Gonzalo Lira On The Coming Middle-Class Anarchy

Tyler Durden's picture

Submitted by Gonzalo Lira

The Coming Middle-Class Anarchy

True story: A retired couple I know, Brian and Ilsa, own a home in the Southwest. It’s a pretty house, right on the manicured golf course of their gated community (they’re crazy about golf).

The only problem is, they bought the house near the top of the market in 2005, and now find themselves underwater.
They’ve never missed a mortgage payment—Brian and Ilsa are the kind upright, not to say uptight 60-ish white semi-upper-middle-class couple who follow every rule, fill out every form, comply with every norm. In short, they are the backbone of America.
Even after the Global Financial Crisis had seriously hurt their retirement nest egg—and therefore their monthly income—and even fully aware that they would probably not live to see their house regain the value it has lost since they bought it, they kept up the mortgage payments. The idea of them strategically defaulting is as absurd as them sprouting wings.
When HAMP—the Home Affordable Modification Program—was unveiled, they applied, because they qualified: Every single one of the conditions applied to them, so there was no question that they would be approved—at least in theory.

Applying for HAMP was quite a struggle: Go here, go there, talk to this person, that person, et cetera, et cetera, et cetera. “It’s like they didn’t want us to qualify,” Ilsa told me, as she recounted their mind-numbing travails.
It was a months-long struggle—but finally, they were approved for HAMP: Their mortgage period was extended, and the interest rate was lowered. Even though their home was still underwater, and even though they still owed the same principal to their bank, Brian and Ilsa were very happy: Their mortgage payments had gone down by 40%. This was equivalent to about 15% of their retirement income. So of course they were happy.
However, three months later, out of the blue, they got a letter from their bank, Wells Fargo: It said that, after further review, Brian and Ilsa had in fact not qualified for HAMP. Therefore, their mortgage would go back to the old rate. Not only that, they now owed the difference for the three months when they had paid the lowered mortgage—and to add insult to injury, they were assessed a “penalty for non-payment”.
Brian and Ilsa were furious—a fury which soon turned to dour depression: They tried contacting Wells Fargo, to straighten this out. Of course, they were given the run-around once again.
They kept insisting that they qualified—they qualified! But of course, that didn’t help at all—like a football, they were punted around the inner working of the Mortgage Mess, with no answers and no accountability.
Finally, exhausted, Brian and Ilsa sat down, looked at the last letter—which had no signature, and no contact name or number—and wondered what to do.
On television, the news was talking about “robo-signatures” and “foreclosure mills”, and rank illegalities—illegalities which it seemed everyone was getting away with. To top it off, foreclosures have been suspended by the largest of the banks for 90 days—which to Brian and Ilsa meant that people who weren’t paying their mortgages got to live rent free for another quarter, while they were being squeezed out of a stimulus program that had been designed—tailor made—precisely for them.
Brian and Ilsa are salt-of-the-earth people: They put four kids through college, they always paid their taxes. The last time Brian broke the law was in 1998: An illegal U-turn on a suburban street.
“We’ve done everything right, we’ve always paid on time, and this program is supposed to help us,” said Brian. “We follow the rules—but people who bought homes they couldn’t afford get to squat in those McMansions rent free. It would have been smarter if we’d been crooks.”
Now, up to this point, this is just another sob story of the Mortgage Mess—and as sob stories go, up to this point, it’s no big deal.
But here’s where the story gets ominous—here’s where the Jaws soundtrack kicks in:
Brian and Ilsa—the nice upper-middle-class retired couple, who always follow the rules, and never ever break the law—who don’t even cheat on their golf scores—even when they’re playing alone (“Because if you cheat at golf, you’re only cheating yourself”)—have decided to give their bank the middle finger.
They have essentially said, Fuckit.
They haven’t defaulted—not yet. They’re paying the lower mortgage rate. That they’re making payments is because of Brian: He is insisting that they pay something—Ilsa is of the opinion that they should forget about paying the mortgage at all.
“We follow the rules, and look where that’s gotten us?” she says, furious and depressed. “Nowhere. They run us around, like lab rats in a cage. This HAMP business was supposed to help us. I bet the bank went along with the program for three months, so that they could tell the government that they had complied—and when the government got off their backs, they turned around and raised the mortgage back up again!”
“And charged us a penalty,” Brian chimes in. The non-payment penalty was only $84—but it might as well been $84 million, for all the outrage they feel. “A penalty for non-payment!”
Nevertheless, Brian is insisting that they continue paying the mortgage—albeit the lower monthly payment—because he’s still under the atavistic sway of his law-abiding-ness.
But Ilsa is quietly, constantly insisting that they stop paying the mortgage altogether: “Everybody else is doing it—so why shouldn’t we?”
A terrible sentence, when a law-abiding citizen speaks it: Everybody else is doing it—so why don’t we?
I’m like Wayne Gretsky: I don’t concern myself with where the puck has been—I look for where the puck is going to be.
Right now, people are having a little hissy-fit over the robo-signing scandal, and the double-booking scandal (where the same mortgage was signed over to two different bonds), and the little fights between junior tranches and senior tranches and the servicer, in the MBS mess.
But none of that shit is important.
What’s really important is Brian and Ilsa: What’s really important is that law-abiding middle-class citizens are deciding that playing by the rules is nothing but a sucker’s game.
Just like the poker player who’s been fleeced by all the other players, and gets one mean attitude once he finally wakes up to the con? I’m betting that more and more of the solid American middle-class will begin saying what Brian and Ilsa said: Fuckit.
Fuck the rules. Fuck playing the game the banksters want you to play. Fuck being the good citizen. Fuck filling out every form, fuck paying every tax. Fuck the government, fuck the banks who own them. Fuck the free-loaders, living rent-free while we pay. Fuck the legal process, a game which only works if you’ve got the money to pay for the parasite lawyers. Fuck being a chump. Fuck being a stooge. Fuck trying to do the right thing—what good does that get you? What good is coming your way?
When the backbone of a country starts thinking that laws and rules are not worth following, it’s just a hop, skip and a jump to anarchy.
TV has given us the illusion that anarchy is people rioting in the streets, smashing car windows and looting every store in sight. But there’s also the polite, quiet, far deadlier anarchy of the core citizenry—the upright citizenry—throwing in the towel and deciding it’s just not worth it anymore.
If a big enough proportion of the populace—not even a majority, just a largish chunk—decides that it’s just not worth following the rules anymore, then that society’s days are numbered: Not even a police-state with an armed Marine at every corner with Shoot-to-Kill orders can stop such middle-class anarchy.
Brian and Ilsa are such anarchists—grey-haired, well-dressed, golf-loving, well-to-do, exceedingly polite anarchists: But anarchists nevertheless. They are not important, or powerful, or influential: They are average—that’s why they’re so deadly: Their numbers are millions. And they are slowly, painfully coming to the conclusion that it’s just not worth it anymore.
Once enough of these J. Crew Anarchists decide they no longer give a fuck, it’s over for America—because they are America.
Update I:
The Center for Public Integrity has a story, written by Michael Hudson this past August 6, that shines a light on the issue of perverse incentives of the HAMP program. These perverse incentives came to light because of a whistleblower, a former employee of Fannie Mae, filing a lawsuit. Fannie Mae was so keen on being perceived as a money-maker, after the Federal government bailout, that the aid programs passed by the Congress and signed by the President were turned into profit centers.
The former executive, Caroline Herron, recounts:

    “It appeared that Fannie Mae officers were focused on maximizing incentive payments available to Fannie Mae under various federal programs – even if this meant wasting taxpayer money and delaying the implementation of high-priority Treasury programs,” she claims in the lawsuit. 

    Herron alleges that Fannie Mae officials terminated her $200-an-hour consulting work in January because she raised questions about how it was administering the federal government’s push to help homeowners avoid foreclosure, known as the Home Affordable Modification Program, or HAMP.

Herron further alleged that “trial mods” were implemented regardless of eligibility of applicants, so that Fannie Mae would be eligible for Federal government bonuses.
Ms. Herron’s testimony in fact proves Ilsa’s suspicion that there was a scam at bottom. As Mr. Hudson writes, “Herron charges that Fannie Mae continued in headlong pursuit of ‘trial mods’ even though it knew that many had little chance of becoming permanent. [. . .] Fannie preferred doing trials, Herron alleges, because it was eligible to receive incentive payments from the Treasury Department.”
So in the pursuit of these perverse incentives, people who did not qualify for HAMP were enrolled in the program. And when their “trial mods” were up after 90 days, they would be notified that they didn’t qualify—regardless of whether they in fact did qualify, as in the case of Brian and Ilsa.
All so as to be perceived as a profitable operation, worth having been bailed out. All so as to be perceived as “returning America’s money”.
As of February, 2010, of the over one million homeowners’ mortgages under HAMP auspices, 83% were “trial mods”. One would assume that those 850,000 homeowners would also be assessed an $84 penalty for non-payment.
$84 times over 850,000? You do the math.

