The Great Homeowner Depression

The Great Homeowner Depression

tent city Springfield MA
Image by michaelannb via Flickr

Real estate comes in cycles. From grand booms to even greater busts. The greatest real estate depression in U.S. history is moving full steam ahead right now as it devours countless homeowners in its foreclosure wheels.  Yet, many homeowners that are suffering as a result of their real estate and mortgage purchases are still not aware that buying a home is similar to that of buying a stock or even making a bet in Las Vegas.

The simple reason being is one word, “marketing.” From the day we are born, we are marketed to. Real estate and mortgages are no different than a pair of shiny new shoes in the world of marketing. Well, except for the fact that a pair of shoes does not cost hundreds of thousands of dollars, nor do they come with 30 year contracts that if we break, we are eternally F’d. (more…)

The Loan Modification Conspiracy

The Loan Modification Conspiracy

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( – This is why homeowners are screwed. You can either read this with an open mind or continue to believe in loan modification fairy dust. There are also  a few bad words here and there to emphasize the vulgarity of this subject.

It has been three years since I started preaching the loan modification gospel from my blogging pulpit here on and over on my other blog, I have come to the conclusion recently that the vast majority of struggling homeowners who cannot maintain their current mortgage contracts are up the foreclosure creek without a loan modification paddle.

They are simply and 100% unequivocally screwed. There is no other way to put it. I am not going to sugar coat these shitty mortgages any longer. If it tastes like shit, looks like shit, feels like shit and smells like shit, then by golly, it’s shit.

I am asking the media, Congress, banks, Obama and anyone else who will listen to please just be honest with the people who are losing their homes. Inform them they are up foreclosure creek without a paddle. So, let’s stop the loan mod chit chat.  There is no reason to reason to put lipstick on the mortgage pig for any longer.

So why such loan modification doom and gloom from Moe?

Hell, I have  researched and blogged about loan mods more than anyone on earth. YES, more than any living soul on planet earth. I  have seen and or counseled thousands of homeowners in the last three plus years. I guess you can call me somewhat of an expert on this subject. So, I tend to know what is “really” going on out there with people who are attempting to save their homes.

What is really NOT going on are loan modifications. They never have been, nor will they ever be.

So, why aren’t banks saving homes and or the government making laws mandating it?

Simple, a mortgage is a legally binding contract, loan modifications are considered a privilege and they do not stimulate the economy. Hence, there are really no economic advantages for the banks or governments to intervene in legally binding contracts by helping people save their homes. The United States Legal System was set up to enforce legal contracts, not to help people who break them. So, don’t expect big government to come in and save your ass anytime soon. If your foreclosure is not a security or economic threat to our nation, then it will be allowed to happen.

25% of the American economy revolves around the buying and selling of real estate. What will create jobs for our system are new home loans, refinances and home buying. For example, just off one new real estate transaction, hundreds of people will be stimulated and with a loan modification, not so much.

This is really simple  economics when you think about it.

  1. Real estate agent gets paid on the buying side
  2. Buying broker gets paid
  3. Brokers employees get paid
  4. Selling agent gets paid
  5. Selling broker gets paid
  6. Selling broker employees get paid
  7. Old lender gets paid off
  8. Old lender employees get paid
  9. New lender get s new loan
  10. New lender employees get paid
  11. New lender sells to another new lender and is paid
  12. Escrow officer gets paid
  13. Escrow office gets paid
  14. Loan gets sliced and diced on Wall Street into credit default swaps and mortgage backed securities
  15. Slicer and dicers get paid
  16. Wall Street salesman now sell this sliced and diced mortgage all over the world
  17. Government gets paid off taxes and get money on every ounce of profit that is made in this never ending chain
  18. New homeowner buys stuff at home depot
  19. Home Depot now has to hire more employees to deal with the homeowner demand
  20. I can go on and on

So what does a homeowner with a loan modification stimulate?

  1. Apple Bees a couple times a month
  2. Premium Red Baron Pizza every Saturday instead of $5 cardboard pizza Little Ceasers
  3. Instead of Keystone budget beer, you stimulate yourself with a Corona and lime
  4. Instead of Wall Mart wardrobe, you venture to Ross
  5. Instead of the $1 old movies, you now go for the $3.99 new releases

Yes, I am being a little sarcastic, but I am doing this to make my mortgage point and help struggling homeowners see the loan modification light. Unfortunately, with a loan mod, really only the homeowner who may or may not be able to keep making their payments will be stimulated.

The sooner we all come to terms with this, the better off we will all be. Loan mods are obviously not in the grand plan and they never have been. Is this the way I want things to be? NO! But it is what it is and I cannot lie for the sake of making you or anyone feel better.

