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New Plan for unsidedown home owners a way for banks to get out from under Housing mess

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posted on Oct, 25 2011 @ 09:13 AM
I was reading the paper this morning and reading on the plan to help homeowners who are upside down on their mortgages. It says in the article " Who is eligible? Those whose loans are owned or backed by Fannie Mae or Freddie Mac, which the government took control of three years ago...They buy loans from lenders, package them into bonds with a guarantee against default and sell them to investors." This quote is directly from the paper. If I understand this correctly, that is the definition of a bifurcation. When you bought your house, you probably signed a Promissory note which is filed with your County records office to maintain a perfected chain of title. When a promissory note is sold or assigned it must be recorded to maintain perfected chain of title. If there is break in the chain of title, a bifurcation occurs and state law is violated. When your promissory note was sold as a bond, it was converted from a secured instrument to an unsecured one and the proper assignments were not filed at the county - It cannot be, the promissory note points to one party and the Deed of trust points to another party. In US Bank National Association vs Antonio IBANAZ the bank was unable to foreclose because there was a defect in the title. Most of the loans in Freddie and Fannie have been converted to bonds also most banks tried to get around this by making a blank assignment. That conversion cancels the Promissory note. The Bank must show a perfection in the chain of title for the Promissory note, and to get around this they used blank assignments. Blank assignments are not acceptable forms of proof of perfection. Once a note is defective, it cannot be fixed! I am sure they are scrambling for a way to recapture these notes. What a good way for them to get back something that is not theirs any longer and convince you they are trying to help you by refinancing your note and giving you a lower interest rate. If I am missing something please let me know.

posted on Oct, 25 2011 @ 09:47 AM
That is the number one reason for any housing reform at this point. Turn an invalid loan into a legally enforcable loan.
While this plan is a start, it doesn't go far enough. We also need a reduction in principal for this to really work, otherwise people will be still be trapped in their homes, weighing down the housing market for years to come.

As I have posted numerous times on ATS and elsewhere, the governmeent should just have FNM and FRE buy all these loans from the investors. Once they own them, they can do the best thing for the citizens of this country and still not use any taxpayer money while doing it. This is how it would work;

We buy the loans at full principal value (Ex: Loan balance $200,000)

We write down every mortgage up to 1% for every year of the mortgage term. So we have those who take 30 year mortgages get a write down of 30%. If you have 10 years left you get a write down of 10%. This way every mortgage holder wins.

We get all the money back through interest over the term of the loan.

Example: Joe Smith owes $200,000 on his loan. He opts for a new 30 year mortgage at $140,000 at an interest rate of 4.5%. Over 30 years he will repay $255,000 to the government. This leaves $55,000 of profit to the governemnt which will be used to pay for servicing and to cover bad loans, etc. Thus taxpayer spay nothing and may even benefit to some degree.

How do you handle new defaults, sales etc? Once a property is put in the program it must stay in the program until the end. Thus in the case of a sale, default, etc. The new resident will be forced to take over the current loan until it is satisified. Either that or pay a flat fee in order to buy out of the previous mortgage. A little messy but very doable. Bottom line is that the government does get their money back.

Something along these lines is the only thing I can get behind. Anything short of this and I say let the banks lose all their rights to homeowners in the courts. The truth is 90% of the mortgages in this country are uneforcable. Let's clal it in and start over under a more sensible paradigm.

posted on Oct, 25 2011 @ 10:12 AM
reply to post by sligtlyskeptical

I like your plan! Businesses are able to "write down" so much of their losses that it makes sense to write these mortgages off in the same way. I live in Atlanta and there are whole neighborhoods that are going to ruin because all of the homes are in various states of foreclosure. It makes much more sense to have them houses occupied by the homeowner who wanted the house rather than take the house and let it sit empty and falling apart. I don't know why the bank can't see that some money better than no money and a occupied house is so much better than one being taken over by vagrants.

posted on Oct, 25 2011 @ 10:44 AM
This may explain why B of A does not want to take our house they supposedly foreclosed on.

We tried to sell the property at a bargain-basement price for almost a year. It was a beautiful home with many upgrades and a very nice pool in the back, in a good neighborhood (DFW area). Nobody wanted to pay the price because other homes that were foreclosed on previously sold at 1/3 the price we had ours at.

So we left the area a year ago, stopped making payments, and told the bank to take the house. They called and pestered for months, and each time we told them, go ahead and take the house. Take my house, PLEASE! They tried all kinds of tricks to get us to sign new documents (short sale, deed in lieu, etc). They demanded new proof of income and our tax returns. We refused to sign anything new and told them they had all the paperwork necessary to take the property as it states in the original documents signed with Countrywide, and they had no right to any new information from us.

We got a foreclosure notice saying they would foreclose in April. Great, we said, take it. They still haven't taken it, it still remains empty per the neighbors, and we're still getting payment notices from B of A as if nothing were wrong. We finally got them to stop calling by stating that we were recording their calls, to which they replied that we weren't "allowed" to record them, only they could record us. Whatever!

We suspect that they don't have the paperwork to properly foreclose. My husband has even called the city and told them to put a lien on it because they're stuck cutting the lawn, and then the city take it. Nobody wants it, which makes me sad because it is a gorgeous house. Oh well. As my husband told the bank, they set up the housing bubble, and when it crashed, nobody could buy it even if they wanted to because the banks weren't lending and the property values were in the toilet. They set up the system, and our abandoning the house because we had to leave the area was the result. Half the homes in this lovely neighborhood are empty. Oh what a tangled web we weave, when first we practice to bifurcate and invalidate the chain of title!

posted on Oct, 25 2011 @ 11:39 AM
reply to post by FissionSurplus

I think BOA and the other banks bit off more than they can chew! It was working when there was someone to sell to, now there is no one. Everyone knows that there is a scam afoot and do not want to get caught up in it. I am almost of the mind that anyone who's house got foreclosed should just move back in and see what happens. Do you know how much it would cost the banks to pay the sheriff to physically move people out of a million houses? It would be a full time job!

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