The dire straits of the middle class of America has made it near impossible for our politicians to keep up the pretense that our current government truly works for the "people." Between the multiple overt and secretive bailouts, the massive bonuses and the circular use of our tax money to lobby for these continued handouts, you can no longer hide from the evidence.
When Senator Durbin said "The banks... frankly own this place," you realize it was not in jest.
Couple this with recent protections handed by the Supreme Court to corporations to directly influence elections and it can make things seem hopeless for those not on Wall Street or their chosen politicians. Favored CEOs and now even foreign countries get all the printed money they need, leaving us paying both our bills and theirs.
And now nearly a quarter of all Americans are currently underwater in their mortgage because of that steadfast honor.
If you are one of them, chances are you didn't do anything wrong. Almost all of you were not subprime borrowers or speculators, but merely people buying a house that they thought they could afford at the time. You were just unlucky in that you bought a house during a time when an outdated Wall Street and their complicit politicians decided to use housing to regain the income they lost due to the Schwabs and Etrades of the internet age.
You didn't cause this mess. They did.
Now you are struggling to make the same payments on this mortgage on your now overpriced home even in light of a crashing economy and massive deflation, all while the government does everything in its power to help Wall St. keep the bonuses coming.
Well, it is becoming time to take matters into your own hands... I suggest that you call your lender and tell them if they don't lower you mortgage by at least 20%, you are walking away. And if they don't agree, you need to consider walking away.
It probably doesn't feel right to you.
That is because you probably are a good person. But your mortgage is a business deal, and it is not immoral to walk away from a business deal unless you went in to the deal with the intention of defaulting.
But somehow, even though the corporations are pumped to exercise their new rights, former bankers like Henry Paulson, current ones like Jamie Dimon and -- get this -- now even Fannie Mae execs want to keep you from exercising your rights.
But before you let them (or anyone commenting below) force you into paying that $500k mortgage on a $300k house, ask them if they'll push Jerry Speyer into "honoring his obligation" by breaking into his $2 billion personal piggy-bank to keep paying for Stuyvesant Town?
Or how about asking Hank and Jamie to lecture fellow bailed-out CEO John Mack about how "you're supposed to meet your obligations, not run from them"? Maybe make him use some of his $50+ million for those buildings he bought in San Francisco?
And before shaming and punishing American homeowners, did they nag Steve Feinberg about helping "teach the American people...not to run away" by writing a check out of his billion-dollar pocket to cover all the stiffed landlords and vendors at Mervyn's? After all, at least you aren't single-handedly putting 1,100 employees out of work when you walk on your mortgage.
As part of the deal for your house, your mortgage holder gets interest payments from you and they also use the note to your house for their capital reserves. In return, they take the risk of a foreclosure. In many states, you paid extra to have a non-recourse loan where the lender just gets the house back if you stop paying -- your interest rate would've been much lower if you were held personally liable like a student loan. But if you still feel bad, then donate the money saved to charity instead of to their bonuses. And when someone tries telling you why it is so wrong, here are some answers:
- Yes, it might seem selfish, but you are actually going to help fix our country the right way, through the use of pure capitalism. There are 3 parties involved in your mortgage -- the mortgage holders, the servicing bank and you. You probably want to stay in your house. Most of the people who actually own your mortgage also want you to stay in your house, preferring a mortgage reduction that you keep paying instead of the total loss of a foreclosure. But the major banks (BofA, Wells Fargo, JP Morgan, Citi, etc.) that underwrite and service the loans don't care about either of you. They (with the aid of their government) just care about hiding their true financial condition for long as possible so they can continue to bonus themselves outrageously. The credible threat of you walking away from your mortgage en masse is the only market-based solution that will force these banks to work with the mortgage holders on your behalf.
- No, you will not "hurt" your neighbors -- certainly not near the scale of the banksters. Chances are someone just as nice will you will move in and (unlike you) pay a fair, non-inflated price for the house. Encourage your neighbors to fight back against the banks and ask for their own mortgage reductions as well.
- Yes, it might make getting a loan harder for everyone. Considering the spate 0% down NINJA loans over the past decade, that probably isn't a bad thing.
- Yes, it might hurt your credit. But with time, people bounce back from having foreclosures on their record. Search online and then talk to a lawyer about the repercussions, which vary by state.
- No, the banks won't necessarily pass the losses on to customers. They already make a lot of money. If costs are passed on to every consumer without banks competing on price, that's a sign of illegal collusion or a monopoly. Let's fix that instead of just letting banks ruin our lives. They might, however, not all make $145 billion in bonuses next year doing something fundamentally so easy that it is an unpaid job in Monopoly.
Meanwhile, our captured government has made it clear that they want to further reward these banksters because there are clearly better ways to "save" the economy without rewarding those most responsible for the damage.
Instead of claw backs for the past theft and strong financial reform for the future, they choose to cover-up the gross misuse of our tax money, making our country worse by helping the criminals on the backs of the most honest.