Let’s take a look back at the various programs, plans, guidelines, press releases and propaganda over the last three long years to prove my theory here:

From Hope Now we were left a little hopeless, so we instituted the Hope Line that really made us frustrated, so we switched things up in order to give more Hope for Homeowners. Then we realized we had to leave No Homeowners Left Behind, so we had to make them feel FHA Secure through a more modern program like the FHA Modernization Act . But we could not do that unless we instituted the the Emergency Loan Modification ACT of 2007 , so we could provide them yet another act via the Emergency Economic Stabilization Act of 2008 in order to make the Making Home Affordable. But then we realized we had to change  foreclosure course because things were not working , so we started the Home Affordable Modification Program that turned out to be another failure. Thus, we decided to finish it off with a foreclosure bang with the Hardest Hit Fund because hell, we need money for all this shit, don’t we?

No, I do not wear a tin foil mortgage hat either…..

The Troubled Asset Relief Program, commonly referred to as TARP or RCP, is a program of the United States government to purchase assets and equity from financial institutions to strengthen its financial sector which was signed into law by U.S. President George W. Bush on October 3, 2008. It is the largest component of the government’s measures in 2008 to address the subprime mortgage crisis.

This has been the only true law to come out of this economic crisis. Unfortunately, it did more for Wall Street and banks than it has done to help homeowners.

Why? Well, because all the initiatives to come out of Washington like the Making Home Affordable and Home Affordable Modification Programs (HAMP)  have never been, nor will they ever be “laws.” They are only a contractual agreement banks signed to get TARP funds. The ability for homeowners or the Treasury to sue for performance is now moot since no they are longer under TARP agreements since most repaid funds.

Other than the Treasury suing banks for violations of their contracts which require following HAMP directives, nothing can really be done. All the attempts by government last year like the swat teams, trying to shame servicers by required reportings and meeting with bankers on Capital Hill have done little to push loan modifications. Yes, they have helped, but not enough. Most mortgage servicers are just ignoring these guidelines because that’s all they are, just guidelines.

The facts are that we have had no less than 10 different mortgage rescue programs and none have made a true dent in this foreclosure crisis. The simple reason being is that these programs are not laws. Hence, a program or directive issued by the U.S. government that is not a law is akin to not having no speed limit laws on our freeways. Instead, we now have guidelines and directives to follow. Do you think that drivers on the freeway will abide by these non-laws that have no real consequences if these directives are broken? You guessed it, many people will drive as fast as they want to in order to get them where they want to go. That is exactly what lenders and mortgage servicers have been doing for the last 3-4 years. They are doing what is best for them.

Simply put, mortgage servicers DO NOT have to adhere or even acknowledge these government guidelines if they choose not too.

How many plans and programs do we all need to understand that homeowners are on their own?

This is not about big bad government or too big to fail banks just running amuck and making rogue decisions out of pure greed or eveilness. To be honest with you all, in the beginning, when I first started blogging about loan mods, I did have that point of view. But it was because I was uneducated about how our banking, real estate and economic systems work. I often used to constantly bash big banks and government decisions, but now I “understand” why things are the way they are.  It is not perfect system, but what they do and don’t do are necessary for the greater good of our society. We might not all like what is happening, but what are the alternatives?

Personally, I think the sooner we all realize this fact, the sooner we will be on the road to recovery. Unfortunately, most people will never get this fact or they fail to recognize it because they are waist deep in their own personal great depressions. Many homeowners are making irrational decisions as they try and bail themselves out of a sinking real estate boat. I really do not blame them. I am just trying to assist them on their journeys as I try to open their eyes to their true realities. Some listen, some don’t. Some open their eyes, some refuse too. At least I can go to bed at night knowing I have tried and I have spoken the truth.

If you are listening to me, you need to understand that the real estate and mortgage markets were never designed for people to stay in their homes for 30 years and pay of their mortgages. They were never designed to offer loan modifications and stop foreclosures. It was designed and managed to perpetuate buying, selling, refinancing and speculation. Real estate and loans are Main Street’s Wall Street or legal Vegas. Unfortunately, if you are underwater and or in foreclosure, then you lost the bet.

You can cry, kick and scream at the banks or government all you want, but it is really just a waste of your energy. That energy would be better spent on improving yourself or life somehow. Maybe you can figure a way to make more income by starting a business or a new career that will fit in our new economy. I am just trying to help you “get” the fact that you may be fighting a losing battle by bailing out a boat that is going down like the Titanic.

