The Stupid American and Mortgage Default

Ok Prove Your Intelligence Here America!

Is being underwater on a loan the fault of the Lender or the Borrower

  • The Lender. They have been crooks for decades.
  • The Borrower. He should have had a degree in economics.
See results without voting

Either the poll Was Fixed or the American Public Is Incredibly Stupid.

There is no hope of financial literacy for the American public if one is to believe the astounding poll taken by Fannie Mae. The poll found that a majority Americans believe that it was the borrowers fault, not the lenders, when it comes to the blame for bad mortgages. What this is is a giant sleepwalk by the American public. The plan was to scam the borrowers. It was the fault of the lenders all along. The scam was organized and carried out by the lenders and their backers, the Wall Street financial banks that sold these crap bonds throughout the world.

The poll found this astonishing fact:

But industry fears of strategic default may be overblown, as nearly nine in 10 Americans and more than seven in 10 delinquent borrowers believe it is unacceptable to stop making mortgage payments altogether. Fannie found that only 39% of delinquent borrowers and 9% of underwater borrowers have seriously considered stopping payment.


This makes me sad and embarrassed to be an American. Since when does a scam rob you of the right to walk away from it? What is the ethical requirement to pay usury or unfair loans? There is no religious ethical requirement that I can think of. These banks are not your trusted neighbor, who you want to pay back. These banks are part of a very dark system that requires whatever you are foolish enough to give them.

So many of you people are so ill informed that you must be listening to liars or you are gaming the system to try to keep your own home values from crashing.What I mean is: it is in the homeowners interest to say that house prices have bottomed, as the poll reveals was the majority opinion. It is in the homeowners interest to say that it is the fault of the borrower, as that will keep the weak and wavering from walking away, or so they think.

But in the long run, it may not be in the homeowners interest to think that the banks are not at fault. The banks will scam us again if we don't "get it". The too big to fail banks must be laughing at we Americans after this poll. They must think that they can get away with anything!

While a small majority, 53 percent, felt it was the borrowers fault not the lenders, that is still a majority. And with all the education out there about what the banks have done this is an unacceptable majority! Worse yet, only 39 percent of people who are struggling have thought about defaulting. That is ridiculous. The prices aren't going to bounce back. You are throwing your financial futures away.

Dumb Americans, tell you what. I am putting a poll of my own on this site, and you can vote here. Tell me what you really think. Stand up for whatever you think. But remember, the big banks were given off balance sheet privileges in Basel 2, way before the liar loans. But the framework was set. And the scam was put in place. So learn a little here, and here and here before you vote.

The fact that banks are now allowing a writedown of principle is pretty much an admission that their loans were a scam.

Disclaimer: This is a protest website. Your tax or legal exposure for walking away is something you should check out with an attorney. If you have the balls, just hide underground, as this is a sort of guerrilla war that is being fought against the Class Warfare that comes from the top reaches of financial power.




James B. Stewart's Article is Pure Propaganda

James Stewart wrote an article in defense of Fannie Mae, who said those who strategically default cannot get a mortgage for 7 years. (With the potential demise of the 30 year mortgage that may be a good thing for borrowers!) The article by Stewart is full of propaganda:

1. It is propaganda to say that borrowers were the cause of their demise when it is a proven fact that thelenders were in control of the process of ponzi lending. The housing scam was the fault of the international banker cabal, the big money behind the lenders.

2. It is propaganda to say that the decline of housing prices won't be helpful to an overpriced housing market.

3. It is could be propaganda to say the house prices will return to bubble levels anytime soon. That is pie in the sky dreaming without the rekindling of securitization and the flow of easy money lending once again. With the potential demise of the 30 year mortgage this will not likely be the case.

4. It is propaganda to say that people don't have the right to walk away from scams. What rule in the cosmos says you don't have that right?

There was once a man named James Stewart, who, in It's a Wonderful Life, was a moral banker. In defending immoral bankers, Mr. James B. Stewart, you prove that you are no Jimmy Stewart. No, you were, indeed, misnamed.

The Fed Says the Recovery Is Not Sustainable Without Jobs Recovery.

How many of you stupid Americans believe in a "jobless recovery"? Wall Street scamsters have been telling you that we can have a jobless recovery because of productivity gains, etc. But the Federal Reserve says no. We cannot have a jobless recovery. That means that the stock market is in jeopardy. At Seeking Alpha I wrote about the grave danger to the stock market. So far, many Americans have been smart to stay out. I wish they were as smart about the culpability of the banks and their shadow banking system and NAR saying that real estate almost always goes up, which got people who were unsophisticated into the crap mortgages that they need to walk away from today.

Dylan Ratigan. The Fed is a Ponzi Scam

House Prices Must Decline in a World of Globalized Trade.

Globalization requires more competitive wages, and the US is not competitive in the world stage. Emerging markets are eating our lunch. As a pundit once said on CNBC. the Chinese make things and we sell each other insurance! So, it while it is likely that global wages will increase in emerging markets, Americans will not likely see across the board wage increases if America is to be competitive.