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Bananamerican's picture

"Bird and Fortune"?


Ricky Bobby's picture

No junk here, bugs_ is right on.

Real Estate Geek's picture

Ahh, to be the proverbial one-legged black lesbian.

MrVincent's picture

This article tries to make it look like these people "did the right thing".

Wait a minute! They bought a home at the top of the market and now they try to get taxpayer money to make up for their mistakes!

I hate the banks just like the next guy, but lets not forget the mistakes that the borrower has made.


NoVolumeMeltup's picture

While many ZH-types plainly saw the writing on the wall regarding real estate, I don't expect the average American couple to be able to call a top in any given market.

Plus the fact that Greenscam's low low rates were artificially driving demand and TPTB have been burying price discovery like a cat burying shit takes an amount (but surely not all) of the onus from them in my mind.

Fuckit indeed.

bronzie's picture

it's not an easy issue - on one side we have financially illiterate people watching American Idle, Flip This House and other reality TV instead of educating themselves about the world they live in - on the other side we have educated people who make a living by screwing over uneducated people - is it a big surprise that the uneducated people got sucked into the biggest real estate bubble planet Earth has ever seen?

two phrases come to mind:

1. "tough love"

2. "there's no such thing as a free lunch"

edit: and didn't one of our founding fathers say something about needing an educated population to run a country?

"I know no safe depository of the ultimate powers of the society but the people themselves, (A)nd if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion by education. This is the true corrective of abuses of constitutional power."
Thomas Jefferson

isn't TJ telling us here that the only way we can maintain our society is by becoming educated?

i-dog's picture

I think you'll find that Churchill had a more practical view of the "safe depository" problem:

“The best argument against democracy is a five minute conversation with the average voter."

StychoKiller's picture

Which is why we're governed by a Republic in the US.

A large IQ test is being administered on Humanity -- the majority are FAILING!

Bitch Tits's picture

So, Churchill thought himself above others - a true sign of a psychopath, btw - a bit smug of him, don't you think?

Men's actions speak louder than words, methinks. And some truths take a different sort of intelligence to be able to comprehend, one maybe not even recognized by men like Churchill  . . .

nmewn's picture

Explain yourself & screen name to Churchill...LOL.

Or maybe Churchill already knows ;-)

Churchill: Madam, would you sleep with me for five million pounds?
Socialite: My goodness, Mr. Churchill… Well, I suppose… we would have to discuss terms, of course…
Churchill: Would you sleep with me for five pounds?
Socialite: Mr. Churchill, what kind of woman do you think I am?!
Churchill: Madam, we’ve already established that. Now we are haggling about the price.

Lucky Guesst's picture

Is it an accident that we dump way more money money in our schools than other countries and have such poor results? Only kids with good parental intervention have a clear sense of reality. Who runs the schools? Liberal Union Idiots! There are some great educators with good intentions in the schools but they are few and powerless to change the entire system. The worse the results the more tax money they get to cry for and those at the top get incredible salaries! Its the same scam for every Left project, cry about the victims and get a huge salary to deliver a program that never helps, only restricts. In the mean time they get the power to create rules and policies to strengthen the progressive take-over!

jesus's picture

What an interesting and very stupid analysis. Take a look at a list of countries that have better educational systems than ours (as measured by test scores, etc). Pretty much ALL of them are FAR more liberal/progressive than our country, and the majority have much stronger unions and labor laws.


Facts: Don't let them get in the way of your fantasies.


Kobe Beef's picture

Timothy Gatto has a worthwhile book published in installments on lewrockwell.com, for those interested in the American public education system.

I encourage the Zedge to read it, & make of it what thou whilt.

Misstrial's picture

Mr. Vincent -

As a Gen Xer and renter, what I see here is an older Boomer couple who were handed every financial, educational, and employment opportunity the world and the USA could offer for decades.

They made the mistake of assuming that the status quo would continue despite endless wars, a truly heinous national deficit through multiple "R" or "D" Administrations/Congresses, offshoring, outsourcing, and the decimation of our manufacturing base in every industry since the mid-1970's among other problems.

btw, by 2005, bloggers were warning of impending doom in the housing market.

