Section 5 of the FTC Act – Unfair and Deceptive Mortgages?

This is an interesting post. The key point of it all is the piece that states “cannot be reasonably be avoided by consumers”….again, the purchase of a home is not a right, it is a privilege. Therefore, a consumer can choose not to purchase a home if they are unsure of the consequences. Obviously, this was not done. By the same token, a lender can decide to decline a loan for various reasons. Obviously, this was not done…..so here we are!!! Look in the Mirror!!!!

Moe-

I like your post, however, you fail to recognize that this sort of preferential treatment has been going on with “high powered” people since the beginning of time. Is it right: “NO”…..does it happen: “YES”. Take the blinders off, and start offerring real world solutions to the problems at hand. The horses are out of the barn, and EVERYONE has been stung by this to some extent. The real question is how to put Humpty Dumpty (The US Economy) back together again.

I offer 2 possible solutions:

1) Institute a Value Added Tax to put some money back on the Treasury’s balance sheet. These tax revenues should only be used to reduce our Federal Budget Deficit….period. No pork belly programs, Iraq funding, etc. We need to reduce the National debt.

2) Put a “one-time” tax on personal adjsuted income above a certain threshhold (Say 250k) to be used for reducing the Federal Budget Deficit ONLY.

What are your suggestions??? We all know what the problem is…..the big question is how to fix it???

Would like to hear your possible solutions????

P.S. Please don’t say “abolish the FED”….that won’t happen, so it is not a real world answer.

MOE, this situation gets scarier by the day….

Jefferson, had the right idea at the time, cause look at us now.

It is sort of like you now with this blog allowing people to open their eyes & mind to the truth no matter how harsh…

Do you really think that we can make “change” by voting?

You mentioned above, ” you fail to recognize that this sort of preferential treatment has been going on with \’e2\’80\’9chigh powered\’e2\’80\’9d people since the beginning of time. Is it right: \’e2\’80\’9cNO\’e2\’80\’9d\’e2\’80\’a6..does it happen: \’e2\’80\’9cYES\’e2\’80\’9d. Take the blinders off, and start offerring real world solutions to the problems at hand.

My blinders are off and it doesnt “change” the fact that the banks have their hands in our politicans pockets in every fabric or every suit, sock and hankercheif they wear and we (THE PEOPLE) need to make sure that what we have today does not happen again.

As you know, the propoganda filling our TV’s and the news is also ran by the banks and the governments who are doing their best to make sure the American people keep the blinders on and stay tuned into “American Idol” because if the people truly had a grasp of the situation at hand, then their would be a run on the banks.

Yes, you are right about stabilizing banks and reviving the middle class. I get a bit “revolutionary blood” in my veins at times and it causes me to be a bit cloudy in my “solutions” judgement.

But, I do feel, that it may be too late. Meaning we are heading to a depression at 100 MPH.

“Would like to hear your possible solutions????
P.S. Please don\’e2\’80\’99t say \’e2\’80\’9cabolish the FED\’e2\’80\’9d\’e2\’80\’a6.that won\’e2\’80\’99t happen, so it is not a real world answer.”

Ha! Like a VAT is gonna happen too? Or a “tax to be used for reducing the Federal Budget Deficit only”. Talk about not giving real world answers. What world are you living on?

I like the basic spirit of the Jefferson quote, but it’s spurious. No such letter from Jefferson to Gallatin exists in any archive of Jefferson’s or Gallatin’s papers. And the terms “inflation” and “deflation” weren’t used in Jefferson’s time.

A good rule of thumb is that the more apropos a quote from a famous person from the past is, the more likely it is that it’s fictitious.

3 step problem…

1. Vote EVERY single incumbant out of office. NO exceptions!!!

We NEED to send a CLEAR MESSAGE that we mean business!!!

2. Short term tax on everyone. A formula tax that is simple. What you make determines what your tax amount is going to be. The tax is not permanent and whatever that number is you pay over a 5 year period of time. Simple…

Sucks, but we need to pay for our inability to act by voting properly on what these idiots were doing on the hill. We did this to ourselves so be real and realize we all will need to pay to fix it!

3. An equal reduction in spending by the goverment across the board in whatever means possible. So it is a wash, but we get our spending down while not impacting things.

Five years from now after you have paid your tax amount based on the calculation at the start of the program, the tax will be gone and our federal goverment will have reduced there debt by this amount by not spending the money. Voting accordingly throughout this process is crucial!

Now we have truly taken back our Goverment!!!

