Now that we are on the path to “free” healthcare, maybe we should see what is in our future here in the good old US of A:
$9 per gallon gasoline in the land where Great Britain used to be.
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Foreclosure Ripoff, Part IV (Strategic Default)
This is a continuation of Foreclosure Ripoff, Part I, Foreclosure Ripoff, Part II, and Foreclosure Ripoff, Part III. You can read the rest of the story by following those links.
Strategic Default- Going John Galt on the Banks
What is a “strategic default” you ask? A strategic default is the decision by a borrower to stop making payments on a debt despite having the financial ability to make the payments. In other words, just walk away. Business does this all the time, and even uses the Bankruptcy Code to do it- See KMart. Some may call this unethical or immoral, but I am advocating making this decision as a financial one.
If you are sitting in a house that you owe $225,000 on, and that house is only worth $100,000 you WILL NEVER see a dime from the investment that you made in your home. Even if the housing market were to bounce back this year, and home prices increased at their historic rates of 5%, in 20 years your house would be worth $265,000 and you will have paid $372,000 in interest and principal in that time.
Sometimes you have to recognize a bad investment and cut your losses. If you owned a stock that had lost 50% of its value, would you keep dumping money into it? Of course not. The more you pay into this investment, the more you lose.
In the above example, I hold on to that home, and lose $107,000. If I had walked away in year one, and bought another (identical) home in year 5 for $161,000, I can still sell that home for $265,000 in year 20, but I would have only paid $124,000 in payments during the 15 years I “owned” it. Even assuming that I rented a house for the 5 years that my credit was damaged, I still come out with a $75,000 profit, and I am more than $150,000 ahead of where I would have been had I stayed in the home.
It appears like the banks are seeing quite a bit of this.
Sure, a strategic default will hurt your credit. What will losing $200,000 by holding on to a losing investment (the house) do to you? In exchange, you get to take the money you were using to pay your mortgage and pay off other debts during the year or so it will take them to foreclose. Just be careful if you plan on using bankruptcy as an out: skipping the mortgage to pay the credit cards is a no-no. Talk to your attorney.
The IRS may want taxes on any money that is not collected, but until December of 2012, that is not the case for mortgages used to pay for a primary residence. Talk to your attorney or tax professional.
Unless you declare bankruptcy, your mortgager may come after you for the deficiency balance.
If you are going to do it, make your preparations and do it before the banks have their way in the Legislature and make Florida a non-judicial foreclosure state. They are trying to game the system by throwing large amounts of cash at Florida’s Lawmakers. Get out while you still can. I know this isn’t for everyone, but this is really worth a look.
I have put a great deal of thought into this. We still haven’t seen the bottom yet. Interest rates are climbing, and the adjustable rate notes will be adjusting. Phase two of the housing crash is coming.
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Foreclosure Ripoff, Part III
This is a continuation of Foreclosure Ripoff, Part I and Foreclosure Ripoff, Part II. You can read the rest of the story by following those links.
So the mortgage brokers, aided by the Realtors, began the fraud when they concocted information about income/assets and value of property on the individual loan applications. I know my mortgage broker fudged a few things, and at that he was more honest than most. He had a special appraiser that he used, and he told me that it was to my benefit- a too high appraisal, and my property taxes would be too high, too low and I wouldn’t get the loan. Wouldn’t you know, the appraisal was EXACTLY the agreed upon sale price for the house.
As a result, the mortgage brokers made thousands on each sale, billions as an industry.
Then the banks made billions when they originated the loans and then sold them to Wall Street Brokers. The asking price was usually about 102.5% of the loan amount. That means that a $200,000 loan was sold for about $205,000- usually within a few weeks of being written.
Wall street then sold them as mortgage backed securities to various funds around the world. These REITs made billions.
Then investors like myself, with their retirement money tied up in mutual funds, 401K funds, and retirement accounts that were professionally managed and heavily invested in these REITs see the value of their investments nosedive. As a result, my employer is going to cut retirement in half in the near future, meaning that I will soon have to make a decision to retire and look for another job, or face the prospect of having a much reduced retirement package in my later years. (The current math shows that if I retire now, I will make the same in retirement as if I stay another 10 years,)
The big investors got bailed out with tax money from my future, and the future of my children and grandchildren. Where is my bailout? To make it worse, the very banks and institutions that caused all of this are being paid by the government to fix the very problem that they created.