Shiller, Schiff, Ben Jones of the Housing Bubble Blog were openly warning prospective buyers. Same with the Craigslist Housing Forum. Many posters on CL, myself included (a member since 10/2005) were warning prospective buyers and homeowners of the doom on the horizon. We also provided many, many, many links to online articles from all news sources regarding the manipulation of housing market pricing via flipping and "specuvestors", appraisal corruption, and appalling lending "standards" (term loosely applied here).

Further, by 2005/6, Patrick.net was well-known (and mocked) in real estate circles and Patrick Killelea was warning of an imminent housing collapse. People who took the time to research and think this through had  come to the conclusion that this housing run-up was not sustainable and was simply a "house of cards."

Apparently this couple, like many others, did not do their research and made an expensive purchase based upon real estate agent "happy talk" and the assumption that the social and financial order (such as the stock & bond markets) will always follow a linear continuum (upwards) as in the past 50 years.

They could have turned around and sold this same property in 2006 or 2007 and still made a profit.

To base their house payments on assumed monthly income from investments was not wise, and anyone reading their story should take instruction on what not to do. The generation previous to theirs, the WW2 Generation, or at least the ones I knew, made certain that they owned their home outright by the time they retired.

Sadly the Boomers did not follow the example of their parents and continued to play the RE game as they reached their retirement years. Unfortunately, they made assumptions based upon past housing and market performance and lost.



DosZap's picture


You seem to have  assumed much.

First the Average ZH person is far and above the normal American if fiscal/fiduciary/educational background/ ways.

Plus, they have no clue about any of these people, nor their warnings, nor their existence.

Ever had an orgasm?,if yes,have you ever had someone tell you what one feels like?.

Are they remotely the same?.

Hell no.

Same here.........

This couple, worked hard,got an education,worked for many years, and saved,and planned,based on the world as THEY knew it.

Since only God knows the future 100%, all we as humans (normal ones), have to go on, is what HAS BEEN, especially when it has BEEN all our lives.

Also, assuming Boomers did not pay off their mortgages is presumptious a wee bit, no?.

I know a lot that did, mines been paid off since I was 45.

Why?, because I decided to live debt free, as far as humanly possible. Like many others we do not give credit to, decided long ago, to not be the tail, but the head.

We all have that choice, just how badly we want it,is the ultimate question.

These folks seem to have laid out really sound plans,except the RULES of the game were changed.

Thieves in high places BROKE the system,that had worked for 50+ years. The rest of responsible Americans who had made a plan, and worked the plan, are getting screwed.

This IMHO, is not their fault.

Had they not fiscally been able to afford their retirement style, I seriously doubt they would have been on a residental Golfing Community,which as some know here are not inexpensive.  

Who KNEW the Bankers, and the Govt's of the world were going to get caught gaming the system, and ruining the entire worlds financial house?.

Not me. As well as I prepared, it would have been changed, as would my place of residence.

Personally, I think we need another Founders Part Deaux.

Whatever comes, I do not plan on being cannon fodder........when you kill a venomous snake,you do not cut the tail off, you get the head.

Victim, or Victor, which do you choose?.

Misstrial's picture

Hi DosZap:

Although the average ZH readership is well-read and financially informed compared to the average American, nevertheless, the Internet and Craigslist *is* for the average American and Patrick.net links to many middle-of-the-road news sources.

There was also YouTube where "Dolly the Sheep" made her debut and Schiff, Shiller, Roubini were featured in a heavily-viewed presentation of the housing bubble meltdown.

I still have the link to that video "Our Economy Right Now" which was filmed to Van Halen's "Right Now". Something like 2M viewed it before it was removed by YouTube: "video contains content from WMG, who has blocked it on copyright grounds."

Here is another one from 2006 and is a clip compilation from the various major networks on an impending housing collapse and financial meltdown: http://www.youtube.com/watch?v=2I0QN-FYkpw

Shiff was warning in 2007 via major television media:


I did not mean to imply that ALL Boomers failed to make certain that their retirement home was fully paid for and not leveraged or heloc'd.