I think the solution is simple. We should all work for the Government.Let’s eliminate all the risk of the private sector and that way all of us can either be a state worker, local government worker, postal worker, police officer, Dept of Homeland Security worker,fireman,teacher, government adminstrator,Farm Bureau worker, dept of motor vehicles worker, state highway worker, etc..Our salaries would be guranteed along with our pensions. We would get four weeks vacation along with great health benefits and we wouldn’t have to worry anymore about whether the company made money or lost money, our mortgages would always be paid on time because we had a great guranteed salary and if there was a shortfall, we would simply raise taxes. I think I am going to suggest this idea to Obama. I know it is an overly simplistic one but we could finally have a workers paradise right here in the U.S.A

THE MERS FIFTY MILLION MORTGAGE MELTDOWN.
By Kevin J. Lamson. May 15, 2008.

PART I. The Promissory Note Evidence Ownership of Debt and Standing to Bring Suit.

\’c2\’b7 The Fundamentals:
In the period beginning in 1999 and ending in March of 2008, Mortgage Electronic Registration Systems Inc., a/k/a/ MERS, has been named as a “mortgagee” on over fifty million mortgages. Yet MERS has never orginated a single mortgage loan nor loaned a dime to a single borrower. In 2001 the New York Surpreme Court ordered the Sufulk County Clerk to accept MERS mortgages for recording as a purely ministerial duty. However the Court denied MERS request for a judgment declaring that MERS mortgages were “lawful in all respects”. The New York Court of Appeals affirmed the Supreme Court\’e2\’80\’99s order directing the County Clerk to record MERS mortgages. The Court of Appeals did not reverse the Supreme Court\’e2\’80\’99s denial of MERS request for a judicical declaration that MERS mortgages are “lawful in all respects”. MERS, for obvious reasons, did not want a published opinion the fact that MERS mortgages are legal nullities and/or that MERS has no standing to enforce a mortgage when it is not a creditor entitled to collect a debt. The New York Court of Appeals did address and frame these two issue but left them to be decided at a future date.

\’c2\’b7 No Note No Foreclosure
In reality MERS is really nothing more than a shell, or a front corporation for its so-called “members”. Many of these MERS members were once some of the most prestigious names in American finance. Many MERS members are now reporting hundreds of billions of dollars of losses as result of their illconcieved scheme to ramp up mortage orgination so they could pretend to flip millions of mortgage loans into trusts in exchange for trillions of dollars of investors money. One big problem was that the promissory notes were never actually deleivered to the trustees of these trusts. Therefore these trusts have no evidence of ownership of the debts they puportedly purchased. Akin to purchsing a home without being given a deed. To make matters worse many of the debts evidenced by these undelivered promisssory notes were supposed to be secured by mortgage liens. However in place of mortgages being executed in favor of the original lender many of these mortgages were executed in favor of MERS. Because MERS never holds these notes or owns a debt it is not a creditor. MERS has no legal standing to enforce a debt, or so it told the Nebraska Court of Appeals in 2005. However this lack of standing defense must be raised by property owners who are sued. The most effective economic way to raise this lack of standing defense is by bringing a motion to dismiss in response to the complaint to foreclose. In many states and in federal court this is called a Rule 12 motion. This motion is brought in place of answering the complaint. An honest attorney in most areas of the country should be willing to prepare and bring such a motion for $500.00 to $1,500.00 for a distressed homeowner. Or you might be able to find a lawyer to do it for you pro bono and perhaps a legal aid attorney. At least five judges around the country have dismissed these actions for lack of standing sua sponte, which means they did it on their own volititia. Perhaps more judges will feel the duty to do the same thing in the future. To protect the integrity of the Court.

MERS members, mortgage industry executives, invented the so-called MERS paperless system to short cut standing mortgage lending safe guards and circumvent the legal requirements for originating mortgage loans and/or for selling and transferring these loans to subsequent holders. This would allow MERS members like Countrywide Financial, Fieldstone Mortgage, and Option One Mortgage to make loans to anyone with a heart beat and then quickly flip these questionable loans to other MERS members such a Fannie Mae, Freddie Mac, Bear Stearns, Merrill Lynch, Lehman Brothers to name just a few. (“Secondary Mortgage Market Players\’e2\’80\’99)

These Secondary Mortgage Market Players would claim to package millions of these loans, with or without being delivered the promissory notes, into loan pools or “mortgage backed security trusts” and then flip the loans by selling trillions of dollars of bonds to investors around the world. The bonds were touted by Secondary Mortgage Market Players as producing safe yet high returns. The investors who bought these bonds included many of the worlds largest national banks. Initially MERS members reported windfall profits year after year by quickly originating, packaging into pools and then flipping trillions of dollars of mortgages loans to investors. Other MERS members, such as title insurance companies, also took their cut from each of the fifty million loans that were made while this high speed gravy train was rolling. MERS itself would earn over a billion dollars a year by charging its members $250.00 for each mortgage that MERS would be named as “mortgagee”.