What we all need to understand is that saving homes is not good for the economy. Yes, I want this to happen just like most of you, but it is only good for you and your family. It is not good in the “GRAND” scheme of the economy and and an overall economic recovery. Sure, its great for bank PR and your family, but that is about it folks.

Loan modifications are not going to help the U.S. recover. Foreclosures are unfortunately the answer to our nations economic woes.

Most all of you getting wiped out is a necessary evil in order to get home values down to “buying levels” again for those that have good credit and a small savings. Thus, I believe that there is a secret push to get borrowers who are violating their mortgage contracts out of their debt obligations and get new, fresh debtors in your home. This is what will revive the economy.

The key here is aligning home values and mortgage payments lower than area rents. This is a fundamental factor in housing prices and in future values. First time home buyers are only a small segment of the purchase money market. It is mostly now made up of investors looking to flip properties to first time home buyers order rent them out with a profit.

Home values have a long way to drop in many areas. The price range that we’ll see the most sales and stay pretty steady would be the $300,000k range and below homes. These are the homes that have the most demand and that many people can purchase and rent out or own where it makes sense over renting.

There will be millions of qualified borrowers once home values and mortgage payments align with local rents. This will make home buying sense for investors who have the cash and credit in order to make property investments with a monthly positive cash flow on their rents. The people losing their homes now will be their tenants. In addition, once the values on homes provide more value than renting (tax write offs + investment) to a consumer then real estate will be back in style again.

Home prices need to fall considerably to get there and they are.

Let’s stop sugar coating things to make them appear to be sweet deals and programs when they are really BS or should I say rather shitty.  The sad truth is that saving homeowners is not a wise economic decision for our banks or government. Thus, I believe that American homeowners are being sacrificed to the foreclosure gods for the greater good of  the U.S. economy.

Most people are not told the truth because they cannot handle the truth. However, I cannot lie.

It’s a hard pill to swallow, but gulp………

Sources: FHA Secure

Forbes: Hope Now Alliance announces new guidelines to help troubled borrowers

BusinessWeek: Hope Now’ Hot Line Frustrates Borrowers Needing Help Now -..

MSNBCHope Now hotline leaves callers frustrated; ‘more work to be done’

NPR: Federal Program To Help Homeowners Takes Effect : NPR

New York Times: MORTGAGES; FHASecure: How Much Help? – New York Times FHA Secure Flop. Only 266 Borrowers Have Been Assisted!

Money CNN: Next steps for FHA bills – Dec. 17, 2007 Emergency Mortgage Loan Modification Act of 2007 |

Wikipedia: Emergency Economic Stabilization Act of 2008 – Wikipedia, the free Will Project Lifeline be Another Foreclosure Flop?

Registration of Mortgage Loan Originators Under the SAFE Act

Registration of Mortgage Loan Originators Under the SAFE Act

WASHINGTON ( – Summary – The OCC, Board, FDIC, OTS, FCA, and NCUA (collectively, the Agencies) are adopting final rules to implement the Secure and Fair Enforcement for Mortgage Licensing Act (the S.A.F.E. Act). The S.A.F.E. Act requires an employee of a bank, savings association, credit union or Farm Credit System (FCS) institution and certain of their subsidiaries that are regulated by a Federal banking agency or the FCA (collectively, Agency-regulated institutions) who acts as a residential mortgage loan originator to register with the Nationwide Mortgage Licensing System and Registry, obtain a unique identifier, and maintain this registration.

The final rule further provides that Agency-regulated institutions must: require their employees who act as residential mortgage loan originators to comply with the S.A.F.E. Act’s requirements to register and obtain a unique identifier, and adopt and follow written policies and procedures designed to assure compliance with these requirements.Show citation box
Unified Agenda

S.A.F.E. Mortgage Licensing Act

I. Background Back to Top

A. Statutory Requirements

The S.A.F.E. Act, [1] enacted on July 30, 2008, mandates a nationwide licensing and registration system for mortgage loan originators. Specifically, the Act requires all States to provide for a licensing and registration regime for mortgage loan originators who are not employed by Agency-regulated institutions within one year of enactment (or two years for States whose legislatures meet biennially). In addition, the S.A.F.E. Act requires the OCC, Board, FDIC, OTS and NCUA, [2] through the Federal Financial Institutions Examination Council (FFIEC), and the FCA to develop and maintain a system for registering mortgage loan originators employed by Agency-regulated institutions. The S.A.F.E. Act specifically prohibits an individual from engaging in the business of residential mortgage loan origination without first obtaining and maintaining annually: (1) A registration as a registered mortgage loan originator and a unique identifier if employed by an Agency-regulated institution (Federal registration), or (2) a license and registration as a State-licensed mortgage loan originator and a unique identifier. [3] The S.A.F.E. Act requires that Federal registration and State licensing and registration must be accomplished through the same online registration system, the Nationwide Mortgage Licensing System and Registry (Registry).Show citation box