Housing is a major expenditure that is making it difficult for people to be willing to work for less or forego raises for long periods of time. Housing has been inflated. Fannie and Freddie may have been a good idea as a temporary fix for the Great Depression. But keeping the agencies and providing easy money for all these years, coupled with the no money down easy money of the shadow banking system in the most recent bubble, has raised prices of houses to levels not sustainable in the global economy.

Therefore, It is essential that housing prices, rents and utilities, etc. come down in price, or we will never come close to being competitive on the world stage. This explains the "Jobless recovery" which is no recovery at all. It explains why Americans have fallen prey to no money down scams and refi scams. This is the work of the shadow banking system and it is necessary that people, dumb Americans more than others, wake up! Wake Up!!!

Americans need to shed debt any way they can. Americans need to walk away from toxic mortgages in order for this country to become more competitive. Yes that is right, in order for this country to become more competitive, people must shed debt and realize that the shadow banking system was a PLANNED SCAM. Otherwise, as wages decline, people will find that there is little appetite for buying houses, forming households, etc. People will hunker down in extended families and demand for housing will decline. In a global economy, either house prices decline or demand must decline where there is a mature economy competing with emerging markets. This is basic economic principle. Wake up Dumb Americans!

The wealthiest of Americans have a vested interest in:

1. seeing real estate not decline.

2. lowering wages for Americans and making America competitive.

These contrary manifestations of greed by the uberrich becomes a vice grip around the necks of Americans. Teach your children. Understand what is going on here and don't be so stupid, America.

Credit Crisis Further Study

Foreclosure Scam

Flip House Scam

George Carlin: You are Owned and They Want You To Remain Stupid, America! Strong Language Warning for Tender Ears.

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Comments 23 comments

thevoice profile image

thevoice 6 years ago from carthage ill

amazingly honest hub thanks


bgamall profile image

bgamall 6 years ago from Las Vegas, Nevada Author

I hope a few folks realize the scam for their own family unity.


eovery profile image

eovery 6 years ago from MIddle of the Boondocks of Iowa

Interesting prospective.

So what was Fannie Mae role in all of these bad loans?

And, so how did the loans get toxic? I agree they over did the bundling and resale of the loans, but the bad loans did come back to roost, and eventually caught up to them, didn't they?

Keep on hubbing!


blue dog profile image

blue dog 6 years ago from texas hill country

once again, bgamall, you lay the painful truth out there for all to read.

great job.


bgamall profile image

bgamall 6 years ago from Las Vegas, Nevada Author

Thanks Blue Dog. Eovery, Fannie Mae did underwrite subprime, but not the option arms and jumbos and expensive loans that made big bucks for the banks. Fannie may have purchased some of these mortgages and probably bundled them into bonds, but not on the scale of the private investment banks, who took this market way past the subprime folks. After all, subprime was "contained" according to Henry Paulson.

But the credit crisis is a function of bad mortgages all the way around, packaged into bonds that were not AAA even though the ratings agencies were bought off, and investors souring on the crummy investments. And Eovery, the worst part of all this is that it was planned, and enabled by Basel 2 in 1998 and by the Federal Reserves and other central banks.


wandererh profile image

wandererh 6 years ago from Singapore

The banks have really made a right mess of things, and right now, many months down the road, I'm still not sure if anything has changed. They should never have made most of the loans that they did, which is one of the reasons the crisis happened in the first place.

But, from the level of a homeowner who mortgaged his house to take out a $100,000 loan and is now struggling to keep up with payments, are you saying that he should not repay the loan? Regardless of whether the house prices are manipulated, or whether the bank was too lax in its credit worthiness check, the homeowner took $100,000 from the bank. Shouldn't it be his responsibility to pay it back?


TheMoneyGuy profile image

TheMoneyGuy 6 years ago from Pyote, TX

Bgamall,

Great hub, you are one of the last few hubbers I still read,

You are right the best thing is to walk on these loans in mass.

It is strike that would bring the system to its knees that wouldn't even require anyone to get out and march on anything.

The fact is the Banks make an obscene amount of money on a mortgage. Most people believe they only make the 5 or 6 percent interest on the loan. That is hardly the case.

Under the fractional reserves system, if a borrower puts 20 percent down on a 100,000 dollar mortgage, the bank can borrow twice the loan amount from the Federal reserve at the reserve rate which is around a quarter of a percent, practically free.

So on a hundred thousand dollar loan you give the bank 20 grand they borrow 200,000 from the fed. They charge you around 5 percent or 5000 dollars the first year.

That means they made 5000 dollars on 20,000 actual assets in hand, for a 25 percent return in the first year.

The other 100,000 they can loan out sub prime for no money down, and if the unsuspecting borrow pays interest on the first year of 8 percent (a conservative rate for a sub prime borrower) that is another 8 grand putting the total at 14,000 on 20,000 of actual asset.

This makes the return close to 70 percent in the first year. Not bad for giving away 180,000 dollars that you didn't actually have.

Now the kicker you can sell those loans for 80 percent of the face value. Now that puts the banks return at or around 870 percent.

Not bad for a bunch of dummies. Get this now Fannie Mae can sell these bonds for practically nothing too our foreign creditors. Who now control the only thing of actual value in our country the real estate?

