Political discussions are all we talk about these days, email about, blog about. After hours of reading and research on the budding foreclosure crisis, I think less of America. And frankly, I wish I didn't. It was simpler not to see the larceny and greed and selfishness that has undermined our country's foundations and principles.
Eyes of the world are glued to the crisis and we watch, listen and wait. The underprivileged sector (middle class) has been grossly unrepresented and from the looks of it will continue to be as long as the bad guys have the money, power and legislative clout. American Justice is partially blind, at best.
I read with interest this month's Rolling Stone magazine article that visited a foreclosure court in Florida set up exclusively to relieve the clog of cases pertaining to property judgments in that state. The reporter dropped in unannounced. What he discovered was seriously flawed paperwork in the form of fraudulent documents with trumped-up chronological dates, murky titles that couldn't establish ownership of either the property or homeowner, and which called into question the legal proceedings altogether. Interestingly, the banks usually prevail since most foreclosures are uncontested.
Contesting a foreclosure does not imply you don't owe the money. Appearing in court protects your right to see the bank's documents establishing your ownership of the property and authenticating them as the leinholder/collection agent. Don't pack your dishes quite yet: even on this random day in a Florida courtroom, Rolling Stone discovered most of the cases produced documents that were riddled with fraud. Plain as day.
Mortgage lenders have been in shark feeding frenzy mode for years. They hire young and inexperienced cubits to process the paperwork faster and faster, cutting corners, closing deals without a second check, falsifying documents to approve undeserving and risky loans. Obviously it created an impossible, electronic paperwork trail.
Turns out, the execs knew exactly what was going on. Instead of revamping the system, they performed the old hot-potato pass-off: they found a loophole whereby they could repackage and sell the loans as fast as possible after committing another out-and-out fraud of upgrading them from risky investments into A+ safe mortgage-backed securities. I mean, what's a little fraud among friends? Millions of investors bought them world-wide.
The deed of trust is a pretty important piece. The original deed is held by the lender, as proof of ownership of the property. When homes are bought and sold, this single document contains the original signatures of all owners, a history of ownership. When a loan is paid off, the homeowner receives the original deed. Copies of the deed are included with loan paperwork but without the original deed, it is extremely difficult for Title companies to approve a property for purchase or sale.
Buying a home is the single biggest investment in most consumer's lives and nearly all of our money is wrapped up in it. So what happens when it no longer becomes an asset? Not sure, but definitely a loss of leveraged borrowing power or even the option of getting out from under it. [Enter loan defaults, stage left.]
We've had our eye on the money, thinking it's the loan defaults causing the crisis, but it is really both payments and paper, layered one on top of the other. Defaults are a huge strain on the banks in their own right. But the bank's horrific self-serving management of the loans now questions every loan in foreclosure or not, and whether any homeowner can be held liable for a debt on a home they may not own, or even if the banks can initiate foreclosure proceedings without proving first they have the legal right to collect. Can I say that again? Every loan is questionable, in foreclosure or not, because homeowners have lost confidence in the integrity and fair handling of every loan produced in America for the last 10 or more years.
It's not just about the original deed that stopped being passed along as the loans were sold over and over again. Disclosure signatures were falsified, no one maintained the standardized ratios for buyers to cope with payments, and loan substitutions were commonplace even for consumers with great credit scores because the banks made more on them. We're going to see more foreclosures halted in the courts and reversed for families already tossed out by banks with no longer a legal claim to the property.
Heap on top of that the looming storm of mortgage-backed securities similarly situated with missing original deed documentation, making them worthless. The banking execs didn't care about any of that: they had already made a killing on the front end of the sale, when they bundled and resold the loans. They knew by offering the money-back guarantee on A+ investments, buyers would overlook the convoluted and confusing paperwork long enough for them to continue the desecration of the American way of life on even a grander scale.
What do you think is going to happen to the American banking industry, economy and property values when the defrauded investors storm back and demand repayment on the money-back guarantee?
Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.
William Shakespeare, "Hamlet", Act 1 scene 3
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