A June 10, 2007 article in Forbes magazine details the carelessness in the securitization process by which mortgage loans were packaged and sold off to mortgage pools is now coming back to bite the trustees of these mortgage backed trusts who are now seeking to foreclose millions of loans that are in default:

\’c2\’b7 The financial engineering (ie. mortgage securitization) helped oil the housing boom by making credit more available. But stalled housing prices and rising defaults have revealed a mess: In the rush to flip paper, lots of the new lenders or pools don’t have the proper paperwork to show they even hold the mortgage.

The reported profits from the sale of these mortgaged backed securities would result in billions of dollars of salaries and bonuses being paid to the senior executives of many of MERS member corporations. Ultimately the bond investors who actually provided all the money would learn that their “safe” investment was anything but safe. As hundreds thousands and then millions of these loans fell into default. These bondholders would lose hundreds of billions of dollars. As of April 1, 2008, the largest banks around the world had already written off loses of one hundred and fifty billions dollars relating to bonds they had purchased. One Swiss bank, U.S.B., has recently reported 40 billion dollars in losses. These loses may only be the beginning. What many people refuse to admit is that because of the so-called MERS paperless “system” many of the so-called mortgage backed security trusts do not actually hold the promissory notes which evidence the debts that are supposed to be backing the bonds purchased by these investors. The situation is reminiscent of the great Great Olive Oil Scandal in the late 1800\’e2\’80\’99s when banks were duped into investing millions of dollars into Olive Oil only to later discover that the tanks which were supposed to be holding millions of gallons of olive oil backing their investments were mostly empty.

This problem with the missing trust assets/promissory notes manifests itself each time MERS and/or the trustees for the bondholders brings a legal action to collect on a debt through foreclosure. Because neither MERS nor the bondholders trustees are holding the notes they lack proof of standing to maintain their legal actions and the actions are subject to dismissal. Many foreclosure actions have been dismissed based upon lack of standing. This a problem that it is a direct result of MERS “system”.

It appears that after MERS mortgage loans are flipped to the mortgage backed trusts the promissory notes are not actually delivered to the trustees. Nor are assignments of mortgages executed and delivered which evidence the fact the original lender has transferred the debt which is secured by the mortgage. This leaves the trusts with absolutely no paper evidence of ownership of the secured debt it purportedly owns. One informed lawyer who represents homeowners in Florida, April Charney, had foreclosure proceedings against 300 clients dismissed or postponed in 2007 for lack of standing. She is quoted as saying that “80 percent of them involved lost-note affidavits”. . . They raise the issue of whether the trusts own the loans at all,” Charney said. “Lost-note affidavits are pattern and practice in the industry. They are not exceptions. They are the rule.” Ms. Charney, started challenging MERS and it members lost note affidavits after becoming skeptical of the a lender could possibly lose hundreds of promissory notes.

At least two Florida judges shared Ms. Charney\’e2\’80\’99s skepticism regarding the copious amounts of MERS lost note affidavits and they issued show cause orders, sua sponte, challenging MERS to show proof that it held and/or lost notes in numerous actions. After evidentiary hearings these two alert judges dismissed twenty nine (29) MERS actions to foreclose for lack of standing. One judge struck MERS pleadings as being sham. A South Carolina court dismissed a MERS action to foreclose for lack of standing even though MERS filed an affidavit wherein a person claiming to be an officer of MERS claimed that MERS was holding a promissory note. The South Carolina court vetted the MERS affidavit claim that it was the holder of the note after being apprised of the fact that MERS had previously told the Nebraska Court of Appeals that it never held promissory notes.

In late 2007 three Federal Court Judges in Ohio dismissed over fifty law suits brought by trustees of mortgage backed trusts where they could not produce the original promissory notes. Following these decisions the Bankruptcy Court in Los Angelas, California adopted a rule of practice which requires all foreclosing trustees or other plaintiffs to produce the original promissory note when bring an action to foreclose a debt or face sanctions for not doing so. Several court in New York have been routinely dismissing foreclosure actions brought by MERS or its memebers because they continually fail to produce promisssory notes.

