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Rollover mortgage...good mortgage. End foreclosure now, rollover debt like the government.

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originalpckelly Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Oct-27-11 11:52 AM
Original message
Rollover mortgage...good mortgage. End foreclosure now, rollover debt like the government.
Edited on Thu Oct-27-11 11:59 AM by originalpckelly
For the most part, foreclosure is the dumbest fucking thing the financial industry has invented.

In a recession, it floods the housing market with newly foreclosed homes, driving down the prices of property, destroying wealth through massive deflation. It places newly jobless workers on the street looking for a stable place to live, to just survive, instead of spending their hours looking for new jobs. It is essentially a massive can of gasoline dumped on the burning fire of recession, and it is only through luck that it has not already ended our country. It is preposterous and sickening to throw American families out of their houses by the frightening process of a sheriff at the door.

And aside from the grossest abuses of the system, it just doesn't have to happen.

If our government were not so monumentally stupid, it would work with private companies to offer newly jobless citizens loans to pay their current lender the money due that month, charging a small interest fee.

It would not increase a person's debt load significantly, all that would effectively be added to their debt load is new interest, which most people would be willing to pay. If the government created smart regulations, they could keep the interest rates low.

The repayment of the principle of the money borrowed to keep the homeowner in their house would occur at the end of the mortgage, it could be the same payment as they paid the month before, and could simply delay the time needed to finish paying off a house.

Each month, once proper employment resumes, the lender of the rollover loan would receive a small interest payment. To them, they could treat the whole situation as a bond of sorts, with coupon payments coming every month, and the full principle being repaid at the end of the loan.

Because the homeowner would only pay interest every month on top of their regular mortgage payments, they wouldn't have to pay very much.

It would be a win-win-win-win. The government wins, because they don't have to actually give out money, the lender of the original mortgage doesn't have to go through foreclosure and possibly lose money on a house which won't fetch as much money in a down market, the homeowner wins because they don't lose their house, and the rollover lender wins because they get a fairly reliable interest payment every month once employment resumes.

The government could sweeten the pot for rollover lenders by offering to insure their losses, this way they would be willing to take on the credit risk of a newly unemployed person.

It would help the housing market recover faster, because a bunch of foreclosed homes won't be dumped on the market. Property values won't dip because of foreclosed homes in disrepair. New/old home sales would increase, because borrowers would feel secure knowing that even if they did lose their job, they will still be OK.

It will also be a triumph for the personal responsibility types, because the borrowers would have to pay back the loan. It's basically pulling yourself up by your own bootstraps. It's not a handout, how can you hand out your own money?

To keep down on new bureaucracy, the program could be administered through the unemployment system, as these would be the people who would make the best credit risks.

And for those people who truly have abused the financial system, they could be dealt with sooner, because a flood of foreclosures would not overshadow their misconduct.

Essentially, this is a similar process to what the treasury uses to fund itself, in part. Rolling over debt happens all the time, and the only net negative of it is the interest, which is usually much less than actually paying back the loan itself.

All of this would act like sand under the spinning tires of our economy, this jolt could really get us out of the rut and back on to the road of success.

It could work, you know.
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dkf Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Oct-27-11 11:59 AM
Response to Original message
1. If everyone had put 20% down it wouldn't be this bad.
People wouldn't have been able to afford the downpayment on the really outrageous prices and that should have restrained the bubble. Moreover they would have had more equity and not been so badly underwater.
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originalpckelly Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Oct-27-11 12:02 PM
Response to Reply #1
2. Not bad advice at all.
Edited on Thu Oct-27-11 12:03 PM by originalpckelly
I couldn't agree with you more.

We are where we are, and there are always recessions. They may not be precipitated by a collapse in the housing market, but they are always going to happen about every 11 years.
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jwirr Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Oct-27-11 01:12 PM
Response to Reply #1
7. And when the Realtors could not sell at that price they would have
lowered the prices.
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dajoki Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Oct-27-11 12:21 PM
Response to Original message
3. K&R
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SoCalDem Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Oct-27-11 12:33 PM
Response to Original message
4. The home-ownership bubble was always unsustainable
the way it was fostered.