But thankfully, in this country we still have the tools to fight back and regain our country. Our vote, our voice, our laws and what we choose to do with every penny we have that doesn't go to taxes are the benefits of our hard-fought freedom, and in this battle we must use them all to fight back. It's time for the citizens to once again own this place.
Follow Dylan Ratigan on Twitter: www.twitter.com/DylanRatigan
If you believe the lie, it's because you want to. You want to get out from your underwater investment free of guilt. You want to believe it won't cause further fear, foreclosures and devaluation that are already spreading like a virus across America. Deflationary forces are self-reinforcing enough without our help. At the very least, consider a short-sale first.
If you have the money to pay your mortgage, then you have the luxury of considering the big picture. Is your ultimate goal to lash out at the banks and possibly benefit by a margin tight enough to warrant a cost-benefit analysis? Or is it for us to work together, support the recovery, and re-establish our dominance and prosperity as the capitalist flag-ship of the world?
My update on HAMP / HOPE / HELP programs through Bank of America / Countrywide from a call with several of the reps yesterday:
1 - In order to apply for any of the government programs for mortgage mod through B of A, you must be 60 days in default. Then you can TRY to qualify for one of the programs.
2 - According to the rep in the Home Retention Dept, the mortgage modification process takes up to 120 days (on B of A's side) to go through. There is no guarantee your application will go through.
3 - B of A reps said there is no guarantee that the bank will not foreclose on the homeowner during this process of applying for a mortgage modification.
4 - If you are current with your mortgage, according to their Default Prevention Dept, you must be able to afford your mortgage in the first place and continue to pay, but since I am a few weeks late, I didn't qualify for this program.
5 - According to Default Prevention and Home Retention, because I am not 60 days in default and a few weeks behind, I don't qualify for ANY programs, even with evidence of unemployment / hardship.
Their suggestion was to go to a local Salvation Army or house of worship and ask for help.
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Elizabeth Warren questioned Geithner last week (TARP hearing on CSPAN) about the $80 Billion given towards these government
Elizabeth Warren questioned Geithner last week (TARP hearing on CSPAN) about the $80 BILLION given towards these government programs to stem foreclosures -
.....Geithner's response was "Servicers are doing a bad job"
I just want people to keep that in mind.
http://www.youtube.com/watch?v=FvbjnJSxZD8
More info here: BE CAREFUL, PEOPLE! Watch for new laws restricting ch7 and strengthening DJs
http://en.wikipedia.org/wiki/Deficiency_judgment
http://www.deficiencyjudgments.com/
Remember to vote cautiously in November. Know as much as you can about who you vote for. Do not rely on public figures to sway your vote. Main St must take back our country because our government could become just as corrupt as other countries. Our country is just better at concealment for it's corruption.
Wall Street took advantage of the fact most people are completely blind to such economic risk stealthily washing in over the transom, and in fact encouraged them to sail along in their doomed voyage. That can be presumed to be the main game of Wall Street, generally: find the place where people are blind to risk, create a financial product to game that blind spot, and fabricate the sales spin accordingly to divert people so they can continue until the game bursts. That is the basis of all sales.
The problem is, when that kind of gaming occurs with the most fundamental, essential, and most expensive purchase in people's lives, and is efficiently spread over the entire population of homebuyers, you can and should expect the inevitable economic bubble. Although the stock bubble is what most people remember about the Great Depression, there also was a housing bubble which burst just prior, likely softening up investors for the final blow.
It will happen again. And again......
Quantify wage volatility and show how people should offset existing income to more clearly understand what they can afford. That sort of thing.
When I bought my first house, I was only allowed to borrow 2.5 times my current total income. That I did, and it was quite a struggle to make ends meet for two or three years, until my income increased enough. During the bubble people were able to get loans at 10 times current income, or more. There is no way anyone can afford that, and anyone who thought they could is a fool. Regulation would help, as would a prohibition on credit default swaps. But ultimately, nobody is going to provide a bailout or the mortgage holders. It is up to us to educate ourselves and not buy things we cannot afford.
Then they no longer cared about risk because they found a way to actually make money on that risk. So then they wanted to get all the gusto in their accounts, changed the rules and became predators. We were lured and trained for this moment by the banks.
Many years back, I remember a banker, during a mortgage closing say "..sorry about all this paperwork and rules but that's the government requiring all that." The last time there was less paper and less in regulation. When I questioned "is that all?" the reply was that the rules had changed.
Boy, did they! Now we have to fix it ourselves before they figure out how to change all the rules again.
We need to understand it is not the banks that are TBTF it is people coming together to fight for equitable solutions that are really TBTF
We played by the rules, paid our mortgage on time, never took a dime out of it, meanwhile our city crime rate skyrockets, mexican drug gangs have their way with our community and are brazen in their burglaries, homicides and rapes.
On another note: Mortgage contracts state the simple- if you stop paying, then the bank can repossess the home, that is the contract. So banks are getting that part of the bargain now.