It is disturbing to know that National Bank\’e2\’80\’99s are the trustees of thousands of trusts that may be missing millions of promissory notes. This might explain why, to date, not a single National Bank has publicly disclosed the fact that they are not actually holding what may be millions of promissory notes which evidence ownership of debts supposedly owned by their respective trusts. An independent audit of these trusts would probably be quite revealing. This writer is also unaware of any such audits that have been performed to date. These National Bank\’e2\’80\’99s, as trustees, are accountable and therefore liable for missing trust property or the documents evidencing ownership.

As more borrowers, lawyers and judges learn that neither MERS nor these trustees are actually holding the promissory notes evidencing the debts they seek to collect through foreclosure, dismissals of these foreclosure actions for lack of standing will become routine. As it now has in New York, Ohio and Florida. This will also mean that bondholders from around the globe will be seeking to recover their loses from the National Bank trustees who never got around to obtaining the notes evidencing debts that were puportedly owned by these trusts.

\’c2\’b7 A Review of problems with basic MERS paperless system:
The members of MERS, had from the onset three serious problems which would ultimately derail their high speed and high volume mortgage lending system. The first the problem was finding millions of Americans who could qualify for a loan to purchase any home. The second problem was how to quickly endorse and deliver of millions of promissory notes from the originating lender to Secondary Market Players and then on to subsequent holders, like the trusts. The third problem was executing millions of assignments of mortgages and recording these assignments in the public land records, which each successive transfer of the promissory notes. The last two would require significant administrative time and expense. MERS and its members didn\’e2\’80\’99t want to be bogged down by trivial administrative details. They wanted to make big money fast by making millions of loans with other peoples money and making those loans at lightning speed. Their attitude was “Damn the torpedoes full speed ahead”.

\’c2\’b7 Rather than finding people who could actually qualify for loans, meaning pay it back. MERS members simply lowered the qualification bar by creating all kinds of “creative loans”, including two which they called “No Doc” and “Sub prime loans”. No Doc (no documentation) loans would be made to borrowers who had good credit scores but would not require verification of actual income of the borrowers. Sometimes relying on income as stated by the borrower. Sometimes putting in fictional numbers. These loan would later become known as liar loans. Sub Prime loans would be made to borrowers who had less than stellar credit history or no credit history. Many people from minority groups and newly arrived immigrants became targets for these loans. Both No Doc and Sub Prime loans carried higher interest rates than regular mortgage loans. By lowering home loan qualification bar these greedy geniuses had invented a larger market of residential home purchasers. Swarms of previously unqualified borrowers could now be swooned by real estate agents, mortgage brokers into buying a house by borrowing money, not from a bank or savings and loan, but from investors who were at two times removed from the closing table. This expanded market of previously unqualified home buyers and/or investors created a real estate bonanza on the street level for realtors, mortgage brokers, and home builders. Prices for homes rose dramatically as this new demand by buyers who really were not qualified out-stripped the supply of homes. The high foreclosure rates in the Las Vegas, Miami, California and rust belt areas as no relationship to geography. But clear relationships with the ease of No Doc and Sub Prime loan acceptance.

