September 24, 2011

Retribution From Mortgage Crisis

The mortgage crisis is not solved partly because it is difficult to assign blame. The first reaction is to blame banks and wall street. However, many borrowers knew they were lying on their mortgage application and went into the transaction highly leveraged and financially stretched. They were counting on housing price increases to cover their over exuberance. They lost the bet.

However, there were other innocent borrowers who put significant equity into the transaction and kept their payment at reasonable levels. They were innocent victims of the housing bubble caused by sub prime lending, which brought about an over supply of housing and causing housing values to fall.. These are the homeowners who have the clearest case against the banks, wall street and mortgage and real estate brokers without scruples. These are the citizens most justified in demanding some kind of retribution from the culprits.

Here is a reasonable solution.
  1. For the "innocent" group, Fannie Mae and Freddie Mac should refinance these loans at current market rates. This reduces the risk of default on these loans because the mortgage holders monthly payments are reduced. It also puts more money in the pocket of the homeowner, which should assist in stimulating the economy. A similar plan is being worked on by the administration
  2. The government and or "certified classes" of these innocent mortgagors sue wall street, banks, and other culprits for the reduction of the equity in their homes as a result of the sub prime calamity.
  3. For the sub prime borrowers, wall street and the mortgage origination business should be required  to set-up a special fund to assist borrowers that were mislead and taken advantage of by these origination companies and wall street firms. An independent review board should be established to determine culpability and damages on a case-by-case basis.
Wall street and banks made a financial killing during the housing boom. It is time some of that gravey is given back to the innocent homeowners. Read More: http://bit.ly/ouYGzJ

6 comments:

  1. We did NOT lie.My wife lost her job as a result of the economic downturn.%25 of our household income was lost therefore that is what created the hardship for us.Re: you comments on banks deal with government.

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  2. I never lied. They never asked. I got the loan and have made ever payment since 2004. I have been paying mortgage payments since 1988, never missed a payment, have paid off all but one of those loans which is on my current residence. I am treated like scum every time I apply for refinancing. They quote me on rate and payment then offer a much higher rate and payment , later, in writing. After 6 months of trying, with three different lying mortgage originators I am, finally, supposed to close on a 4.895% 30 year fixed. The GSE's ought to be offering 0.25% rate but, I guess I don't go to the right Temple. Now I wish I would have never ever even bought a house in the first place. It is just a weight around my neck which I will never be able to sell because not even high credit scores can get a loan. Where is my pitchfork. I can't wait until the troops are discharged. They will have a rude awakening.

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  3. This is the first I have seen anyone acknowledge that there were innocent victims in the housing crisis and they deserve retribution. Why are we not doing this?

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  4. HAMP, or whatever they're calling it now, requires a new application for credit. With decreased income, I'd never qualify for even the 57% LTV mortgage I've got. So, no chance of getting my mortgage interest rate reduced, even though I've paid every bill, including the mortgage, on time throughout this recession on greatly reduced income.

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  5. There are no innocent and culprit borrowers. Both were betting on the same losing horse and should take the loss. The fact that some used more leverage than others, just means that they were more risk-takers and should be wipped out.

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  6. The private sector can create jobs faster than the government with efficient access to capital, but the government has to ensure capital markets are worthy of the public's trust.

    With more than $4 trillion in cash setting on the sidelines, it should come as a surprise to no one why the economy added only 69,000 jobs in May and unemployment grew to 8.2%. The fact is, Americans no longer trust Wall Street, which reflects negatively on federal banking and market regulators tasked with protecting investors.

    Please sign the petition to the U.S. Senate Banking and House Financial Services Committee asking for improved oversight of federal banking and market regulators that have proven ineffective at not only detecting inappropriate behavior, but also preventing such behavior that has crippled our economy.

    To read more about what we’re trying to do and to sign the petition, click here:
    http://www.change.org/petitions/u-s-senate-banking-and-u-s-house-financial-services-committees-use-technology-to-provide-oversight-of-u-s-banking-and-market-regulators?share_id=HTpDoOQNJgpe=d2e

    It'll just take a minute!

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