Broke? You May Now Be Entitled To a Free Home

Tyler Durden's picture

It’s been seven years since the epic collapse of the US housing market, and there’s never been a better time to buy your first home. In Denmark for instance, the bank will tax depositors in order to pay you to take out a home loan. But before you move to a European country operating in NIRP-dom, consider Florida and New Jersey first because as Susan Rudolfi recently discovered, you can actually get a house for free by simply not making your mortgage payments. Here’s more via NY Times:

She is like a ghost of the housing market’s painful past, one of thousands of Americans who have skipped years of mortgage payments and are still living in their homes.

 

Now a legal quirk could bring a surreal ending to her foreclosure case and many others around the country: They may get to keep their homes without ever having to pay another dime.

 

The reason, lawyers for homeowners argue, is that the cases have dragged on too long.

 

There are tens of thousands of homeowners who have missed more than five years of mortgage payments, many of them clustered in states like Florida, New Jersey and New York, where lenders must get judges to sign off on foreclosures.

 

However, in a growing number of foreclosure cases filed when home prices collapsed during the financial crisis, lenders may never be able to seize the homes because the state statutes of limitations have been exceeded, according to interviews with housing lawyers and a review of state and federal court decisions.

It should come as no surprise that the free house legal loophole comes courtesy of the always dangerous and extraordinarily unpredictable combination of government ineptitude and TBTF inefficiency, and thanks to the fact that the Fed-sponsored, investment bank securitization-fee-fueled real estate bubble was allowed to inflate to the point where it swallowed the entire US economy, tens of thousands of borrowers may ultimately become owners by virtue of remaining resolute when it comes to not making payments:

It is difficult to know for sure how many foreclosure cases are still grinding through the court systems since the financial crisis. It is even harder to say how many of those borrowers are still living in their homes.

 

Bank of America, for example, has initiated the foreclosure process on roughly 20,000 mortgages that have not been paid in at least five years. The bank estimates that 90 percent of those homes are still occupied.

 

The courts are not the only source of delay. Over the years, the federal government has made 69 changes to its mortgage modification programs, forcing lenders repeatedly to scrap previous offers to homeowners and extend new terms.

 

Of course, the banks have also dragged out this reckoning through shoddy paperwork, botched modifications and general dysfunction as they struggled to cope with a flood of soured mortgages. Many cases were passed among lawyers like hot potatoes and lay dormant on court dockets.

This arrangement works out particularly well if the property you now own (because it’s cheaper to pay a lawyer than it is to pay the mortgage) can be used to generate rental income: 

[Rudolfi’s] working-class neighborhood is a short drive from Coconut Grove, a wealthy waterfront enclave of Miami. Her bedroom opens up onto a pool, shaded by palm trees. Outside her house, she parks a small motorboat she named Mermaid. The property includes an adjoining house that she rents out…

 

In November 2009, her mortgage servicer at the time, Aurora Loan Services, a unit of the now-defunct Lehman Brothers, filed to foreclose on her house.

 

Instead of making her roughly $1,300 monthly mortgage payment, she pays her lawyer $500 a month to represent her in court.

 *  *  *

So a bit of poetic justice we suppose for an investment banking community and a complicit Federal Reserve who facilitated the creation of a modern day tulip mania which lined Wall Street’s pockets even as it put Main Street (which was itself all too eager to finance a McMansion and a Hummer) on a path to ruin. But in the end, the Susan Rudolfis of the world ask: "What are you gonna do?"...

“I screwed up and they screwed up, so now what?” she said.

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SheepDog-One's picture

As long as you can just hold out long enough, all deadbeats will come out on top in new 'Murka.

PoasterToaster's picture
PoasterToaster (not verified) SheepDog-One Mar 30, 2015 10:46 AM

When the game is rigged, there's no such thing as a deadbeat.

Shocker's picture

In the end,we all pay for this nonsense

Job Situation: http://www.dailyjobcuts.com

.

Creepy A. Cracker's picture

<sigh...>  I feel SO stupid telling the truth, paying for things that I promised to pay for.

(And no, I didn't promise to pay for the government's irresponsible spending/wealth transfers - and neither did the U.S. Constitution.  Leftist aye-hole politicians forced that on me.)

pods's picture

I think this is more about equitable interest than the SOL.