\’c2\’b7 Rather than actually delivering millions of endorsed promissory notes to the Secondary Market Makers and then on to the bondholder\’e2\’80\’99s trusts, which is the only way a debt evidenced by a negotiable instrument is legally transferred to a new owner, the promissory notes were either not delivered at all, or were simply delivered to the original loan servicer, weeks and/or months, after the originating lender had sold the debt. Thus in many cases the “mortgage backed security” trusts may not actually be holding millions of promissory notes which evidences the ownership of the debt that these mortgage backed loan pools supposedly own or hold. To make matters worse many of the original mortgage lenders and large loan servicing companies have filed for bankruptcy of just gown out of business. Decreasing the trusts likelihood of ever locating much less obtaining possession of what could be hundreds of thousand if not millions of missing promissory notes.
\’c2\’b7 Rather than actually delivering boni fide (real) assignments of each mortgage to the Secondary Mortgage Makers and then causing each mortgagee’s interest to be re-assigned to each mortgage backed investment pool, along the high speed mortgage gravy train route. The simply invented the MERS “paperless” system. The founders of MERS knew that MERS was merely a “a facade” they would employ to expedite the number of loans that could be originated, packaged and sold as mortgage backed securities. They felt they could “eliminate” such paperwork as promissory notes and mortgage assignments. Even though commercial law requires such sundry items as promissory notes and mortgage assignments. The MERS founders seem to think they could ignore and/or circumvent the law as if the “the ends justified the means” as long as they would make big money.
\’c2\’b7 Rather than record millions of mortgages and multiple millions of assignments in local land records the founders of MERS decided that it would be named the “Mortgagee” in place of the original lender. By creating (inventing) this new entity, MERS declared that it was some sort of agent for each and every mortgagee, or mortgagee assignee and could then act as a “mortgagee” in the public land records. Through this clever legal sight of hand MERS founders believed they could eliminate the commercial lending practices of having to endorse and deliver each promissory note to the new owner/holder and eliminate the execution of each assignment of mortgage by the mortgage lender for each secured note that was sold to a Secondary Market Maker. Together with incidental recording of each assignment of mortgage by the Secondary Mortgage Maker or its assigns.
MERS founders and members, went about foisting thier so-called “paperless” system on the American economy and indirectly upon the global economy. MERS studiously avoided seeking any legislative changes of long standing commercial laws relating to promissory notes, mortgages and public recording of assignments in any of the 50 states that it would ultimately be operating. It is possible that this blatant abuse, of the UCC and state recording laws might have passed itself off as the new way off doing business in our computer age. But MERS member companies, under clear instructions from their leaders, guarantied disaster by pumping up and them dumping these shaky loans onto investors through trust they set up for this purpose. These invesotor/bondholders are jut now discovering that they were duped. They just don\’e2\’80\’99t know how badly they were duped.
Perhaps this is what the global economy is really all about. Seeing who can dupe international banks and governments out of trillions of dollars depositor and taxpayor money and do so with complete impunity. Yet, to my knowledge, after learning that they invested trillions of dollars into these questionable loan pools n/k/a/ cesspools, not a single National Bank has ordered an audit of these cesspools or turusts to determine the acutal contents and the value.

As a matter of sound public policy our courts should not allow MERS or its so-called “members” to circumvent and/or violate long standing laws of commerce, simply because some greedy mortgage executives thought they could shoe-horn their so-called “paperless system” into the framework of our current system of commerce. Our system still requires such sundry instruments as promissory notes be used to evidence debts and also requires that these instruments change hands when sold or transferred to a new owner. Our system also requires a new holder of a promissory note to record an assignment of security interest or mortgage in order to enforce a lien which secures the debt evidenced by the promissory note. No one should be able to simply ignore these long standing laws just so they can reap billions of dollars in illicit bonuses by quickly originating and then flipping loans without the attendant delivery of notes and assignments of mortgages. Our system of commerce does not operate this way. This is because we have laws of commerce including the UCC which regulates our system of commerce.

The MERS paperless system simply provided an expedient way for MERS and its members to fleece investors on a global basis, by loaning money to people who couldn\’e2\’80\’99t or wouldn\’e2\’80\’99t pay the money back and then flipping trillions of dollars of these bogus loans to third party investors. The MERS system does not comply with our current laws of commerce. While the computer age has admittedly changed how business is transacted it has not eliminated or replaced the legal requirement for such things as promissory notes, mortgages and assignments of mortgages, when a loan is made, a mortgage given and the loan is subsequently sold and/or resold. This is precisely why a competent and prudent lender who makes a loan to a qualified borrower takes back a promissory note and if the loan is to be secured the borrower executed a mortgage or security agreement naming the lender as the mortgagee or secured party. The lender must then record or file its mortgage or security agreement to prefect its lien. If the lender decides to sell the debt it is owed to a third party it must endorse and deliver the promissory note to the third party. And in order for the third party to enforce either a mortgage lien or security interest the original lender must execute an assignment of mortgage or security interest. Which must then be recorded or filed by the third party to give evidence and public notice of its status as assignee of the lien securing the debt it had purchased. Only the holder of the promissory note is entitled to enforce the note and/or any lien which secured the debt.