Not bad I think at all, the banks make a lot of money we secure our debt with property to countries like China so that they don't have to worry about what we do to the dollar anymore.

So the only loser it seems is the schmuck making his mortgage payment every month at the expense of his families' well being, and the handful of us left that actually pay taxes.

Another fraud is that only about 10 percent or so of the mortgages in any bond package actually defaulted meaning even though they valued those bonds at nothing they were still getting 90 percent of the money paid every single month. How is that for criminal behavior? If I told the IRS I got zero dollars when my company paid me 90,000 dollars in a year I was supposed to get 100,000 dollars. Yep you got it, I would be in jail.

TMG


bgamall profile image

bgamall 6 years ago from Las Vegas, Nevada Author

It is quite obscene, Moneyguy. Thanks so much for the lesson on finance. Hopefully it opens a few eyes.


bgamall profile image

bgamall 6 years ago from Las Vegas, Nevada Author

Wanderer, nothing has changed. In fact the international banker cabal is even more powerful now.


Hello, hello, profile image

Hello, hello, 6 years ago from London, UK

Not living in America it wouldn't be right for me to comment and also I couldn't


bgamall profile image

bgamall 6 years ago from Las Vegas, Nevada Author

Feel free. Someone needs to wake these folks up.


Tom Cornett profile image

Tom Cornett 6 years ago from Ohio

Good hub! They appraised our house for $117,000....actual worth...$65,000. They lied and then lied about lying. The only thing I recognized on the loan papers was our names. The broker was going to charge $3,500 just for writing up the loan....which his low paid secretary actually did the work. He had written (without even consulting us) that we had college educations and that we owned two new cars....we had neither.

We were trying to get out of the first bad loan where the broker told us that our payments would never go up more than a few dollars. They went up $300 a month in the first six months when the new interest rate kicked in.

This new loan broker was obviously more criminal minded than the one before. I told him I was unemployed...he said,"Well...it's a perfect time to consolidate your bills then." He approved us for the full appraisal amount. We said,"NO!"


bgamall profile image

bgamall 6 years ago from Las Vegas, Nevada Author

Awesome Tom. You can't fight scams on their terms.


scheng1 6 years ago

No wonder China is catching up fast. Majority of Chinese households do not believe in debt. They have a very high rate of household savings.


bgamall profile image

bgamall 6 years ago from Las Vegas, Nevada Author

Sheng1, the Chinese have threatened jail for credit card abuse. I don't think that the greedy American mega banks like that. I hope that the Chinese don't get into debt. They may if house prices go down, and they are upside down. However, many have paid cash which protects them.


OpinionDuck profile image

OpinionDuck 6 years ago

bgamall

I am also astounded by the many people that let the lender off, and put the sole blame on the borrower.

The loan packages offered by the lenders were close to interest only loans, and many had negative amortization. The only thing that kept these loans from exploding was that the variable loans were kept stable by continued drops in the interest rates by the Federal Reserve.

Then the lenders bailup these bad loans and treat them like a unit. Like the dot com and the stock market, the real estate market was manipulated to work like a ponzi scheme. This meant doing away with good old fashioned conservative and prudent business decisions.

I could go on, but you have it correct.

:)


bgamall profile image

bgamall 6 years ago from Las Vegas, Nevada Author

Hi Opinion Duck. Thanks for the clarification on just how toxic these loans were. There is a certain misplaced populism in the Santelli camp. I believe if there is going to be a populism it should expose who the real culprits are. http://dontpaycreditcards.com/populism.html Conservative business practice versus neoconservatives who wanted the casino to finance the Iraq war.


Jane Bovary profile image

Jane Bovary 6 years ago from The Fatal Shore

Hi bgamall,

I'm no economist [numbers send me into a stupor] but even I can see that the sub-prime mortgage crisis was propelled by predatory lending.

Australia has hugely inflated house prices. The average price of a house in

Melbourne's inner suburbs is now over 500k...in some areas much more.It's becoming prohibitive for many people to own their own home. This is apparently compounded by [or because of?] a housing shortage. Even where I live, in a blue-collar regional area, prices have skyrocketed, I'm wondering when and if this gigantic bubble will burst?


bgamall profile image

bgamall 6 years ago from Las Vegas, Nevada Author

Hi Jane, it is amazing how Australia's house prices can stay so high with a GDP near zero. Smoke and mirrors I think. I wonder what is driving the Australian market. Maybe it is small enough to manipulate.


scheng1 6 years ago

I think when the economy fully recovers, and everyone has job again, they will forget about the lessons learnt in a recession.


bgamall profile image

bgamall 6 years ago from Las Vegas, Nevada Author

That could be true, Scheng. However, that may be awhile. And there may be fundamental changes to the economy in this life changing great recession.


H P Roychoudhury profile image

H P Roychoudhury 6 years ago from Guwahati, India

If not scam, it is a big business of Bank in cooperation with the government to squeeze money from the common citizen.


bgamall profile image

bgamall 6 years ago from Las Vegas, Nevada Author

It happens the world over HP.

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