In connection with the Federal registration, the Agencies at a minimum must ensure that the Registry is furnished with information concerning the mortgage loan originator’s identity, including: (1) Fingerprints for submission to the Federal Bureau of Investigation (FBI) and any other relevant governmental agency for a State and national criminal history background check; and (2) personal history and experience, including authorization for the Registry to obtain information related to any administrative, civil, or criminal findings by any governmental jurisdiction. [4] On June 9, 2009, the Agencies issued a notice of proposed rulemaking to implement these requirements for Agency-regulated institutions. [5] Show citation box

B. Implementing the Requirements for Federal Registration

The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) have developed and maintain a Web-based system, the Nationwide Mortgage Licensing System (NMLS), for the State licensing of mortgage loan originators in participating States. [6] Mortgage loan originators in these States electronically complete a single uniform form (the MU4 form). The data provided on the form is stored electronically in a centralized repository available to State regulators of mortgage companies, who use it to process license applications and to authorize individuals to engage in mortgage loan origination, as well as for other supervisory purposes.Show citation box

The Federal banking agencies, through the FFIEC, and the FCA are working with CSBS to modify the NMLS so that it can accept registrations from mortgage loan originators employed by Agency-regulated institutions. This modified registry will be renamed the Nationwide Mortgage Licensing System and Registry. The existing NMLS was not designed to support the Federal registration of Agency-regulated institution employees, who are not required to obtain additional authorization from the appropriate Federal agency to engage in mortgage loan origination activities that are permissible for an Agency-regulated institution. Accordingly, the system must be modified to accommodate the differences between the requirements for State licensing/registration and Federal registration. It also must be modified to accommodate the migration of an individual between the State licensing/registration and the Federal registration regimes or the dual employment of an individual by both an Agency-regulated institution and a non-Agency-regulated institution. [7] Furthermore, the S.A.F.E. Act requires new enhancements to the current system, such as the processing of fingerprints and public access to certain mortgage loan originator data. These modifications and enhancements require careful analysis and raise complex legal and system development issues that the Agencies are addressing both through this rulemaking and through consultation with the CSBS and the SRR. The OCC, on behalf of the Agencies, has entered into an agreement with the SRR that will provide for appropriate consultation between the Agencies and the Registry concerning Federal registrant information requirements and fees, system functionality and security, and other operational matters. The issuance of this final rule establishing the requirements for Federal registrants will enable the Agencies and SRR to complete modifications that will enable the system to accept Federal registrations. As described in the SUPPLEMENTARY INFORMATION section of the proposed rule, the Agencies will publicly announce the date on which the Registry will begin accepting Federal registrations, which will mark the beginning of the period during which employees of Agency-regulated institutions must complete the initial registration process. When fully operational, mortgage loan originators and their Agency-regulated institution employers are expected to have access to the Registry, seven days a week, to establish and maintain their registrations. [8]

Read more:

FHA Launches Short Refi Opportunity for Underwater Homeowners

WASHINGTON – ( – In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development today provided details on the adjustment to its refinance program which was announced earlier this year that will enable lenders to provide additional refinancing options to homeowners who owe more than their home is worth. Starting September 7, 2010, the Federal Housing Administration (FHA) will offer certain ‘underwater’ non-FHA borrowers who are current on their existing mortgage and whose lenders agree to write off at least ten percent of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage. (more…)

2nd Lien Loan Modification Program (2MP)

Due to our economic crisis and the falling housing market many homeowners can no longer afford to keep up on their mortgage. Many of these homeowners who are struggling just to make ends meet have obtained a second  mortgage that is no longer affordable. Even though the first mortgage (which is generally a much higher payment) may be affordable at this time, the increase in monthly payments due to the extra mortgage may cause a situation to get out of hand fast. these second mortgages often times complicate the process of trying to modify your first mortgage or even secure a refinance. (more…)

2nd Lien Loan Modification Program

Due to our economic crisis and the falling housing market many homeowners can no longer afford to keep up on their mortgage. Many of these homeowners who are struggling just to make ends meet have obtained a second mortgage that is no longer affordable. Even though the first mortgage (which is generally a much higher payment) may be affordable at this time, the increase in monthly payments due to the extra mortgage may cause a situation to get out of hand fast. these second mortgages often times complicate the process of trying to modify your first mortgage or even secure a refinance. (more…)