Given the extremely close relationship that MERS, its many corporate members have with the politicians who run our state and federal governments, it is not surprising that MERS and it members were able to pull off this gigantic global financial scheme without raising the brow of a State or Federal law enforcement or regulators. Only now are a few politicians and regulators paying lip service to what they refer to as the “Mortgage Meltdown”. What no politician or regulator ever seems to mention is that a millions of the mortgages that “melted down” have the name Mortgage Electronic Registration System Inc. on them. American courts should no longer tolerate or close a blind eye to the fact that the MERS has no standing to commence any legal actions relating to peoples properties because they do not hold any legal or equitable interest in the debt or in the properties. The Court\’e2\’80\’99s must protect the integrity of our court system by enforcing our laws of commerce as they have existed and not allow parties to come into our courts and commence actions relating to debts that they do not own and/or have no proof of ownership.

This writer has been investor in real estate since 1976, and has owned properties in eight states and three countries. Over the last thirty two years I have witnessed and heard of many illegal or fraudulent schemes involving real estate finance. The MERS “paperless system” is the kind of scheme that is hatched in some internet boiler room in Nigeria, not in the boardrooms of our once prestigious American financial institutions. This gigantic scheme completely ignored long standing law of commerce. The effect of the system has already had a catastrophic effects on both the American and global economy. Yet many of the investment “trusts” which supposedly hold thousands of original promissory notes are hard pressed to produce them when legally required to do so. MERS admittedly does not hold any promissory notes. A party must have possession of a promissory note in order to have standing to enforce and/or otherwise collect a debt that is owed to another party.

Given these facts how will these investors ever recoup there investments if the debt they were suppose to own can not be legally enforce or collected? What will be the status of title to properties that were purportedly foreclosed by MERS where MERS admittedly had no legal right to foreclose or otherwise collect debt which are evidenced by promissory notes held by someone else. Please feel free to contact me with any comments or questions you may have: kev_o_shanter@yahoo.com.

The solutions are as Moe has indicated.

The Fed can only create asset bubbles, it has no other function. It creates these bubbles at the whims of the banks that own the treasuries held by the Fed. If you do not want the banks to be the only drivers of our nation, the Fed MUST be abolished.

There is a huge swelling of people to be found on the internet that believe this also. Most approach the problem from an intellectual, non-violent viewpoint, though they advocate revolutionary change. One group, though small, convinced several thousand people to remove all their assets from the banks for a period of 10 days on June 6th. If the group had been several thousand, the banks may have taken real notice.

Another group organized in mid May in front of Bear Stearns in New York to protest the Fed aiding Chase in its takeover.

These were the first real attempts at change that I noticed. There have probably been many others. I am certain there will be more.

As this internet movement grows, with all its seperate groups, one will begin to meld with another of common goals, then another will join, and then another. Pay attention, join in the discussion. take action when you feel it appropriate.

Moe is right, a difference can be made. If we want that difference, we must make it happen.

In the meantime, some good suggestions already exist in these previous posts. You will know the good ones, for they are similar in one regard – they are aimed at removing or reducing bank profit. All others are fruitless.

Moe-

From your posts, it appears that you subscribe to the ideals set forth by Ron Paul…abolish the FED, flat tax, etc. I think Ron Paul is a very smart person, with some great ideas and theories, however, he does not operate in the “real” world. These ideas are fantasy, and they will not take place in our lifetime. Here is what I see happening right before our eyes:

1) The U.S. is moving from a “market-based” society, to a government subsidized economy…..which is basically socialism.

2) China/India, and several Eastern Bloc countries are having their Industrial Revolutions, and are becoming capitalistic societies. It doesn’t matter that the Chinese government is labeled “communist”, the fact is, they have built a HUGE manufacturing base that is not being dragged down by Unions and corrupt politicians that pander to “special interests.” A perfect example is the way our legal system works: anyone can sue anyone for ANY reason….this does not CREATE anything, in fact it DESTROYS things.

We may disagree with the Chinese governments “iron grip” over their people, however the fact remains that they are becoming a 1st World Nation, and we have become a 2nd World Nation (soon to be 3rd World if we don’t address our issues IMMEDIATELY) dependent on OTHER countries for EVERYTHING.

3) There is no “quick fix” to the housing problem, or the lack of manufacturing jobs in this country. The reason companies went off-shore in the first place was due to unsustainable labor costs in the US. Again, Creative Destruction at work. If we hadn’t strengthened our Labor Unions, and allowed Trial Lawyers to mess up our system, we wouldn’t be in the dire predicament we are now in.

4) People in this country are finally waking up to the fact that they are not necessarily the “chosen ones.” We operate in a global business world, and unless we realize that we can not compete with our current business structures (look at the US auto and airline industries), we had better adapt fast!

