UncleNasty
Posts: 1108
Joined: 3/20/2004
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Merc,
"Where in the policy of this rewarding failure program are the issues you raise being addressed?"
Unfortunately, nowhere. But they need to be addressed and dealt with.
"I'll take it further - show me the exact "illegal" language or act universally committed and present in every case of mortgage default and I'll join your side of the battle."
That isn't possible because it isn't "universal." But it isn't isolated either. In the sub-prime and Alt-A markets it is frequent and consistent. It doesn't have to be universal to be unethical or illegal. I'm pretty sure you aren't implying that in order for enforcement of laws to be worthy the violations need to be universal.
"Does you position limit the definition of "victim" to misinformed home buyer? What of the Bank stock investor? What of the insurance company who bought Fannie Mae 'guaranteed assets' which should have not qualified for the program?"
Misinformed is much too soft a term. Defrauded is much more accurate. And yes, those that have been defrauded are certainly victims.
I've mentioned in previous posts the fiduciary duties of various parties in the origination - brokers, originating lenders, etc. Those parties also have a fiduciary duty to be truthful with disclosures they make to investors. But yet again the originators have breeched fiduciary duties and obligations to investors. They had some assistance from other parties as well - the agencies that rated the notes and mortgages that went into the pools such as Standard and Poor, Moodys... So the fraud perpetrated on borrowers is passed further up the chain to investors.
Investors come in many shapes - insurance companies, pension funds, school boards - but rarely are they individuals. The buy into the pools is too large for most individuals. But the investors are victims too. They were told the loans in the pools were all in conformance with statute and regulation, and also that they were of particular classes, or tranches. Provisions for dealing with nonconforming loans, and nonperforming loans, are generally in the the Pooling and Servicing Agreement (PSA). Typically they require the originator to either repurchase loans of those natures, or to replace "bad" loans with "good" ones. PSA's I've read are usually in the range of 1500 - 2000 pages long and include language for just about every contingency. A lot of thier length comes from also listing all of the loans included in the pool, or trust.
Loan originators, with the help of brokers and rating agencies, sat in the middle of all of these transactions and profited at every turn, and they misrepresented things to all parties.
"To me this is more important. If you choose to answer one question please let it be this one; where is the solution in your position?"
There is not a quick or easy solution. Period. People will be uncomfortable, will loose anything from a little to everything they own, homes, hard goods, businesses, investments, pensions.... People will suffer. And not a few people but many people. From homeowners to city pension funds. The impact of the violations and crimes is going to be felt by all of us for a long time, and in some unexpected ways. For instance school districts will have less money - not just from having to absorb losses in their Mortgage Backed Security Pools but also because the decrease in property values also decreases property tax bases, and that tax base is what funds a large protion of schools. Law enforcement will be taking a hit, and likely at a time that crime rates, due to poor economic conditions, will be rising.
But I don't see any solution being reasonable or effective unless it includes holding guilty parties accountable. We are supposed to be a nation of laws. In fact laws not being enforced is one of the ways we've gotten into this pickle. Looking the other way, or giving the guilty a pass, serves the innocent very poorly.
It sounds as if you're suffering. It also sounds like you've been responsible. It is tragic when good people suffer as a result of the bad deeds of others. I'm sorry for all of us, including you.
Logic can help us in identifying who the bad people are. The typical borrower has only one home and one mortgage. The typical large scale lender (there aren't a whole lot of these - INDYMac, Countrywide, Option One...) makes hundreds of thousands to millions of mortgage loans. Is it more likely that millions of home owner/borrowers all made the same mistake? Or is it more likely that a much smaller number of large scale lenders made the same mistake millions of times knowing they would profit on each one?
Did you read any of the statutes or regulations I linked for you?
Uncle Nasty
As a quick final comment have you become familiar at all with the loan modification packages some of these large scale lenders have sent out to borrowers? I've read over several of them. All of them include language which indemnifies the lenders for any and all past bad deeds, and any future bad deeds, and leaves the borrower signing the document with no recourse whatsoever. Clearly that language is included with knowledge and intention - the lenders are aware of their misbehavior and are attempting to shield themselves from litigation, and from prosecution.
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RE: "I have just signed the most sweeping economic... - 
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