However this couple chose a mortgaged residence despite the drawbacks to taking such a financial risk at their age. I would like to clarify that there are also many Boomers who did make certain that their mortgage was fully paid off by the time they retired. These responsible Boomers are the unsung heroes of their generation, yet sadly, the focus has been on those who failed to prepare for their retirement years and have now chosen to pattern their behavior after  banksters who should be imprisoned.

Perhaps at one time, based on assumptions of market performance, the profiled couple could afford a golf club community, however they no longer can and so they are facing the probability of having to sell their home for less than they purchased. If renters lose their job or suffer losses in the markets due to falling (or collapsing) investment values, then they have to move out to a less expensive rental or move in with the relatives or friends (not to imply that relatives cannot also be friends).

Lastly, I think after all of these decades of being at the top of the social ladder and enjoying the benefits of tax write-offs, tax credits, Prop 13, and the mortgage-interest deduction, homeowners are having a very rough time accepting a position of less importance and possibly being despised. This is a state-of-affairs that renters have had to deal with for a very long time.



Cathartes Aura's picture

both of your posts above are excellent, well-reasoned, and well argued Misstrial.

I have very little sympathy for people who have benefited from their cultural positions, la-la-la through their lives thinking they're where they are solely on their own merits, with zero acknowledgement for what their "country" does globally in their name, and how they profit from those actions. . . the leg up their "ethnicity" gives them, the doors that magically open simply because they fit the social criteria - then all of a sudden hit a reality wall and feel hard done by.

it's called responsibility folks, we all need to take it on our own behalf. . . this couple need to suck it up and make some hard decisions about where they are at this moment in time, and then act accordingly.

if they think it's cool to "default" on their mortgage, and continue living in their golf community, fine, that's a decision. . . but I know I would not be such a sitting duck when the real shit hits the real fan soon. . . all those "master plan" communities will sure look like rich pickin' to the "underclass". . .

Misstrial's picture

T/Y Cathartes Aura.


Bitch Tits's picture

Misstrial, I think you misunderstood the game. I base this judgement on your statement: "I would like to clarify that there are also many Boomers who did make certain that their mortgage was fully paid off by the time they retired. These responsible Boomers are the unsung heroes of their generation . . ."

Unsung heroes? These days, those people would be called suckers. I can practically foretell their future: their savings will be depleted by fees and dropping market values, as well as having to take in their children or parents and the extra associated costs, they will have to go back to work when their SS and Medicare coverage no longer covers the essentials, and their home will be re-mortgaged within the next five years because they will be taxed and insured and utility-ed (okay, now I'm making up words but I know you understand) out of their current housing budget.

Life's a bitch, my friend . . . and then, you get old.

Beware the predators. They're everywhere.




Misstrial's picture

Sorry but your final sentence makes you appear paranoid.


arby63's picture

Let's also point out (at least from my reading) that they were just looking for better terms. I didn't notice they were trying to skate on what they owed....unless, of course, the "fuckit" syndrome takes hold.

Either way it's too easy to "cyber preach" when for all we know we're all 17 year-old virgins with dirty underwear. Just saying.

nuinut's picture

except the RULES of the game were changed.

Rubbish. They assumed they knew the rules.

Time for personal responsibility.

FEDbuster's picture

Bullshit, the bankstas got their food stamp bailout.  Dumped their trash at the FED, and are now rolling in the dough by playing the zero risk spread in Tbonds.  They dumped houses ruining the housing market.  Made it damn near impossible for anyone to refi their mortgages due to the "comps" from foreclosure sales.  "Loan" money they never had and charge interest on it (search "Mako" for an education on it).  I say let them die a painful death, they are fucking parasites.  Our bought and paid for politicians aren't any better, we should shut that whore house down, too.

Dburn's picture

Blaming the victim doesn't work anymore. Maybe if you go to a bankers site...


chopper read's picture

by the same token, is there anyone left that is not a victim?

Rodent Freikorps's picture



Oh and...Molon Labe, Bitches.

Sudden Debt's picture

Consumer protection is a joke!

snowball777's picture

I put consumer protection in a class with abstinence-based sex-ed and fusion...great in theory, useless in practice.

Popo's picture

The elites shattered the trust in the system at every single turn.  Ratings agencies.  Offshore banking.  Insider political appointees.  Wall Street Fraud.  High Frequency Trading.  Etc. Etc. Etc.

This isn't so much a defection by the middle class as it is a vote to join the elites.

The only way to restore faith in the system is to start putting elites in jail -- fast.