You hear that Linda Green?

pods

General Decline's picture

I smell an executive order on the way to fix this.

froze25's picture

It gets even better if you have a forensic accountant go through the banks records to show where they actually put up consideration to make the loan happen.  Bottom line is that they didn't lend you anything.  UCC 1269, the note you sign is handled like a check, it is deposited and actually finances the loan that you took out.  So the question to the Bank is "show me the Loan".  It is the mortgage that spells out the "repayment" terms (interest, number of payments etc.)  The bank puts nothing at risk.  Lets not even get into assignments of loans into pools after the closing date of the pools and notarized blank endorsements (illegal for a notary to do).  There are so many "f"ups in the loan process from 2002 - 2008 if you have a good lawyer who accurately studies the laws and litigates most of the time you are good to go.  If you have a MERS # and your loan servicing agent changed multiple times those are tell tail signs that you have a securitized loan where the original docs have been either destroyed and/or the chain of title has been broken.

Dr. Richard Head's picture

While you are indeed correct about the point of financial consideration NOT being extended by the bank, you are wrong about the LIARs...I mean lawyers willing to put their head on this, let alone a court actually going along with that argument.  

I went this alone with my credit cards with JP Morgan, back before I knew who those fucks were, and had to fight it alone with JPM credit card.  In the end, I paid them 12 cents on the dollar for the credit card debt, just to make them go away. 

froze25's picture

Its not that they just use that argument it is one of many points they raise.  You need to raise everything under the sun in the beginning so that if you need to appeal you can.  Lawyers will use that btw, not all but I can name one.  I know it for a fact.

TruthInSunshine's picture

The argument about lack of consideration is entirely empty. Anyone making such an argument lacks a proper understanding as to what qualifies as legal consideration sufficient enough to bind a party to a contract.

There's been subsequent national legislation upholding MERS transfers.
It was tacked onto HAMP/HARP statute (funny how that sweeping under the rug thing works retroactively when sold as a "benefit to the oppressed," huh?).

There's a slim to nearly zero chance (lottery ticket - I've only seen it happen on commercial properties, and even then, it's very rare) anyone who has defaulted on their mortgage will be able to successfully claim fee simple title by any suit for quiet enjoyment.

Also, the mortgage notes regarding a great many of these properties the NYT article references are now in the hands of government GSEs (Freddie & Fannie), so good luck arguing quiet title - this is why it's critical to understand that MERS was a way, during the residential RE boom, for the mortgage & title industries to avoid physically recording actual original documents In Rem - and that mortgages and their accompanying notes (the actual security collateralizing the mortgage itself) were flipped to another party by the originating "lender" as soon as the purported transactional documents were signed, and that to further complicate things, these individual docs were sliced up into segments/fractions and bundled into "synthetic MBSs" and sold to institutional investors.

Finally, anyone who wants to take the moral position that deadbeat homebuyers are the root of all evil should really consider the other side of the transaction in many of these cases as deadbeat, bailout kings and wards of the taxpayers, writ large, too

Watch this funny/tragic clip & try an maintain your simple narrative:

http://thedailyshow.cc.com/videos/qatlaz/mortgage-bankers-association-st...

cnmcdee's picture

So the bank has so much money in their fists a few nickels fell between their fingers - that is pretty much all this is..

Pendolino's picture

"The argument about lack of consideration is entirely empty."

Not quite:

https://criminalbankingmonopoly.wordpress.com/montgomery-vs-daly/

(although I'm sure they've found a way to weasel out of it since 1969!)

TruthInSunshine's picture

Jerome Daly, the plaintiff in that case & an attorney, was disbarred & convicted of tax evasion, and the case was overturned.

I'm not arguing what is just or not, I'm presenting the state of things as they exist, which sadly, is FUBAR.

ThroxxOfVron's picture

IRS will fix it.

Proceeds of unpaid loans will eventually deemed income, just like defaulted credit card balances are.

A lot of indigents/squatters are gonna get a bill from the IRS for the full principal amount on their flopped mortgage one day.

Maybe the IRS will also impute unpaid rental or interest charges into that equation as well...

-Then there will be frenzied attempts to snag quiet title and try to sell before the whole mess comes apart...

 

That $200K or $400K or $600K, etc. mortgage that wasn't paid is going to turn into precisely as much undeclared income and a massive tax arrears complete with interest and penaties and fees.