Home ownership is a "marker". It says "I'm a grown-up..I have arrived at middle-class-dom".

That used to be true, but the whole premise got perverted with "EZ-Credit".

Looking back, you'll find that buying that first home used to happen after YEARS of saving for that down payment, and it used to happen for most people when they were well into their 30's.

They spent their twenties living in a series of cramped, less-than-lovely apartments, and when they did buy that first house, it was usually a pretty small, extreme-fixer. They gradually fixed it up, and then moved up to a bigger house that they would pay off.

The EZ-Credit model, said ..we don't care if you have loads of student loan debt, car loan debt or if you've only been at that $15 hr job for a few months,, you can buy a $300K deserve it.

The Stuart Smalley homebuying method was just another permutation of the "everyone gets a trophy...even if you came in last place" sort of thinking that became popular in the late 80's/early 90's.

20% down used to be the norm, and with that came requirements like a year's-worth of paycheck stubs and 2 or 3 year's-worth of tax-forms to prove that you had a stable income and the ability to actually afford that house, and still have enough to feed & clothe yourself.

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originalpckelly Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Oct-27-11 01:01 PM
Response to Reply #4
6. The problem is that people live in those houses now.
Not numbers.

And they will be homeless.

We can certainly be smarter going forward, but this method of dealing with the problem is not reasonable.
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msongs Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Oct-27-11 01:00 PM
Response to Original message
5. sorry dudes, only corporate war profiteers and the bloated military get help. nt
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ms.smiler Donating Member (311 posts) Send PM | Profile | Ignore Thu Oct-27-11 02:55 PM
Response to Original message
Such options would only be workable for about 15% of mortgage loans. About 85% of mortgages are securitized mortgages which are Promissory Notes turned into securities over on Wall Street.

Simply, a securitized mortgage is a sophisticated Wall Street scheme to collect multiple times upon the same debt.

I covered some of that information recently in this discussion:

If MERS appears in a mortgage loan, it has been securitized. The problem is even non-MERS mortgages have been turned into securities. A homeowner with a non-MERS mortgage would need to check with a professional to determine if it was turned into a security.

This means that about 85% of mortgage loans were used to defraud investors on Wall Street. It also means that about 85% of mortgage loans leave the homeowners with a broken chain of Title and clouded Title due to the manner in which the banksters improperly and illegally handled the securitization process.

It makes no sense to me, why any homeowner with a securitized mortgage should simply continue making payments or refinance when they will never receive a valid Deed and clear Title to their properties upon completion of their payments.

It is my position that any homeowner with a securitized mortgage, first take it to a professional who can determine how much fraud may be lurking in the mortgage agreement in the first place. My own 30 year fixed rate mortgage contained over $54,000 in fraud subject to Treble damages which will put an end to the mortgage loan since someone already owes me more money than I might still owe to them.

Then I suggest the homeowner seek an attorney who well understands securitized mortgages. Such an individual can determine who actually holds the Note and if that party has a valid lien on the homeowners property which is doubtful.

Such an attorney can determine the many instances in which the banksters broke the chain of Title and in what ways the Title has been clouded. As will likely be necessary, the homeowner should file a Quiet Title suit to clear their property Title, obtain their Deed and the appropriate money damages for the particular harm done to them as well as relieve themselves of the burden of a fraudulent mortgage loan.

A Quiet Title is not very expensive nor does it take a long time, usually only 6 months to complete.

It amazes me that the banksters thought they could get away with this.

Ive been researching mortgage/foreclosure fraud for 3 years. I recently filed a Quiet Title suit over a new MERS issue. 300 such suits were filed in PA & NJ and in 297 of those suits, the mortgage servicers are either voluntarily withdrawing their fraudulent liens or the court will strike them from our land records. My case is among the 1% going to trial and is closest to trial.

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