Then when it comes time to foreclose, the banks have lost the paperwork, so they simply forge and create new paperwork, and take your home.
The double whammy here is that my 401K is worth about 40% of what it was in 2007, and the triple whammy is that my home is worth about 40% of what I owe on it.
Doing the math, it is impossible for me to retire EVER under those circumstances. I will have to work until the day I die. There is only one way out-
Continued yet again
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Toilet Humor
Let’s take a break from bitching about the economy and have a little fun:
I called my friend Andy Sable, a gastroenterologist, to make an appointment for a colonoscopy. A few days later, in his office, Andy showed me a color diagram of the colon, a lengthy organ that appears to go all over the place, at one point passing briefly through Minneapolis. Then Andy explained the colonoscopy procedure to me in a thorough, reassuring and patient manner.
I left Andy’s office with some written instructions, and a prescription for a product called ”MoviPrep,” which comes in a box large enough to hold a microwave oven. I will discuss MoviPrep in detail later; for now suffice it to say that we must never allow it to fall into the hands of America’s enemies.
I spent the next several days productively sitting around being nervous. Then, on the day before my colonoscopy, I began my preparation. In accordance with my instructions, I didn’t eat any solid food that day; all I had was chicken broth, which is basically water, only with less flavor. Then, in the evening, I took the MoviPrep. You mix two packets of powder together in a one-liter plastic jug, then you fill it with lukewarm water. (For those unfamiliar with the metric system, a liter is about 32 gallons.) Then you have to drink the whole jug. This takes about an hour, because MoviPrep tastes — and here I am being kind — like a mixture of goat spit and urinal cleanser, with just a hint of lemon.
The instructions for MoviPrep, clearly written by somebody with a great sense of humor, state that after you drink it, ”a loose watery bowel movement may result.” This is kind of like saying that after you jump off your roof, you may experience contact with the ground.
MoviPrep is a nuclear laxative. I don’t want to be too graphic, here, but: Have you ever seen a space shuttle launch? This is pretty much the MoviPrep experience, with you as the shuttle. There are times when you wish the commode had a seat belt. You spend several hours pretty much confined to the bathroom, spurting violently. You eliminate everything. And then, when you figure you must be totally empty, you have to drink another liter of MoviPrep, at which point, as far as I can tell, your bowels travel into the future and start eliminating food that you have not even eaten yet.
After an action-packed evening, I finally got to sleep. The next morning my wife drove me to the clinic. I was very nervous. Not only was I worried about the procedure, but I had been experiencing occasional return bouts of MoviPrep spurtage. I was thinking, ”What if I spurt on Andy?” How do you apologize to a friend for something like that? Flowers would not be enough.
At the clinic I had to sign many forms acknowledging that I understood and totally agreed with whatever the hell the forms said. Then they led me to a room full of other colonoscopy people, where I went inside a little curtained space and took off my clothes and put on one of those hospital garments designed by sadist perverts, the kind that, when you put it on, makes you feel even more naked than when you are actually naked.
Then a nurse named Eddie put a little needle in a vein in my left hand. Ordinarily I would have fainted, but Eddie was very good, and I was already lying down. Eddie also told me that some people put vodka in their MoviPrep. At first I was ticked off that I hadn’t thought of this, but then I pondered what would happen if you got yourself too tipsy to make it to the bathroom, so you were staggering around in full Fire Hose Mode. You would have no choice but to burn your house.
When everything was ready, Eddie wheeled me into the procedure room, where Andy was waiting with a nurse and an anesthesiologist. I did not see the 17,000-foot tube, but I knew Andy had it hidden around there somewhere. I was seriously nervous at this point. Andy had me roll over on my left side, and the anesthesiologist began hooking something up to the needle in my hand. There was music playing in the room, and I realized that the song was Dancing Queen by Abba. I remarked to Andy that, of all the songs that could be playing during this particular procedure, Dancing Queen has to be the least appropriate.