The States and Municipalities will be also be faced with budget deficits or onerous tax increases.  They will want their cut of this undeclared income as much as the Feds at some point.  It will be politically impossible to ignore the vast unpaid taxes outstanding once State and Municipal pension funds go critical..

Oldwood's picture

But if they are never given title, only allowed to live there indefinitely, then there is no tax issue.

Its funny because there is always a tax issue, as it is the only thing that gives meaning to government.

pods's picture

If the loan goes poof, the 1099 will come.  That is the income. Has only to do with the loan. It is independent of the home. 

pods

ThroxxOfVron's picture

"If the loan goes poof, the 1099 will come.  That is the income. Has only to do with the loan. It is independent of the home.  "

 

That is exactly what I think is likely going to happen.  

Indeed, the property isn't income.   However, in a credit/debt based fiat system un-repayed credit is taxed as income.  

A default or write-off of any kind implies that the unredemed credit is income for taxation purposes.

This income will eventually 'realized' by the IRS.  When this happens it will be also very likely be realized as income in one calendar year for the sake of taxation and be be taxed all at once, and thus at a very high rate of implied interest.  Maybe even at a penalty rate as 'previously undeclared hidden' income...

IF a $200K loan is suddently transformed into $200K of income the tax bracket that this debt is going to be assayed at will obviously be in a very high tax bracket.

Not only will the late IRS imposed late payment penalties and fees be high, so shall the interest rates charged on this large outstanding debt.  

..And the present W4 income earned as well ! 

..And this suddenly crazy high 'income' will also have other knock on effects in .GOV/IRS regulation.  For one, any ACA subsidies based on projected income are gonna obviously be clawed back if projected income of say $35K becomes 'realized income' of $235K when a $200K flopped loan gets tacked onto the return with a 1099...  

And so on!!  

willwork4food's picture

Absolutely what POD says. If the mortage goes poof, the 1099 will come...and so will the eviction notices.

MachoMan's picture

Nonsense.  The 1099 may come, but it may also get thrown in the trash.  http://www.irs.gov/taxtopics/tc431.html

Canceled Debt that Qualifies for EXCLUSION from Gross Income:

 

  1. Debt canceled in a Title 11 bankruptcy case
  2. Debt canceled during insolvency
  3. Cancellation of qualified farm indebtedness
  4. Cancellation of qualified real property business indebtedness
  5. Cancellation of qualified principal residence indebtedness

The exclusion for qualified principal residence indebtedness provides tax relief on canceled debt for many homeowners involved in the mortgage foreclosure crisis currently affecting much of the United States. The exclusion allows taxpayers to exclude up to $2,000,000 ($1,000,000 if married filing separately) of canceled qualified principal residence indebtedness.

Generally, if you exclude canceled debt from income under one of the exclusions listed above, you must reduce certain tax attributes (certain credits, losses, basis of assets, etc.), within limits, by the amount excluded. You must file Form 982 (PDF), Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), to report the amount qualifying for exclusion and any corresponding reduction of those tax attributes. For cancellation of qualified principal residence indebtedness that you exclude from income, you must only reduce your basis in your principal residence.

You might also want to look at page 8, here: http://www.irs.gov/pub/irs-pdf/p4681.pdf .  Essentially, qualified principal residence indebtedness is incredibly broad.

Worst case scenario, you face capital gains on a zero basis house...  but, since gain on the sale of a principal residence is not taxed (up to certain thresholds), even if you have a zero basis, you're not going to pay a dime in tax...  alternatively, you can start renting it out for a couple years, then 1031 out of it...  keep trading properties until you kick the bucket and your heirs take a stepped up basis.

ThroxxOfVron's picture

The Devil is going to be buried in the details.

I still think a whole lot of 1099 are going to be issued and upheld, and that this exeption is going to be sunset eventually...

 

http://www.irs.gov/publications/p525/ar02.html#en_US_2014_publink1000229351

"Excluded debt.   Do not include a canceled debt in your gross income in the following situations. 

  • The debt is canceled in a bankruptcy case under Title 11 of the U.S. Code. See Publication 908, Bankruptcy Tax Guide. 

  • The debt is canceled when you are insolvent. However, you cannot exclude any amount of canceled debt that is more than the amount by which you are insolvent. See Publication 908. 

  • The debt is qualified farm debt and is canceled by a qualified person. See chapter 3 of Publication 225, Farmer's Tax Guide.

