In the past we paid 2% to 5% interest on homes. It was illegal to charge over 18% and anyone that did was considered a loan shark. Today banks are charging as much as 29.9% interest on Credit cards. They fostered predatory lending and sub-prime mortgages by creating balloon mortgages & adjustable interest rates on highly leveraged speculative loan investments. The banks charge outrageous fees that can cause consumers to pay 500%+ per year on money that they have borrowed, but because they call these charges “fees” they are permitted. And the government is complicit by endorsing all of this.
Thomas Jefferson said in 1802:
'I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property - until their children wake-up homeless on the continent their fathers conquered.'A House that was built in the early to mid 1900s for $1,000 to $3,000 was being sold a few years ago for as much as $250,000. The banks knew some of the homes needed major work & were not worth the loan amount, but they loaned large amounts and then sold these notes as derivative instruments on Wall Street. They even wagered on mortgage holders failing to maintain or increase their household income. And it has been obvious that the government allowed this by not maintaining proper oversight procedures.
Maybe we should all walk away from our mortgages. The cost of home maintenance keeps escalating. The values of the homes are depreciating, because of the stagnant real estate market and in real terms because of the depreciation of the dollar. People also are having a hard time affording the bubble prices they originally paid for their mortgage, because of the housing market and the inflated cost of living.
In all, 930,437 homeowners received a foreclosure-related warning between July and September, up nearly 4 percent from the second quarter but down 1 percent from the same period last year, RealtyTrac said (Banks seize a record 288,345 homes in 3Q - Alex Veiga AP - 10/14/2010). The latest tally translates to one in 139 (7/10 of 1 percent) of U.S. homes in foreclosure. Banks have seized more than 816,000 homes through the first nine months of the year and are on pace to seize more than a million - .
1 in 4 homes currently being sold are homes that are in foreclosure (Nearly one in four second-quarter home sales a foreclosure - Reuters - 9/30/2010). Even without the current problems associated with fraud and foreclosure, we are going to see a disastrous depreciation in home prices. The fraudclosure issue only exacerbates the problem. This loss in value of home prices not only hurts mortgage holders, it also hurts people who own property outright, because it translates into negative equity in your home or property. You could see a situation where a home with a value of $200,000 in 2006 could fall to a value of $100,000 or less in the next few years.
The reason we are in this mess is because of the Financial Institutions’ hubris and greed. They used their own appraisers to escalate homes many times over their true intrinsic value. They also used the MERS system to avoid fees and did not follow historical precedent associated with Common law to follow proper procedures to secure and register property and maintain the history of the chain of ownership of properties. This leaves the entire market associated with foreclosures in a state of flux. The banks created truly convoluted schemes by loaning money out for $0 down and/or at initially low adjustable interest rates. They put people into homes that were too large a percentage of their income.
And the Banks keep getting bailed out by the Federal government. They used their appraisers to inflate properties that had a true value of let’s say $70,000 to $125,000. And a variable in the equation allowed the system in which artificial demand was created through speculation through house and property flipping. The client who enters the market wanting (creating demand) a home has to pay the price in this rigged (inflated bubble) market. The mortgage holder pays the mortgage until they can no longer afford it or the property falls so far under water that they no longer desire making the inflated payment in a recessed or depressed economic environment. At this point many homeowners/property owners will choose to walk away from the property.
Banks have made money on the monthly installments, they collected on late fees, and they collected on the derivatives and insurance from the foreclosed properties (Remember those PMI payments), and in the end they own the property. The banks should have to take the loss, because of the fraudulently elaborate structure that they have created. That might be bad for the bankers, but the government has decided to come along and bail out their banker buddies on multiple levels. And the government bailing out the banks leaves the taxpayers holding the bag. So the injured parties, in this system, are average Americans who have lost equity in their home, some who have taken home equity mortgages could end up in foreclosure, and some have already been forced into the foreclosure process, because they can’t afford the exorbitant cost of their mortgage in this imploding economy.
The government has loaned the megabanks trillions at 0% in the name of creating liquidity to take care of the problems associated with the Real Estate implosion. Very little of this free money has made its way to help individuals and small businesses out. They are using the market to make money through an arbitrage scheme called the “Carry Trade.” Carry trades are a form of arbitrage in which money is made if nothing changes against the carry's favor. The banks are borrowing money created by the Federal Reserve in conjunction with the sale of U.S. Treasuries at an artificially low interest rate. The banks then in turn invest the money in developing countries which inherently have higher rates of return associated with the increased risks associated with the returns on investment. This allows the megabanks to take this cheap money and make a substantial rate of return.
Besides the megabanks, this “hot money” has gone to an Automobile company, General Motors, who has been deemed too big to fail and it has gone to insurance company, AIG, who took premiums and invested them in very risky investments. What does this teach? General Motors has taken some of this money and invested it in their factories in China and Brazil. Once again we see harm being done to average Americans in favor of Wall Street and the Banking cartel.
It sure does seem that the Banks are staying afloat by buying time through these “Hot Money” Speculative Investments paid for by American Taxpayers. With so many homes being foreclosed on and the high default rates on short term loans, such as credit cards, that financial institutions are rigging the market at the expense of the middle class who is going broke. The Plunge Protection Team (run by the Fed and the Megabanks) is manipulating the markets to the tune of billions of dollars per day, the same way that they sold bad mortgage notes and played both sides of the fence when the Real Estate market tanked over the last few years. They have been in a no lose situation reflected by the huge bonuses that they continue to receive, while this debacle continues.
The worst part to me is when the wealthy disparage poor people as lazy, dumb, etc. They do this because their silver spooned minds can't understand common folks. Nothing ever trickles down. They tinkle down on us like they own us and we should be glad they allow us to breathe. They are comfortable and they don't understand people who struggle, so they insult, ridicule, and hate. Anyone who struggles is lumped in as a freeloader looking for a handout. The last few years have taught me, sure there are those who abuse the safety net, but the majority of people who are struggling have been pawns to the rich man’s game and this has nothing to do with Donkey or Elephant, because both parties have sold out the middle class through a lack of investment in human capital and endorsing the offshoring of our industry.
The banks are broke and the sooner people wrap their pea-brains around that, the sooner we can get on the road to recovery. The Federal Reserve represents the Financial Institutions interests. Any Americans who do not have ties to the Cartel are at risk of losing everything -- to think otherwise is foolish. They are debasing our currency to the point that it will soon be worthless, if we do not act. This housing debacle is part of the process leading to the destruction of the dollar and subsequently any assets based upon (tied to) our sovereign currency.
Below is a video of Randy Kelton, a Pro se litigant in Texas, who addresses this issue on Alex Jones radio show. For the non-dimwitted, who aren't lip locked to the mainstream media, here is an excellent summary of the Fraudclosure issue and remedies to this situation. This issue is going to have to be dealt with in the near future and the answer isn't to throw more money at the Banksters who go us into this mess to start with.
Fraudclosure 101: Bursting the Piñata
A letter to the NC Attorney General involving Fraudclosure
You can help people save their homes!
Real Terrorism: Financial Terrorism - Time to break the Banksters
2nd wave of the Banking Meltdown is here
How can the United States avoid Bankruptcy?
The Plunge Protection Team and the Ponzi Economy
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