Showing posts with label banks. . toxic assets. Show all posts
Showing posts with label banks. . toxic assets. Show all posts

Thursday, August 25, 2011

$1.2 Trillion in Secret Additional Bailout for Banks with No Collateral and No Commitments « Livinglies's Weblog

From livinglies.wordpress.com


$1.2 Trillion in Secret Additional Bailout for Banks with No Collateral and No Commitments « Livinglies's Weblog

Of course the figure is much higher, but the secrecy surrounding the money given by the Fed to the banks is something to enrage any tea party advocate and for that matter any taxpayer. The Federal Reserve window was opened to banks who actually sold their mortgage bonds — worth nothing — to the Federal Reserve under the guise of a loan that would never be repaid. The program correctly explained in this video was one of many totaling more money than the principal on all the defaulted loans put together. The kicker is that the mortgage bonds they sold probably didn’t belong to them! (But they were acting as agents for investor/lenders whether they like to think of it that way or not.
Add to that the proceeds they received from insurance, credit default swaps, cross collateralization, overcollateralization and servicer payments (made to creditors with reports stating the loans were performing), and you have real boondoggle fueled by ideology instead of arithmetic. If the banks received more money than they loaned, then how are those loans in default? If your Aunt Tilly pays off your mortgage, your non-payment after she pays it off is not a default because there is no payment due! In this case it was Uncle Sam who paid it off and a bunch of third parties who were all making money, having sold the loans multiple times under the guise of exotic derivatives and synthetic derivatives.
SO the Banks made a ton of money in “off balance sheet” transactions which remain off balance sheet because they are hiding profits and not paying taxes. THEN they claimed losses because the money they made was “off balance sheet” and received a “bailout” they didn’t need equal to all the money that was loaned.

Monday, February 7, 2011

A Mortgage Isn't a Life Sentence

This is the segment I did with someone who walked away from his mortgage, his home, and his $120,000 down payment after wrestling with the bank for months. It's powerful, and it's hopeful. "It feels great," Burton said without hesitation. "I'm starting again. I've still got my talent; I've got my intelligence. I've got my health. At least I'm free of the enormous amount of stress that I had and the frustration of doing the best I could and it wasn't good enough. It wasn't working. Ultimately, I made a decision that my physical and mental health was more valuable than this house and my investment in it." At this point in the housing crisis, if you're having problems, it's clear that no authority is coming to help you. Not bank regulators. Not Obama. Not the Republicans or Democrats in Congress. And especially not your bank. But the good news is there is hope. You have options. Ryan Grim, Lucia Graves, and Arthur Delaney interviewed 50 people thinking of walking away from their mortgages, and then interviewed them a year later. They wrote up what they found. For those who were able to walk away, it was a profoundly liberating experience. The hatred of the banks was searing, not because they owed money, but because the banks were often entirely unresponsive and dishonest. A mortgage isn't a life sentence, it's a contract. Your house is the collateral for that contract, and if you stop paying the bank gets the house. That's in the contract. There's nothing immoral about not paying your mortgage, you need to see your relationship with your bank as purely contractual. The bank certainly sees you as a number. If you're thinking of walking away from your home, you need to consider a couple of things. First, hire a lawyer who can give you good advice and negotiate on your behalf. There are legal traps to be aware of. For instance, depending on the state, if you stop paying your mortgage, your bank might be able to sue you for additional assets. This isn't common, but you should check out this list of states. Some are non-recourse, which means banks can take your house and stop there, while some are recourse, which means that banks can take your house, and sue you for assets for the difference between the loan amount and what the house fetches at auction. There's also your credit score. While it's true that your credit score will get hit for walking away, the formula for calculating it is secret. Some people report getting credit card solicitations within months of walking away.


 Read the full Article here A Mortgage Isn't a Life Sentence

Here is a related article from my blog several months ago.  It is nice to see someone else having the common sense to say the same thing. 

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Sunday, March 29, 2009

Free Market has left the building.