  • The debt is qualified real property business debt. See chapter 5 of Publication 334.

  • The cancellation is intended as a gift.

  • The debt is qualified principal residence indebtedness, discussed next. 

 

Qualified principal residence indebtedness (QPRI).   This is debt secured by your principal residence that you took out to buy, build, or substantially improve your principal residence. QPRI cannot be more than the cost of your principal residence plus improvements.

 

  You must reduce the basis of your principal residence by the amount excluded from gross income. To claim the exclusion, you must file Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), with your tax return.

 

Principal residence.   Your principal residence is the home where you ordinarily live most of the time. You can have only one principal residence at any one time. 

 

Amount eligible for exclusion.   The maximum amount you can treat as QPRI is $2 million ($1 million if married filing separately). You cannot exclude debt canceled because of services performed for the lender or on account of any other factor not directly related to a decline in the value of your residence or to your financial condition.

 

Limitation.   If only part of a loan is QPRI, the exclusion applies only to the extent the canceled amount is more than the amount of the loan immediately before the cancellation that is not QPRI.

 


Example. 

Your principal residence is secured by a debt of $1 million, of which $800,000 is QPRI. Your residence is sold for $700,000 and $300,000 of debt is canceled. Only $100,000 of the canceled debt may be excluded from income (the $300,000 that was discharged minus the $200,000 of nonqualified debt).

 "

MachoMan's picture

Plenty of wiggle room...  and I think you're going to find a scenario where tax return prepares fire away under vagueness and let the IRS tell them otherwise.  It seems like the only people who stand a chance of not qualifying are strategic defaulters...  How many people either haven't had an impairment to financial condition or a house that decreased in value?

ThroxxOfVron's picture

I'd like to see some numbers.  Exactly how many taxpayers have actually taken advantage of this exception?

Just because it is listed in some regulation somewhere does not mean it is automatically being processed by the bureaucracy.

 

There is a big difference between going bankrupt and walking away debt free and not going bankrupt and walking away with a million dollar home free and clear.

A lot is going to depend on the loans.  Firsts, seconds and/or lines of credit?  Was the loan to appraised value more than 100% ?

The issue of whether the house was merely purchased or has serially refi'd with cash outs is/will also be an issue.

The depression and housing crisis have effected everyone to some extent.

I'd klike to think that there will come a point where these bailouts stop and prudent responsible people are given some fucking respect.

Anger is not just growing with the government and the banks.  Some of Us are getting mightily -evily- pissed off at our neighbors who are taking advantage of the situation to the very best of their ability.   There are going to be social costs to this episode the longer it is dragged out and the more people are bailed out or handed out...

ThroxxOfVron's picture

"It seems like the only people who stand a chance of not qualifying are strategic defaulters...  "

It could be argued that everyone who defaults is in fact a strategic defaulter to some extent if they own absolutely anything else -including a goddamned Roth IRA or a structured annuity which was not liquidated to pay...

willwork4food's picture

Nonsense.  The 1099 may come, but it may also get thrown in the trash. 

Got to disagree with you on this Macho. Not the present legality issues, but the upcoming state, municipalities frothing at the mouth with the IRS new mandate behind them. It is a perfect FEMA camp/ renter controlled envirnment.

MachoMan's picture

You don't need to be worried about FEMA camps...  you need to worry about the guy that promises loan forgiveness, to tackle the banks, a chicken in every pot, to fix things... 

ThroxxOfVron's picture

"You don't need to be worried about FEMA camps...  you need to worry about the guy that promises loan forgiveness, to tackle the banks, a chicken in every pot, to fix things...  "

Agreed.  Mr. Strong(wo)man is due to start 'campaigning' for 2016 right about now...

Government needs you to pay taxes's picture

Very nice work, Throxx and Machoman.  Comment threads like this make me feel less ignorant.  FWIW, I dont think .gov will sic the IRS on these squatters/soon-to-be homeowners.  .Gov wants this behind them, and the last thing they want is a downdraft in RE prices.

ThroxxOfVron's picture

" .Gov wants this behind them, and the last thing they want is a downdraft in RE prices. "

IMHO, this is just as likely to destroy the housing market.

WHY pay for a home when squatting is eventually rewarded by the govenment?