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Foreclosure Ripoff, Part II
This is part 2 of this post.
So what we have here is the banks are writing loans with little regard as to whether or not people can afford to actually pay the loan, securitizing and selling the paper to investors as quickly as possible, all with little accountability or oversight.
In the middle of all this, the Fed lowered the prime rate from 6.5% to 1.0% in the wake of the 9-11 attacks and the financial recession that followed.
This was a situation ripe for disaster. The banks were selling loans as quickly as they could in a feeding frenzy of subprime lending. Every major bank had a subprime lending department. This wasn’t just in mortgages and real property. This was in credit cards as well. As credit became easier to get, more people got credit. The financial boom that began in the mid-90s was a result. Housing prices skyrocketed- nationwide they increased by 124% in just 10 years. In some real estate markets, the rise was MUCH higher. The Fed had to raise rates to compensate. This cause the Adjustable Mortgage Rates to climb, and many of the people with ARMs that they could barely afford to pay at the lower rate began to default when the increasing rates and payments pushed them over the edge.
The house of cards and paper began to collapse in mid-2007. As home loans began defaulting, the insurance companies providing mortgage insurance were among the first to go. Insurance giant AIG fell in September of 2008. Fannie and Freddie Mac went during the same month. By this point, bankruptcy filings had doubled, foreclosures were increasing, and housing prices had fallen 20%. Interest rates began to climb as some banks began to struggle.
As an example, the Middle District of Florida saw about 15,000 bankruptcy filings in 2006. In 2007 that had risen to about 26,000 and in 2008, it rose to 42,500. In 2009, there were nearly 63,000 bankruptcy filings, all in one Federal district. 2010 isn’t shaping up to be any better. The first two months of the year have already seen 9,500 filings.
The government has responded to all of this by borrowing more money and dumping it into the economy. Over $4 trillion since 2006, and half of that has been in the last year. The banks made money by making loans that should not have been made. Then they were ‘bailed out’ by other banks who used funds supplied by our government, and those banks are being funded by more government dollars, and are making even more money by foreclosing on homes that they cannot even prove they own the paper on, and meanwhile the American Public is paying the tab- twice. Once in taxes, and again in losing their savings and their homes.
We as a nation are responding to a crisis that was caused by too much borrowing and spending by borrowing and spending even more. We are essentially paying our Visa with our Mastercard. I fear that we have not seen the end of this financial crisis.
To be continued…
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The foreclosure ripoff
Last month, I wrote a post about the foreclosure problem here in Florida and across the nation. When the financial problem began, I was a part of the crowd that was drinking the Conservative Kool-Aid and blaming government regulation and interference, with a heaping helping of blaming people for taking out loans they could not afford.
I have since reevaluated that position. There is blame enough for everyone, and the biggest crooks here are in the Nation’s Financial Sector. Let me walk you through this (all names used here with the Exception of MERS are fictional for illustrative purposes, and are not intended to represent real or imagined people or businesses):
First National Federal Bank of Florida makes a loan to the Smith family so they can buy a home. That loan is written down as a “note” and the “note” is secured by a mortgage on the Smith home. The Mortgage states that if the note is not paid, the owner or holder of the note is entitled to force the sale of the home, and the proceeds are used to pay off the note, with the balance of the funds going to the Smiths. The mortgage is recorded at the County Clerk’s office as an official record for about $10.
The bank sells that loan to a trust, where it is securitized, bundled with a few hundred other loans, and resold as an investment to the Franklin Secure Real Estate Investment Trust. The bank has made their money, and their risk is covered. There is no incentive for First National Federal Bank of Florida to make sure that the Smiths can pay the note, because the note will be sold long before the Smiths default. The only real motivation for the bank, is for them to originate as many loans as possible, and sell them quickly before they default. That is how an assistant manager at McDonalds qualifies to buy 5 houses.
The Franklin Secure REIT sells the notes to Richards and Company Investment REIT, who sells them to the Wells and Frederick REIT. The consumer never knows this, because the note is still serviced by the First National Federal Bank of Florida, who takes their payments and forwards them to the owner through a shell company (more on that in a minute).