With no exaggeration:  There are literally tens of thousands of Wall Streeters, bankers and executives that have violated serious laws and need to be prosecuted -- and likely see jail time.

Until the middle class sees this, its going to be a free for all.   The ball is in the hands of the regulators.  

If they drop the ball, they break America.   And the clock is ticking.  

This shit will get ugly very fast.  As everyone knows, crashes happen quickly.  Once money starts to pull out, it moves with breathtaking, horrifying speed.  And it will.  Soon.  




kaiserhoff's picture

Already happening, my friend.

It's like a collision of galaxies.  For a long time, it looks like a near miss, like nothing much is happening in all of that empty space, but gravity has already done its deadly work.

At least you are aware.  So many are not.  Good luck.

Misstrial's picture

Popo: +1000

Two years ago Mike Morgan said these banksters needed to be arrested, charged, and imprisoned.

Unfortunately nothing was done other than watch them reward themselves with bonuses.

Now its monkey-see, monkey-do.



arby63's picture

Right on. There are no rules anymore; I think we'll all be seeing that more clearly with each passing day. What rules? I didn't sign that social contract we often reference. What if we don't even acknowledge the game let alone the rules?

Cathartes Aura's picture

This isn't so much a defection by the middle class as it is a vote to join the elites.


"they got theirs, so I can grab mine!"

this immature thought process will turn around and bite everyone's ass.

great post Popo.

kaiserhoff's picture

When small town lawyers and CPAs are joining the rebellion, there is no middle.

Coolidge Low's picture

Man, I feel for these people, but nobody asked them to over extend themselves and purchase a home beyond their means.  Did they not know they were buying an over extended market?  Guess who is now going to get stuck with their mortgage?  That's right....... Maybe we should publish stories on how the "me" generation of baby boomer lucusts have destroyed the economy and are now crying like whining babies because they have to take responsibility for their actions.  Doesn't sound like there was fraud.  Doesn't sound like they unexpectantly lost a job.  Doesn't sound like they were hit with medical bills.

Golf course community...... I bet they still play a couple of rounds as you and I are figuring out our future tax liability.  Sell the home, move into something more affordable and find new friends.  Take the hit and move on.

P.S.  I bet they are not willing to take a haircut on their social security benefits as future generations will...... yeah, entitled.


Cvillian's picture

I am the same as these people homey. I bought my first place at a bad time (early 2005) but am responsible, law abiding and continue to pay my mortgage on a condo that is anywhere between 30-40% underwater. Over the past two and half years, anywhere between 40-50% of my condo project has walked away or defaulted on their properties, crushing the local market and making refinance in this lower interest rate environment impossible. I rent my property out as marriage and a new job forced me to leave but I continue to lose money every month on this terd. I will be paying down debt to Chase for a long time (at a higher interest rate I can't do anything about) and am equally pissed that I can't pay more principal through a lower mortgage rate.  The banks don't give a sh-t and are slowly ramming me in the ass. Oh yeah, I can't sell (other than a short sale) because I don't have the funds to close and the banks won't extend me an uncollateralized loan (even though it is already uncollateralized now). What is your answer to that?

Hansel's picture

Walk away.  Or quit paying the mortgage and continue renting it out.  There is a good chance the bank doesn't have standing to foreclose.  The original note was probably destroyed and your loan is probably part of an MBS.  The "rich elite" got that way because they swindled and stole.  Now is your chance to join the "rich elite" because possession is 9/10 of the law.

poorold's picture

the answer is...stop paying the mortgage, keep paying the condo fees, don't pay the taxes, keep the insurance up...and deposit whatever is leftover from the rent into your bank account.

Lucky Guesst's picture

Buy physical gold with whatever you have left. Don't lend it to the bank and allow them to track it at the same time!

laughing_swordfish's picture

My zweipfennigs worth:

Pay your taxes and HOA fees, but skip the mortgage. If you live in a "judicial procedure" state, if your mortgage was sliced and diced into an MBS, it's a pretty safe bet the "bank"  can produce neither the original note and/or DOT (deed of trust) and all of the assignment/re-assignment paperwork.

This means that whoever forecloses on you has no standing to do it. However, here in NV both HOA's and the state/county CAN foreclose for unpaid taxes and assessments, and the STATE will always be granted "standing" to get its due.


