California Real Estate Fraud Report

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06
Apr

Stabilizing the real estate market with toxic paper

Congress and the previous administration sat by and fiddled while mega-banks like now-deceased Countrywide Home Loans and Washington Mutual (WaMu) wrote loans to everyone who didn’t deserve one. Seems like all the campaign contributions and junkets blinded our elected representatives from the waterfall they were about to throw taxpayers off of.

The current administration has had little to no effect on the completely predictable burst of the real estate bubble. Of the several million mortgage defaults in this country, only a fraction of those borrowers ever received a loan modification.

The latest attempt to bail water involves rewarding the irresponsible at the expense of those of us who were prudent. The Obama Administration has made changes to its Home Affordable Modification Program, aka HAMP, the $75 billion taxpayer-funded handout whereby banks are “incentivized” to offer reduction in principal in a dual attempt to keep borrowers in their homes and reduce foreclosures, the latter of which will certainly cause the real estate market to keep cycling downward, imperiling the equity of homeowners who purchased their home with a genuine down-payment, steady income and good credit.

But who is the Administration really rewarding: distressed homeowners or Wall Street? Bloomberg News, on March 30, said that subprime mortgage securities – the toxic paper that Wall Street created and gorged itself upon until the bubble popped – is now hot, hot, hot again because the principal reductions some homeowners receive will make it less likely that they will default. Voila! Spray that smelly paper with perfume and now the hedge funds want their drug again. Being that these toxic mortgages are being blessed by FHA insurance courtesy of the taxpayer, the super wealthy once again can thank the administration and their favorite stooge, Treasury Secretary Timothy Geithner.

Heaven help the rest of us.

Read one view of the re-securitization by Eurasia Review.

© Copyright 2007-2017 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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