There are thousands of mortgage transfers made each day in Florida alone, and continually recording these transactions at the County Clerk’s office at $10 a pop is costing banks $600 million a year. They decide that there MUST be an easier way. This is the “way” that they came up with:
So, in 1999 a Corporation called Mortgage Electronic Registrations Systems (MERS) was formed. MERS is a shell corporation that is jointly owned by the Nation’s large banks, has no financial stake in the real estate mortgages, but mortgages are all registered to MERS, and the 44 employees of MERS keep track of who actually owns what Mortgage. MERS is the registered holder on over 55 million mortgages. They avoid the $10 fee, and save the banking industry billions. The problem is that they have taken our Nation’s Public records system, and made it so no one knows exactly who owns what, and during all the transferring that went on, the original note is lost. This makes it impossible in many cases for a bank (any bank) to prove they own the note, but that doesn’t stop them from trying.
This allows mortgage fraud on a scale that was unheard of for the thousands of years of property law that existed before MERS came along. Fake assignments, contracts, affidavits, and other evidence has been used to take homes that banks had no right to take.
The reason why I support people fighting this is that since no one knows for sure who owns what, there is a chance that settling with who you think is the owner of your mortgage may result in the REAL holder taking your home when the note IS eventually found, or may result in more than one bank claiming that you owe them money. In one case here in Lee County, Florida, a homeowner was foreclosed upon by two different banks, both of whom claimed to be the owner of the mortgage and note, and both of whom had paperwork and “evidence” to prove it. (The cases are American Home Mortgage Servicing v. Joanne Fredenburg Case 08-CA-050001, and Deutsche Bank National Trust Co. v. Joanne Fredenburg Case 08-CA-051319)
There will be more to follow on this…
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Congress doesn’t care about the Constitution
Listen. at 44 seconds, “I don’t care about the Constitution.”
When confronted about the statement, he says: “It says that we all have the right to life, liberty, and the pursuit of happiness.”
The reply, “That is the Declaration of Independence.”
The congressman: “It doesn’t matter to me. Either one.”
Here is the secret: No one is dying because they can’t be seen at a hospital. There is already a law in place that requires emergency departments to see you whether you can pay or not. It is called EMTALA, the Emergency Medical Treatment and Active Labor Act. No one can legally be refused care because they don’t have insurance. The hospitals are not aggressive about pursuing payment, either.
I have patients that have been taken to the emergency room hundreds of times in the past few months, some of them occasionally go to the ER 5-8 times a day. My record is taking the same person to the ER 9 times in one day. That patient has NEVER paid a dime for either the hospital visits or the transport.
Anyone who tells you that this bill is about health or about care is a liar. Wanna see what health care will look like under Obama? Click here and look at what he is doing to the auto industry.
This is about the government controlling every facet of your life. Obama controls the financial sector, manufacturing, and now he has his sights set on health care.
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Dealing with bullies
This article astounds me. Who ever this Barbara Coloroso is, she is a fool. In her book, this supposed expert claims that you should teach your children to never fight back against a bully. The comments on this thread are even better:
Here is a simple way to stop a kid from bullying your child: File a civil suit against the Parents of the bully(s) File the case under “harassment” and seek monetary damages.
The American answer for everything: sue, sue, sue.
Reading these situations…if they were to take place in the adult workforce – it would called SEXUAL HARASSEMENT.
The female answer for everything: the sexual harassment trump card. If you don’t like something someone does or says, scream harassment. That will usually get them in hot water or fired, and you don’t need to prove anything.
One of the most important things a bullied kid needs to realize is that the way the person treats you shows you what kind of a person he/she is, not what kind of a person you are.
This is akin to saying “sticks and stones,” and that is really no help when you are getting the tar beaten out of you.
When I was a kid, I was picked on a lot. With an IQ of 144, I was in the 99.83th percentile. When I was in the 7th grade, I was tested on math and reading skills and maxed out the test: College Junior. It may have been higher, but the test scale went no higher, so there was no way to tell.
I was picked on and called geek, nerd, etc. Even the teachers sometimes participated. The abuse would sometimes get physical. It was so bad that I would not let my children be placed in a so-called gifted program when they were in school. When the abuse turned physical, there was one thing that stopped it EVERY TIME: I learned to fight back. When the abuse turned physical, I punched the bully in the face. To my parent’s credit, they went to school and defended me against the “zero tolerance” rules that the school had against fighting.