WHY would the Investors -let alone banks-  provide loans witout significant downpayments, which many people can not/do not have, if the government is likely to step in at the next sign of a price crash/bubble burst or spike in unemployment and annul these contracts to give the homes away for political points?

WHY would the responsible bill paying portion of the citizenry sit back and watch the cycle of crime and reward for crime be committed without responding at some point.

This bullshit cannot go on forever.  

..And it won't.

g speed's picture

but the guy in the house never got the money--the builder did--or the seller did--- the guy in the house gets to deduct when he pays-- cause he is paying not recieving----you are wrong on this--

El Vaquero's picture

Yet banks still issue 1099s on debt they know isn't going to get repaid and the IRS still comes after people. 

ThroxxOfVron's picture

"but the guy in the house never got the money--the builder did--or the seller did--- the guy in the house gets to deduct when he pays-- cause he is paying not recieving----you are wrong on this-- "

 

It is CREDIT that was exchanged for property.  This is a credit/debt based monetary system.

 

Say someone 'spends' $50,000 with a credit card.  They never take cash out.  They only 'buy' stuff.

Then, whatever the reason, they don't pay the Card Company. 

When the Card Company goes to the IRS to write the 'debt' off they generate a 1099 to the Debtor/Card Holder for the amount they want to write down.  Thus the 'loss' on the balance sheet of the Credit Card Company is transformed into 'income' on the balance sheet of the Debtor/Card Holder.  

I don't know if regulation mandates taht the debt can only be written off by issuance of a 1099 to the Debtor.  This might be a component of the process of liquidation of debt at the corporate accounting taxation level.  I assume that this is the case as this how the process appears to function in practice...

The IRS adds this 1099 amount directly into the earned income amount on the ledger.  It is all there and no taxes have been taken out at the Federal or State or Local levels.  No FICA has been credited since this amount is in the form of 1099.  

The whole amount is taxable at all levels at the rate of the bracket the earned income and this 1099 addition together puts the total adjusted gross into.

 

I expect that eventually the scuttled loans will be taxed thusly.  Some level -if not all levels- of government that can claim this as taxable income will demand their portion.  

This is why I believe that at some point it will be the IRS/Treasury that will unwind this mess.

After all, the US Treasury, the US Treasury backstopped GSEs and TBTF, and the Fed itself which hold trillions of dollars of these mortgages and which are eventually going to have to unwind or re-organize this mess somehow since they basically own it.

10mm's picture

As Henry Hill said in GoodFellas" Now Take Me To Jail".

laomei's picture

1099 is meaningless if you have any brains.  You get to calculate all liabilities and assets and claim insolvency, which negates all taxes on it.  It's REALLY EASY, and if you are paying taxes based on it, you are just dumb.

Cult of PersonALity's picture

Still working on the wording (payoff)

Oldwood's picture

The core of our problems comes down to a lack of moral conscience. When we justify our lies, our abrogations, simply because it is in our interest to (and everyone else is doing it), we have lost our way. We see it from the bottom to the very top.

If it is a moral world we seek, we will have to start with ourselves, which in this world can come at a very high price. I take simultaneous honor and stupidity with the thought that I have never defaulted on a loan or failed to meet a financial commitment. This is what I see as our downfall. The simple thought that to live up to one's commitments is the ultimate losing strategy.

No one should be able to dictate our morality, but apparently they do. We continually settle to the lowest common denominator and then scream about how corrupt the world has become. If we want to live in a better world we will first have to be better people. Live by your commitments...and then learn from them, rather to to do it again and again because that is what "winners" do.

Our government is destroying the moral life through its use of LAW, through its endless manipulations that hinge on inane technicalities while discarding anything that would represent common sense.

For anyone to claim that a lender has no recourse on their loan due to some technicality, when they KNOW full well that they agreed to repay this loan, they have lowered themselves to the bottomless pit that those we claim to hate reside. This is not a solution, it is self destruction.

pods's picture

That all sounds fine and dandy but morality has no business in a contract.  The terms of the contract dictate the actions under the laws that govern the contract. 

The "lender" severed their recourse by their actions.  They pooled mortagages and sliced them up and sold them. Even saw them putting mortages into multiple MBS.  They created a system (MERS) that allowed this to go on, and make it very profitable for them, while at the same time making it impossible for the borrower to ever receive a clean title if challenged.

When it all falls down the "borrower" (I use that loosely as the borrower creates the funds for a mortgage) is asked to abide by their terms?