5) We need to also realize that our models our outdated, and that no one is “guaranteed” a job any longer. We must get our worker’s retrained in order to survive in this New Economy, and realize that we need to take advice from our trading partners. This is tough medicine to swallow, however it must happen, or we will continue to occur even more rapidly.

6) We have reached the tipping point in the history of the United States, and we need to right-side the Titanic quickly, and that means coming up with a COMPREHENSIVE energy plan, a housing plan, a realistic wage plan, where worker’s are paid by incentive based programs rather than by a “set wage”….i.e. if the company succeeds, the employees receive compensation for the success. Everyone must put “skin” in the game in order for our society to advance. Government bailouts and subsidies should be used only for dire circumstances…..PERIOD. Otherwise, we will become a 3rd World Nation! The train is on that track, and unless we make major adjustments, we will continue down the socialistic based society where the brightest of us will choose not to participaate in shaping the future due to lack of financial incentives.

Solutions:

1) We have to reduce the National Debt immediately. Over 22% of our tax dollars go to pay INTEREST on the National Debt….this is absurd, and has to be fixed. As I see it, we need to get more money into the Treasury in order to PAY DOWN the debt. We can do that by the following options: institute a VAT tax, and also a “one-time” tax to people making over a certain amount of AGI (say 250k). That revenue must only be used to PAY DOWN THE DEBT.

2) No more PAC money, period. This only serves special interest groups, and gives power to a small group of people and corporations.

3) Abolish Unions, and institute incentives to employees based on production, and success of the company. If we do not do this, than we CAN NOT compete in the manufacturing arena.

4) Face the fact that we are in a GLOBAL economy, and work with other governments to attempt to set up a more level playing field. That may entail price and wage controls in the short term, and tarriff’s on foreign goods.

5) In the short term, the FED must keep printing money to attempt to deleverage the banking system, allowing it to get back on its feet. Without a banking system that loans money to finance homeowner’s, businesses, etc., we have nothing. The banking system is the oil that fuels economic growth. We can point fingers all day long on what creates bubbles, however, the fact remains that bubbles will always occur in a market-based economy. IT IS HOW WE MANAGE THE BUBBLE THAT IS MORE IMPORTANT THAN THE BUBBLE ITSELF.

6) Finally, I believe the smartest minds reside in the Private sector, NOT the public sector. Therefore, it is important that the government try to push as many programs out to the Private Sector to manage, and we will see a much higher return on Investment. The perfect example is the 401-k programs which exist. Our health-care system should be privatized as soon as possible, and this will create companies that are incentified to come up with creative ideas to solve the mess we have. Also, social security must be privatized or eliminated.

7) We need to become energy self-sufficient as soon as possible. That means using nuclear power, drilling in ANWAR, and giving preferential treatment to companies that develop alternative energy sources (Solar, Nuclear, and Wind Power). Special interests are so interested in the state of environment (global warming, etc.), that they are failing to realize that those issues are meaningless if we do not become energy self-sufficient. We won’t have an environment to worry about if we don’t get our financial house in order. We need to prioritize immediate needs FIRST, and then focus on secondary needs (i.e. global warming….waste of time worrying about when people can’t put food on the table!)
Finally, we must enact a Balanced Budget Amendment for the Federal Government. YOU CAN NOT SPEND MORE THAN YOU EARN FOR VERY LONG. This should be done in stages, however it MUST be done for our society to continue as a viable place for people to invest in. Take a look at California (which has a balanced budget amendment). The governor is having to make difficult choices on where money is spent, however, this short term pain, creates long term fiscal responsibility, and the balanced budget requirement holds policy-makers “feet to the fire” since it constrains their spending. Companies are not allowed to survive very long if they spend more than they earn, why should our country be allowed to spend more than they earn????

I would like to hear some comments about these ideas????

LITM-

I really don’t get why the herd does not ACTUALLY READ what is posted and take one person’s version of facts within a post.

I do not get the impression that you are heartless…just that you feel we all should take responsibility and be careful of what others are trying to make us do. I find it amazing that certain people want brokers and other “front line” persons to take responsibility but do ask those who may have been duped to do the same.

I believe that we all are victims of the larger game and need to prepare ourselves and play by the rules already set…or finally educate ourselves on what we can do to make the system change for the better.

It is interesting to read the different perspectives and a shame that some feel the need to trash, insult and even threaten those with a different perspective or opinion instead of taking the opportunity to read and learn from the posts that have another insight into this turmoil.