I did the same for my kids. When my son was in the second grade, he came home crying because a fifth grader was beating him up on the recess yard. I went to the school and was told that the teachers can’t be everywhere, and that they couldn’t discipline the bully unless they saw it happen. My son, who was playing Pop Warner football at the time, was told that the kids on the football team were larger and hit harder than this bully did, and the next time it happened, he should fight back.
He told me that the teachers were teaching them that fighting was wrong, and that the policy was that both students were to be disciplined if a fight broke out. I told him that I would take care of the teachers, and that he should never start a fight, but if a person attacks you, you should defend yourself.
Several days later, I was called to the school because my child had beaten the bully pretty badly. The kid went crying to the school office. When I got there, I saw that the child was twice the size of mine. The school wanted to suspend my son. When I asked them if a teacher had seen the fight, they replied that no teacher had actually seen it. I then pointed out to them that they told me that if no one had seen the event, they couldn’t do anything.
“After all,” I said, “teachers can’t be everywhere.” (is that like the saying that the police can’t be everywhere?) I then told them that I would never raise my child to be a dysfunctional adult that knuckles under every time someone attacked them, and I certainly would not teach my child to stand there while someone beat the tar out of them.
The bully never touched my son again. In the same vein, that is why my son received a .45 caliber handgun from his Dad for his 21st birthday. He has a concealed weapons permit, and carries that pistol frequently. The schoolyard bullies of yesterday are the violent criminals of today.
Well, sometimes they get jobs as cops, but that is a story for another day…
Edited to add: All of this “don’t fight back” nonsense forces kids to bottle up their hostility and resentment at being picked on until they snap. I believe these policies are the reason why good kids who are bullied go on shooting sprees. See Columbine. Reminds me of the Pearl Jam song Jeremy.
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Florida’s foreclosure crisis
Millions of Floridians are losing their homes due to foreclosure. It would be easy to just say “pay your mortgage, deadbeat” as many people have, but things are not as easy to solve as that statement would indicate. Matt Weidner, a Tampa area attorney, has a blog that spends a good deal of time and bandwidth explaining the problem:
The lenders of Florida, and the firms that bought mortgage backed securities, have traded, sold, spindled and mutilated the mortgage notes and mortgages in this state in such a fashion as to make it impossible for anyone to determine or prove who owes what to whom. When confronted in court, many of the lenders and their attorneys are manufacturing the evidence they need to take the home. They have been caught doing this so often that the Florida Supreme Court had to issue rules that apply to these foreclosures in an attempt to curb some of the lies, fraud, and manipulation that is going on.
Reading Mr Weidner’s blog made me truly understand why the mortgage, insurance, and bank failures that caused our current recession occurred. The banks and mortgage lenders have been lying, cheating, and stealing their way to billions in undeserved profits by enticing lawmakers and the courts to game the system in their favor.
Now we come to the reason for this post. As the courts begin to catch on to the fraud being carried out here, the banks are beginning to lose foreclosure cases all over the state. They have responded by getting legislators to introduce a new bill ironically called Florida Consumer Protection and Homeowner Credit Rehabilitation Act. The purpose of this proposed law is to change Florida from a Judicial foreclosure state (requiring a bank to take you to court to in order to take your home, thus allowing you your day in court) to a non-judicial foreclosure state, essentially allowing people using “Operation Repo” style tactics to take your home without you ever getting your day in court.
If you think things are going to improve in our economy anytime in the near future, you are sorely mistaken.
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Glen Frey
The sailors and pilots,
The soldiers and the law,
The pay offs and the rip offs,
And the things nobody saw.
That song is in my head this morning because of the backdoor deal that convinced anti-abortion senator Stupak that his morals were for sale. Just what is the going price for a senator these days?
$726,409 more or less. That is the total grant money being given to three airports in his district.
I have to ask- why were airport grants included in a healthcare bill? And why didn’t the healthcare bill include- well, healthcare? See, the Dems were so busy passing out the pork, they forgot to include helathcare in the bill.