We’ve only seen the tip of the iceberg on the mortgage crisis.
I wrote back in 2004-2005 that all of this mortgage rewriting was a sham — and was going to come back to haunt the country. Everything happened just as I predicted publicly two years before it started.
I’ve made my career in Debt Recovery and Debt Resale — in addition to selling a popular computer system that did both. I was a highly sought after speaker on the topic in the 90s (before I’d retired). The bottom line is not only do I know the industry of Distressed Debt resale and debt recovery real well. After 40 years, I know 100s of people in the industry.
Fact is that the shit hasn’t really hit the fan yet! The banking system and any other investor/fund holding mortgage debt is about to really get hammered — and they know it. So far all of the money that Obama, Frank,and Dodd have thrown at the problem is chopped liver — which only hides the delay of the inevitable “Big Crash”. There are about to be a ton of put backs (buyers of bad debt making the sellers of bad debt contractually buy the debt back because it was fraudulently sold to them). I know the concept of put backs real well — and I know (and have seen) banks fraudulently selling debt up close and personal. They’re scumbags. Portfolio managers were paid the big commissions on these fraud packages — and are now long gone and virtually untouchable. They knew they’d never have to pay the price — and knowingly misrepresented the debt they sold for the higher commissions. That part of the industry is a snake pit.
Technically Fannie Mae and Freddie Mac guaranteed the loans — but they only have as much money as Obama will give them. He’s got to have reached the limit of the taxpayer’s patience on Government Bailouts and redistribution of wealth to those who don’t make their home payments.
This put back is estimated at $130,000,000,000 — but those estimates are being made by firms with skin in the game — as they all own large share stakes in the Seller banks, which they need to quietly bail on before the shit hits the fan. I assure you $130Billion is way low.
Add to that that banks will lose billions on the Robo-signing of foreclosures (a different issue) — and the Socialist Obama government will not allow foreclosures of any property that doesn’t have the documentation normally required. This debt has been packaged, traded, repackaged, and traded again so many times — very little of the legal documentation to transfer the property exists. Many of the people who didn’t pay for their homes will get to stay there indefinitely until the investors give up on the property when the property taxes aren’t paid — and the county/city governments foreclose. Quick-Claims (where the legitimate property owner give up their interest in the property and the property starts as a new entity) will be the only way this property will ever get transferred unless laws are changed. Liberals need these people for votes — and will allow them to get something for nothing.
However, that still isn’t the big problem.The big problem is that a very large percentage of the loans written in 2005-2007 were on Balloons. The Three-year balloons have already come due and are baked into the problem — but the most of those balloons were NOT 3-year balloons; they were 5-year and 7-year balloons that are coming due soon. No one will rewrite those loans because the property is now worth 60%-75% of the principle coming due — will become worth even less than that as more foreclosed property hits the market driving down property values, and the debtors aren’t worth spit because they won’t repay no matter how your rewrite the loan. No doubt the government will again spend trillions to make this right to their voters — and the US will go bankrupt.
Thank Barney Frank, Chris Dodd, William the Impeached, Franklin Raines, ACORN, and now Obama. US Currency won’t be worth spit! I really believe this is the near future.