In fact, that's how I think this will ultimately be settled. Once the states and localities get hard up enough for unpaid taxes and fees on all these foreclosed homes (remember, the banks are NOT paying taxes on REO properties), the states and counties will start foreclosing on all this property and will auction them off with new, Original Grant deeds, wiping out any previous liens/encumbrances. Alternatively, they do have the power of Eminent Domain, and could just "take" the "abandoned" property for the "public purpose" of " creating affordable housing".

Nver underestimate the power of the STATE to just do as it pleases if the situation is drastic enough.

laughing_swordfish's picture

My zweipfennigs worth:

Pay your taxes and HOA fees, but skip the mortgage. If you live in a "judicial procedure" state, if your mortgage was sliced and diced into an MBS, it's a pretty safe bet the "bank"  can produce neither the original note and/or DOT (deed of trust) and all of the assignment/re-assignment paperwork.

This means that whoever forecloses on you has no standing to do it. However, here in NV both HOA's and the state/county CAN foreclose for unpaid taxes and assessments, and the STATE will always be granted "standing" to get its due.


In fact, that's how I think this will ultimately be settled. Once the states and localities get hard up enough for unpaid taxes and fees on all these foreclosed homes (remember, the banks are NOT paying taxes on REO properties), the states and counties will start foreclosing on all this property and will auction them off with new, Original Grant deeds, wiping out any previous liens/encumbrances. Alternatively, they do have the power of Eminent Domain, and could just "take" the "abandoned" property for the "public purpose" of " creating affordable housing".

Never underestimate the power of the STATE to just do as it pleases if the situation is drastic enough.

Bananamerican's picture

I don't know where to START junking you on this comment...

for junking Coolidge, or for "buying at a bad time", for continuing to pay your underwater mortgage ( i rent--You NEED to skate on your mortgage so that i can live rent free vicariously thru you) or for getting married, for having your debt with CHASE or for allowing yourself to be "slowly" rammed in the ass......

Cvillian's picture

Don't forget the other 7 people that junked the post, guy.

Your feedback is stellar otherwise. I bet you're one hell of a Monday morning quarterback in the office. 


Blankman's picture

Answer:  Fuckit.  Everyone complains they want to change the way things are done in this country but are afraid of actually trying to make a change.  I see this situation (mortgage mess) as a great way to make a change in this country.  1000 paper cuts is how to kill the beast, not with weapons or outrage.  Everyone wants to change the world, well the mortgage mess is a great way to do it.  You want to see abrupt change, imagine if everyone in the US stopped paying their mortgage.  Sure there will be initial chaos and perhaps a brief time of tyrannical dictatorship but after that perhaps out of the carnage a phoenix will erupt.  Instead of trying to elect leaders to change the way things are done, stand up and be a leader and show your own strength of conviction by realizing you have been lied to all your life.  Try to wake up everyone else.  Everything we see and take to be truth is all lies fed to us to keep us from ever dissenting.  Once you realize there is no constitution any more the eyes will widen.  Why do you think bankers and lawyers rule everything.  The system has been rigged since ~1938 to the lawyers favor.  He who understands the rules make the rules.  Didn't you ever wonder why you can not represent yourself in court.  It is not for your protection it is for their protection.  Under constitutional law we can represent ourselves.  Under UCC / USC law only a barred lawyer can represent us.     


FYI: I walked away from 3 houses in 2008, reset my life, pay for everything in cash and have begun the learning process into the depths of our financial and legal systems.  Walking away is easy, relearning everything you once thought to be true and honest is the hard part.  That is the fear.  That is why most will not do this.  One of my favorite movie quotes (Dune):  

I must not fear.

Fear is the mind-killer.

Fear is the little-death that brings total obliteration.
I will face my fear.
I will permit it to pass over me and through me.
And when it has gone past I will turn the inner eye to see its path.
Where the fear has gone there will be nothing.
Only I will remain

DosZap's picture


"Sure there will be initial chaos and perhaps a brief time of tyrannical dictatorship but after that perhaps out of the carnage a phoenix will erupt."

These fuckers do not go away, they get murdered, or you do.

Once embedded, they are like Alabama ticks,except they dopnot drop off.

Castro ring a Bell?.


arby63's picture

I'm not so sure anymore. This is one big and heavily-armed country. Makes one wonder long and hard about the consequences of chaos and anarchism. Even dictators need backup. This time around I wouldn't be surprised to see everyone stay on their asses and listen to no one about anything. Guess time will tell. Good point nevertheless.