Unbelievable! I can NOT believe what I have read on the internet and heard on the cable financial news channels. The Financial Crisis bail out proposal is aimed at BUYING all of the bad-debt from ALL of the Banksters! They are trying to make YOU the American public believe that we will come out of this earning a PROFIT.
HELL NO ~ there is no way this can happen. Why you ask? Well let's just say that if the banks are not able to mark to market (price) simply because there is NO market. How can the "powers that be" conscientiously, with a straight face, say that we will be able to make a profit and come out of this on top???? Enough with the lies please.
You see, the exotic investment vehicles that are now considered bad-debt, such as SIVs, CDOs and MBSs, are TOXIC! This is what our government is planning to DIGEST on our behalf. Nice huh? We are buying JUNK! It's the investor's of the toxic debt that are demading payment. Remember these exotic investment vehicles were sold to financial market investors ALL around the world.
I have also heard that the government will or may inherit the housing foreclosure inventory being held by the banks. Really now? Ask yourself how successful our government has been at managing anything (ie; welfare, the foster care system, low income housing, senior citizen assisted living/nursing homes, our military veterans, etc.). These homes are already sitting vacant and unkempt by the lenders. So imagine for a moment when our government takes control of these properties?
This crisis began late 2006. Everybody involved (the banks, the fed, & government) had plenty of time to take pre-cautionary measures. They obviously didn't. No, what the banks continued to do is churn the obnoxious loans such as the negative amortization loan and the short term fixed rate adjustable rate mortgage. People were only making the 1% payment because they were told that was all they needed to make to maintain their mortgage. However, the reality was their interest only payment was 6% or 7%. This doesn't even include principle. The difference in these two payments was being added to their principle balance. Therefore, can you see what can happen in a declining real estate market? Their property value is decreasing, meanwhile their principle balance is increasing. What happens when they've passed market value? Well, the bank is going to demand the interest only payment in order to remain in the house. Meanwhile, they were qualified (lied to) for the 1% fixed rate mortgage payment! There is no way they are able to make the payment.
People are losing their homes and having to foreclose because their payments began adjusting once the fixed rate expired. This is the root cause! Peoples payments are increasing by thousands of dollars. American citizens are having to choose between making a $4 or $5 thousand dollar payment vs. putting food on the table. When they once paid $2 or $3 thousand per month.
To give you a common example, I know of a couple who are both employed with two children. They have owned their home for 3 years in a nice suburban area. Their payment is due to adjust within a month. They received their recent statement that says their payment is going from $2,500 to $4,000 and will adjust again in 6 months to probably $5,500+. Plus, the state of California has increased their property taxes. Their credit scores are in the high 700s. However, they are unable to re-finance because their home has lost $100,000s in value (basically they owe more than their house is worth) and their lienholder/bank is unwilling to help them lock in a reasonable fixed rate to help them keep their house!!!
All of the Banks are guilty of paying a higher compensation to their employees and brokers who pushed the negative amortization loan. Therefore, this caused the sellers to put as many people in this loan program, selling the 1% minimum payment as fixed for fives years without disclosing the dire consequences!!! Plus, most of these mortgages had pre-payment penalties which locked the borrower into this agreement for 2 to 3 years. I remember seeing infomercials on cable falsely advertising this 1% minimum payment claim. Obscene lending practices to say the least! No fiduciary duty required in AMERICA anymore!
What's worse is that these TOXIC loan programs are still being PUSHED/PEDDLED by the Banksters! These loan programs have NOT been removed from the system. So I ask you, what good can come out of our government buying the Banksters TOXIC debt when the system, the root cause still remains the same? Not to mention, ALL of the players remain the same with absolutely NO disciplinary action in site! Not even a slap on the wrist for heaven's sake. No, they are ALL receiving compensation from US for doing a fine job at screwing up our livelihoods! ~ Merci beaucoup...
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