't sell these mortgage-backed securities to get the 60k back, and the security is paying interest in the meantime(appeasement payments).

I ask you this...what good is 5-8% in interest if you lose the entire principal?

Not much. So my point is this- why is the SEC allowing this to happen? They opened an investigation into this "auction rate" securities fraud in 2004 and has watched the entire meltdown from a unique perspective of knowing where these loans have ended up. Dr. Paul would conclude that the federal government has proven itself once again, to be untrustworthy. The SEC is a joke run by lawyers who don't understand the industry that they are trying to regulate.

Just another way for the middle class of this country to line the pockets of wall street.

Merrill Lynch had been artificially supporting the auction rate market for a few years prior to this failing altogether. This allowed the bank/broker dealer to unload as much of this bad debt onto their clients before the proverbial s*** hit the fan. And quite successfully at that.

So when you think about this mortgage crisis please remember that the folks paying the taxes to bail out these foreclosures are also getting rung up by the big banks who have made profit at almost every step of the process. The final step of this has been to dump the securities on hard-working middle-class folks who aren't able to discern the fraud before it happens. These can be sold as safe investments quite easily. The gentleman I spoke to was not even concerned about this...I had to explain that "no market" is a bit of a red flag and that his IRA money may not be recouped if there is really no market for these. There is in fact a class-action suit underway that folks can participate in if affected.

And I'm sure the brokers who push this garbage on their clients get paid out pretty high in commission or else they wouldn't knowingly advise people to buy these fraudulent products.

Sorry if this is too technical but this is a big problem that not many folks are aware of currently.

In mortgage market, ‘walkaway’ homeowners may be urban myth

http://www.latimes.com/business/investing/la-fi-walkaway11-2008may11,0,7...

Bankers and housing analysts say many homeowners, owing more than their homes are worth, are defaulting on their loans even when they can afford payments. But no hard numbers back up their claims.

By Michael A. Hiltzik, Los Angeles Times Staff Writer
10:42 AM PDT, May 10, 2008
Bankers and housing market analysts are warning of a chilling new trend in the mortgage world: Homeowners voluntarily defaulting on their loans even though they can actually afford to make the payments.

It's known colloquially as "walking away," or more jocularly as "jingle mail," from the sound your house keys supposedly make when you mail them back to your bank.

Trying to survive a sub-prime squeeze
House passes mortgage rescue
It's a way of saying that Americans are beginning to apply a cold financial calculation to home ownership: When a home's value has fallen below what is owed on its mortgage, they feel it makes no sense to keep up the payments.

"That is going on, clearly, and there's lots of evidence of that in the market," Don Truslow, senior executive vice president of Wachovia Bank, said in a conference call with investors last month. A few weeks earlier, Treasury Secretary Henry M. Paulson had waggled a stern finger at homeowners contemplating walking away from affordable mortgages: Do that, and you're no better than a "speculator," he said.

Elsewhere, media reports and Internet postings are rife with stories about the trend and a supposed sea change in American attitudes toward debt. But there's a major problem with all this talk about the phenomenon of solvent homeowners "walking away": There doesn't appear to be any hard evidence that it's actually happening.

When pressed for the number of borrowers who could afford their mortgage payments, major banks and lender groups could not produce numbers figures.

Nor could the Mortgage Bankers Assn., the leading trade group for housing lenders. Spokesman John Mechem said he believed that walkaways by homeowners who could afford their payments were "becoming more prevalent." But he said that was based on "anecdotes we're hearing from our members and what we're reading in the newspapers."

Wachovia's Truslow acknowledged during the bank's conference call April 14 that walkaways were "hard to quantify." A bank spokesman said this week that "we have heard anecdotally that people are walking away" but that Wachovia had no hard numbers.

Bank of America Chairman and Chief Executive Kenneth Lewis, whose company is acquiring mortgage lender Countrywide Financial Corp., complained about "a change in social attitudes toward default" in an interview with the Wall Street Journal in December.

In response to questions from The Times, Bank of America spokesman Terry Francisco said the bank had seen indications that some homeowners were taking pains to keep their credit card accounts current at the expense of their mortgage balances, often by raiding their home equity lines to pay their cards, a reversal of traditional customary customer priorities.

But he said the bank did not have "firm figures" on how many homeowners were unnecessarily defaulting on their mortgages.

"We are working hard with our analytics to get at how much that is happening," Francisco said. Others suggest that it may be impossible to find out.

"How would you know what someone's true ability to pay would be?" asked Todd Sinai, an associate professor of real estate at the Wharton School of the University of Pennsylvania. "I'm not sure you could even come up with a definition."

At Fannie Mae, the government-chartered company that owns or guarantees billions of dollars in home mortgages, Senior Vice President Marianne Sullivan conceded that there was growing "folklore" about residential walkaways but said that the phenomenon was more likely connected to investors than people who live in their homes, or "owner-occupants."

"The vast majority of borrowers we find have been acting in good faith," she said. "If they get behind, they are interested in working with their lender."

Bruce Marks, CEO of Neighborhood Assistance Corp., a Boston-based nonprofit agency that helps strapped homeowners, says flat out that the notion that legions of borrowers are simply deciding not to pay is an "urban myth" that largely reflects the mortgage industry's desire to blame homeowners, rather than their lenders, for the surge in problem loans.

Marks and others assert that mortgage bankers have an incentive to blame the rise in delinquencies and foreclosures on borrowers skipping out on obligations they're financially able to meet, because that diverts attention from the lenders' own role in the mortgage crisis.

"So many of the loans made were irresponsible -- for the borrowers and for the lenders," said Kurt Eggert, an expert on predatory lending at Chapman University Law School in Orange County. "Lenders have an interest in painting themselves as responsible, even caring entities. They want to cast blame for the sub-prime meltdown as much as possible on their borrowers."

It is generally agreed that the real culprit in the meltdown is the proliferation of exotic mortgages that hit borrowers -- many with paltry down payments and therefore almost no equity in the home -- with huge payment shocks in the early years of the loan. The new payments are often raised to levels that the borrowers could never have afforded but expected to escape via a refinancing or a sale of the house into a rising market.

When home values fell instead, their exit strategy evaporated. But that does not necessarily mean that they can afford to keep paying.

Single Page | 1 | 2 | Next »

Truemensa

" You can only protect your liberties in this world by protecting the other man's freedom."
~Clarence Darrow~

" It Becomes A Contest Of Power; Those Who Have Money And Those Who Have People~
We Have Nothing But People. "
~Saul Alinsk

See my column on this subject (updated today). Nemesis