The borrower is still saddled with this debt, the only thing that happens is the loan turns to an unsecured loan.  

So, in short, fuck them.

pods

 

Oldwood's picture

Your morality is your willingness to live by the "intent" of that contract as you understood it when you signed. We all fall prey to the technicalities of the law and its contracts, but if we refuse to even live up to our commitment, then what good are we? People bought homes and signed contracts to pay for them. What in the hell makes you feel that that simple commitment is not valid simply because a lawyer can figure a way around it. Honesty and trust are our only value system and when that is obscured by infinite legal wranglings like the meaning of "is", we have no future. We already live in a world where truth means little compared to the legal might that money can bring, and when you suggest all is fair in this, it makes me see the worst possible outcome for humanity.

pods's picture

Can the lender prove that by MY paying off the note that the title can be properly signed over to me at the end of the loan?

What if some other predatory capitalist figures out they can sue for title?

How am I going to sell a property with a clouded title?

How is it that the little guy is the one that has to live by "morals" in legal contracts where the big players play by the rules of what is better (and not even following the legal ways of those)?

By your definition going bankrupt is a sin.

The worst possible outcome for humanity?  I would say the banks ability to create credit is a bit more encompassing that this.

Houses that have been "financialized" by a predatory industry REQUIRING a loan to buy something (like cars, and even educations now) due to their ability to allow us to create credit in our names.

Banks fucked two sets of people (borrowers and investors) and pay a fee to keep going, while the little people are left to clean up.

Fuck the banks.

pods

 

Anusocracy's picture

The little guys are the dupes that want government. They deserve to be screwed over every second of their lives.

Those who know that government is nothing more than a wealth transfer scheme and therefore reject it are the only real victims.

MachoMan's picture

@PODS, you're wrong regarding morality of the matter.  The issue is that both sides are culpable, thus the solution must harm both.  The only fair thing that I can see is to let the banks fail and the borrowers along with them.  Force the lenders to bring the homes to market and let the highest bidder win.  If the loan was made in a no recourse state, then tough shit for the lenders; if the loan was made in a recourse state, then the lenders can throw good money after bad chasing the turnips.

Moral hazard looks differently when the schlubs are doing it, but it's still moral hazard.  It's something that society should never incentivize nor condone.

As far as title is concerned, we know who the record title holder is...  the dipshit who's busy scratching his ass on the couch in the home right now.  The only question is whether there is any valid lien on the property...  The chain of title isn't at issue, it's the chain of a cloud on the title that's at issue.

Bringing it back to the article, the solution is different for different classes of borrowers.  For those folks who've been flipping the bird to the lender and are outside the statute of limtations period for a suit, then they get the house free and clear.  For those claims that aren't time barred, tell the banks that there will be no bailout, no dipping at the discount window, and it's time to put on big boy pants and mitigate your losses.  File declaratory judgment actions to precede a foreclosure suit, seeking to determine the real holder.  Once the court makes a determination, then have the holder file a foreclosure/breach of contract suit against the turnip.  Alternatively, add the entire chain of lenders/assigns as parties to the foreclosure/breach of contract suit.  Worst case scenerio, you're an unsecured judgment creditor of a turnip...  but that's your call on the front end, do your fucking homework.   

Squid-puppets a-go-go's picture

@oldwood

What is the comparative complexity of a mortgage document signed circs 2005 compared to , say, 1970 ? These things are deliberately so fucking complex that not even lawyers- if you go to the expense of hiring one to finetooth comb it - can say what the real rights and obligations are. The  banks thrive on this complexity, and they know that the people are in a TRAP. You still pay rent when you are too old to work, you die in misery and squalor. So peoples fear of that drives them to try and buy a home. even at high risk. The banks dont have the risk - they know the taxpayer dollar has their back - so where's the incentive for them to stick to prudent lending standards?

Then you have a system that supresses their wages, inflation eats at their ability to repay their mortgage - and then when the kicker hits - the sleeper loans that ramp in interest rates by an extra 5% after a certain timeframe. read http://4closurefraud.org/  . all sorts of theivery going on. 

At the end of the day, the banking system regards the equity of the people as their orchard to harvest, and they dont give a fuck about laws or due process - so why should the people. Anyone who toughs it out and puts up with the stress of the process is entitled to a free home. 

