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View Diary: "Geithner Blocking Legal Help For Foreclosure Victims" (124 comments)

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    •  When a bank takes a home through (2+ / 0-)
      Recommended by:
      Xapulin, shrike

      foreclosure, it loses money. A modified loan is much more profitable. The reason people are defaulting is that they cannot pay even a HAMP payment. There is zero reason a bank would take a home if the borrower can pay. To the extent this happens, it thus happens out of bank incompetence, not some conspiracy to take our depreciated homes back.

      I'm in the I-fucking-love-this-guy wing of the Democratic Party!

      by doc2 on Thu Dec 16, 2010 at 06:21:37 AM PST

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      •  not really true (6+ / 0-)

        the problem is many mortgages are not held by banks. They have been sold 5 times over.

        Other times, banks are so incompetent, the right hand doesnt know what the left hand is doing.

        Bad is never good until worse happens

        by dark daze on Thu Dec 16, 2010 at 06:36:52 AM PST

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      •  Mortgage insurance (2+ / 0-)

        The banks do not lose a thing by seizing your house- they carry mortgage insurance and the icing on the cake is the resale of the property.

        Win/win for the banks.

        Now if, for some various reasons, the properties were not resaleable........

        Ornaments-dogs.cats.mermaids.at Kos Katalog

        by flowerfarmer on Thu Dec 16, 2010 at 06:42:44 AM PST

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        •  Absolutely not the case. (1+ / 0-)
          Recommended by:
          Earth Ling

          Most home do not have MI for one thing. Those that do only have MI to cover the difference between about 70 ltv and whatever the original ltv of the loan (say, 90). So MI mitigates loss, but doesn't eliminate it, with REO properties typically selling for half of their original value. PLUS, MI companies are notorious for denying claims; if there is any doubt as to the original statements made in underwriting, such as borrower income, the claim is likely to be rejected. You can try to use your imagination to come up with some win/win scenario for banks, but it's like people who spend their time trying to come up with reasons that evolution may not be true.

          Look at the salient facts, look at the condition of the banking system, look at the trajectory of bank stocks over the past 5 years. And look up Occam's razor.

          I'm in the I-fucking-love-this-guy wing of the Democratic Party!

          by doc2 on Thu Dec 16, 2010 at 07:08:39 AM PST

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          •  The 'salient' fact (0+ / 0-)

            concerning the banking industry is that they would rather take a loss than appear to have one molecule of compassion for any of their former customers.

            Ornaments-dogs.cats.mermaids.at Kos Katalog

            by flowerfarmer on Thu Dec 16, 2010 at 10:03:05 AM PST

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          •  They are foreclosing (0+ / 0-)

            on mortgages that are entirely current, and using blatant fraud to do it. More than once they've foreclosed on homes that had no mortgage at all. They obviously just want the property, their money was covered when they sold the mortgage the first time. Money was made on each subsequent sale. And when it got to the last fool in line (and all those shady MBS's), losses were covered 100 cents on the dollar by we the taxpayers.

            The only people who have seriously been hurt by any of this are homeowners, as property values have plummeted. Banks and Wall Street gamblers are sitting on trillions. Asking us to feel sorry for them is pointless. They are not in the least bit pitiable.

            Now, more than ever, we need the Jedi.

            by Joieau on Thu Dec 16, 2010 at 04:55:49 PM PST

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      •  Most credit default swaps are for 5 years so (1+ / 0-)
        Recommended by:
        Joieau

        they were still cheap back then before the market fell apart.
        Heck you didn't even have to have financial interests in them, just buy them naked! Buy 5, they're cheap!

        But to qualify to get a pay off on mortgage securities you need them in default.
        That is a quicker and potentially larger payoff

      •  Ok, the banks were made whole by Geithner et al (1+ / 0-)
        Recommended by:
        Joieau

        Paulson, etc.

        Appraisal fraud was reported to Bernanke in 2005.  Crickets.
        It was at it's highest in 2009.

        Can someone explain this?

        Collateralized Debt Obligations or CDO's (Sachs, BoA, etc),

        Pretend that you have a mortgage (okay, most of us aren't pretending) and you make principal and interest payments each month - these payments are made to your loan servicer and then split up as follows:

        Investor A - Gets all of the interest payments from years 1 - 4
        Investor B - Gets all of the principal payments from years 1 - 4
        Investor C - Gets all of the interest payments from year 5
        Investor D - Gets all of the principal payments from year 5
        Investor E - Gets the interest and principal payments from years 6 - 10
        Investor F - Gets interest payments from years 11- 24
        Investor G - Gets principal payments from years 11 - 24
        Investor H - Gets the remainder of principal and interest payments, if made from years 25 - 30

        A trustee for these investors is in charge.  Who are the trustees?  

        Can you see why there is no chance of a workout, and these go into foreclosure.

        Can you see why the lawyers for MERS and the Banks might have a problem proving a Standing to Foreclose?  Who were the Investor A's?

        Credit Default Swaps or CDS (AIG)

        There is nothing wrong (highly debatable these days) with a Credit Default Swap - it is basically an insurance policy against the failure of a specific asset. The reason these have been in the news is because some companies - like AIG, Lehman and Fortis (and many others) found these insurance policies to be very lucrative business.

        However, when the reality that the MBS and CDOs were for overvalued houses with predatory loans that wouldn't be paid, the insurers (AIG, PPI) just didn't have the money needed to cover everyones losses.

        So Geithner bailed out AIG and made investors whole.  Well, those that had CDS.

        All quoted from this source, with author comments in italics included.

        It's difficult to be happy knowing so many suffer. We must unite.

        by War on Error on Thu Dec 16, 2010 at 09:50:36 AM PST

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