16/09/2012
https://twitter.com/ForensicOpinion/status/247396168785616897
Forensics.org 35 minutes ago
I don’t think you understand the core issues here, despite having given them considerable thought. Obviously, many (or perhaps most) of the people who are in debt with mortgages they can’t afford today were never able to afford those mortgages, and unless those people are able to find renters to share the home with them there is no good alternative to a foreclosure auction. A foreclosure auction is the right remedy when a borrower is collecting rental income on an investment property and not paying the mortgage. There are many instances in which foreclosure is warranted and justified and everyone who has a mortgage should strongly support the bank’s right to foreclose.
But your research appears to have failed to reveal to you that the mess that has been made out of the American mortgage finance system is not a result of borrowers who recklessly over-borrowed in an attempt to flip property, it isn’t the result of NINJA loans, and it isn’t the result of speculative investments that have been producing cash flow in the form of rental income for the owner while the bank is barred from foreclosing. The mess is the result of a structural collapse in the mortgage finance industry, and by extension the economy, that caused millions of homeowners WHO HAD NEVER MISSED A PAYMENT AND WHO NEVER WOULD, to nevertheless receive a foreclosure notice.
Everyone who took out an ARM at a reasonable interest rate and with favorable, affordable monthly payments received a foreclosure notice when the loan needed to be refinanced. Not because the borrower was not creditworthy, but this time it was because the entire banking system was not creditworthy. The bankers became uncreditworthy and they could no longer extend credit to refinance anyone!
At the same time, the system of mortgage servicers and the mortgage backed security markets failed to adapt their policies, procedures, and computer software quickly enough to what was happening in the real world to avoid sending millions of automated late payment or mortgage default notices to the credit reporting bureaus, resulting in ruined credit for anyone who had purchased a property with a mortgage that needed to be replaced with a new loan after the initial one- or two-year term. The borrowers were deemed in default on a massive scale, when in fact they were not in default — the system of mortgage finance defrauded them.
If you are going to write an article for Forbes, the least you should do is research the subject matter beforehand. Go spend a few days in court where these issues are being explained, investigated and litigated. Then come back and tell us what you’ve learned. Thanks.
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