Dec 172011

by Alicia Ortiz

This article is an excerpt of a discussion that was held during a recent meeting of the minds.

I hope the banks and mortgage companies could see the benefit to themselves and the homeowners by keeping people in their homes. They could cut the mortgage payments to keep people in the homes, keeping the homes secure. The homeowners keep up on repairs and the maintenance in and out.

First of all, most banks do not repair homes. They sell them as is. Second, most of the homes that are sitting empty are either written off by the bank or are stalled by the robo signing that has been going on. Seven out of ten mortgages that were taken out in the heyday of mortgages were bundled and sold on the stock market for a huge profit. This means the notes were sold.

Notes have to be signed the same as a check when they are sold. This was not done. So now the banks are trying to backtrack to make sure their paperwork is accurate. Too little too late.

Once a note is turned into stock it cannot be turned back into a note by SEC law. This creates a major problem for the banks because they have to have the original note in hand (not a copy) to foreclose. Most of the notes for these houses do not exist and cannot be legally foreclosed on.
Some of the big banks are being forced to buy back their bad debt. This means that they are now debt collectors the same as if you do not pay a credit card or medical bill. This still does not give them the right to foreclose. Too make matters worse, the government has bailed out the investors and given them the money for the bad mortgages(AIG), so the money the banks are getting for foreclosures are all profit for them, thus the profits by the major banks on the stock markets.

Banks will cut mortgage payments and do loan modifications. First, this creates a new note and the bank is in control again. Second, the bank is collecting every penny they can and this is going to be the next phase of foreclosures. I have seen loan modifications done for people whose houses appraise at 50,000 who now owe 110,000 after the loan mod.