 

Oldwood's picture

There is no doubt that it is all a trap. We have been studying our weaknesses since the beginning of time, so there should be no surprises here, but like every bubble that pops, we never see it coming. There is no doubt that there is tons of manipulation and deceit going on but it is not one sided. We are NOT a bunch of idyllic sheep grazing in the pasture completely unaware of the wolves lurking in the shadows.

We know.

But we choose to ignore the risks, simply because we want to. Because it is easier and more convenient to go along to get what we want and ignore the risks.

We know.

But we pay our taxes and WANT to believe that our government is there to protect us...but they are not. They are there to manage us...and we play along...its easier than looking over our shoulder and constantly expecting the worse. As one who lives that way, I cannot say it is comfortable or easy. But I understand EXACTLY why we are here now.

Squid-puppets a-go-go's picture

completely true. we take the smooth road to crisis rather than the steep, rocky road to independence

pods's picture

There is blame all the way around in many cases. The banks, when things blew up, found relief in the FED buying MBSs to prevent the fraud from being found out when the MBS blew up.

Moral hazard does go both ways.  One of the big problems is that large institutinos are amoral and the individual is (supposed to be) moral.  

But the little guy is not walking away unscathed if they go the route of failure to pay.  There is credit impairment, job problems (credit score is used in employment screening) and a myriad of other difficulties that are tough to quantify.  Like a phone ringing constantly, as well as court.  And the little guy is still on the hook for the loan, the property has just been lost as collateral.

If we are trying to use morality, well then bankruptcy certainly needs to be addressed, maybe even limited liability.

How can one guy be burdened with debt and struggle to keep up with fees, interest, and penalties and another walk away with a bankruptcy and be free and clear in 7 years?

Who is moral?  If the first guy is moral, then it can be said that non-dischargeable debt is moral and even forced indentured servitude is as well.  I mean, they signed the note, right?  

The system itself is immoral.  Letting one class of people create credit out of thin air and lend that to another with attached interest.  Sure interest should be a part of lending, but that is to protect the time value of money lent, as well as protect against default.  How the hell can this be applied to credit that is whipped up at the signature of a promissory note?

pods 

Four chan's picture

what is moral about the federal reserve printing the debt notes it enslaves us with out of thin air?

you have a moral obligation to act immorally against an immoral foe, out to destroy your savings,

steal your assets, and doom your offspring to indentured servitude to its franchisees the banks.

Anusocracy's picture

While I agree that the lenders are responsible, the government is to blame.

As for the squatters, no way in hell should the property be theirs unless they pay for it. They are fucking squatters - a euphemism for thief.

Squid-puppets a-go-go's picture

listen to their stories. Many of them were entrapped, beseiged and harassed. I dont think a single one of them would tell you they got it for free. They been through hell. Very few of them cynically started out rubbing their hands with cynical glee looking for a free ride.

Creepy A. Cracker's picture

What if one's home loan is from their local credit union funded by your neighbors and/or fellow employees?  Is it then OK to steal from the neighbors and fellow employees by defaulting on the loan?  The credit union is kind of like a bank but they aren't.  Does that make the neighbors evil enough to steal from?

There is a difference between the Fed and organizations/people who loan money.

ThroxxOfVron's picture

"What if one's home loan is from their local credit union funded by your neighbors and/or fellow employees?  Is it then OK to steal from the neighbors and fellow employees by defaulting on the loan?  The credit union is kind of like a bank but they aren't.  Does that make the neighbors evil enough to steal from?

There is a difference between the Fed and organizations/people who loan money. "

 

Indeed.  Few want to discuss the repurcussions of either side of this fraud where parties acting in good faith are concerned.  

The banksters did not loan everything out of thin air, there is a significant cohort of actual capital impairment to consider.

The people that are paying their mortgages are at also at a horrendous competitive advantage to their neighbors who are not.

IF two people have with commensurate mortgages and other liabilities/costs are competing as small businesses in the same niche, and one is -for whatever reason- provided mortgage and home owner's insurance and property tax forebearance by their lender/servicer for 5 or 6 YEARS -and the other IS NOT: It is easy to see which business owner can lower their costs and steal practically all of their mortgage and bill and tax paying competitor's business...

This whole process is actually ruining productive citizens and small businesses by allowing their impaired competitors incredibly lengthy stays of due liquidation...