Rick- I just reviewed your post about “reducing bank profits”….I think that has already happened. Moreover, we live in a capitalistic society which incentifies its’ workforce….why in the world would you WANT banks or any other entities not to make money??? Your pollyanish view of the world is really quite disturbing….

LITM,

You need a shorter name for starters. Additionally, there will never be a ’special’ tax for the rich – that isn’t something that will pass muster with special interest groups – I don’t care how many folks vote on it.

What state are you in?

There are plenty of successful people that got duped – try anyone who bought in the last several years in a bubble market and is now upside down and needs/wants to sell. They are trapped, or will be forced to eat huge losses. This isn’t rocket science but there just aren’t any easy solutions.

Banks/investors working with borrowers who each share loss makes more sense than than the banks/investors losing all. Moe is on the right track with the modification quest because quite simply everyone stands to lose; from the top to the bottom and your focus is on the group that can do the smallest to effect a change. Yes, perhaps they made a mistake but it isn’t one they can say “My bad!” and ask for an option out.

But how do you ensure fair and equitable modification quidelines and a qualification process – as everyone is doing it differently (some not at all). There is no perfect answer or set of criteria that will qualify every loan, borrower, or investor but at least the effort is getting stronger. By keeping people in their homes, values will still come down due to stricter lending standards and an increase in supply of homes on the market – yet the market will stabilize more quickly and realistically as the baseline of REOs draws fewer. This will in turn restore a sense of stability to the market which will ease some of the tension in credit markets and begin to turn the entire econmomy around somewhat as folks go back to logical finance. It will take time, but seems to me a better option than doing nothing.

Furthermore, a home is not a stock and treating home loans as stocks is a large part of this mess we’re in. Nonetheless, most folks that invest in stocks only do so with a portion of their disposable income and if they still have a large portion of their working lives ahead of them advising them to pull all of their money out of stocks is bad advice. Comparing losing money in the housing market to losing money in the stock market is not a viable comparison. No one I know takes out a large loan to buy stock with, do you know folks who do this? That compares to taking a cash advance on a credit card and going to Vegas or buying lottery tickets.

Historically, investing in a home has been a relatively stable investment until Wall Street got involved. Unfortunately, now we must address rule change day but those who facilitate lending in this market must make the effort to make the market healthy again or the depressive conditions will only continue, become more severe, and gravitate to a broader recession.

nice Tom !!!!

Lookinthemirro:
doesn’t it make sense for the bank/investor to modify at a lower rate for the borrower and the bank continue to get paid, versus foreclosing, getting no money & adding yet another property to the court system and when it does sell in foreclosure have sold it for a big loss?

i would prefer to continue to get paid…

Tom-

There are ALWAYS bubbles in a capitalistic society. Take a look at commodity prices right now. Real Estate is the same. You purchase a home to live in, and a take a mortgage that is affordable….if you do not, you suffer the consequences.

On the macro level, this is a HUGE mess. Banks should do anything possible to preserve the values of their underlying assets (home prices). Unfortunately, this debt boom has cut a swath through ALL sectors of the economy. I am all for a one-time tax increase for people earning over a certain amount of money provided it only goes to pay down the Federal Deficit. That would help strenthen our dollar. When and if the Deficit evre get’s under control, the Congress and Executive Branches need to adopt a balanced budget amendment that many states have (and the Federal Government USED to have). We are in uncharted waters as a debtor nation, and we are now controlled by the whims of foreign investors. No simple solutions…..I keep hearing on this post: “abolish the FED”…well, for one, that won’t happen, so why waste time floating that idea out there??? We need to have realistic discourse about this problem. I wish you well.

Commodity prices are another examples of stocks and futures trading based upon speculation and historical data which boils down to essentially gambling on future prices. Again, Wall Street created this fiasco and fueled the bubble, everyone from the top down to the brokers and realtors were receiving commissions based upon the dollar value of the amounts being traded. Since the folks underwriting and approving the loans had no risk as they weren’t lending their own money they threw economics out the window and here we sit.

The average Joe didn’t know what was happening here, no one successful in business has gotten where they are without taking some risk. And in borrowing money on a secured note (especially in a non-recourse state like like California) I’m sorry to say that the lender/investor is the real risk taker, the borrower may suffer the consequences of ‘bad credit’ but in most cases they won’t be out any cash.

The banker (blinded by Wall Street and short-sighted profit margins) is still the biggest idiot in the room, regardless of the politics or emotion involved. Unfortunately, the rest of us will collectively pay the price despite our involvement, or lack there of.

Best of luck to you as well.