Journalism in the Public Interest

Our Guide to Obama’s Floundering Foreclosure Programs

The Obama administration’s efforts to address the foreclosure crisis have resulted in struggling programs, recycled ideas and little chance of significant improvement.


An eviction team member removes a child's mattress from a house during a home foreclosure on Oct. 5, 2011 in Miliken, Colo. (John Moore/Getty Images)

More than 6 million Americans are behind on their mortgage payments or facing foreclosure. Housing prices have continued to drop, and many neighborhoods across the U.S. are filled with foreclosed homes.

What exactly has the administration done in the face of such historic need? We've put together a guide to the administration's major efforts to help homeowners, laying out the promise of each and how they've actually performed.

It's a sobering list. Obama himself has called his approach to the foreclosure crisis one of his biggest mistakes dealing with the recession. Overall, the foreclosure programs have failed to reach more than a fraction of the homeowners they were designed to help.

Here are the depressing details:

Programs That Have Been Enacted

Plan: Help millions of homeowners by encouraging servicers to lower mortgage payments

Obama launched his "homeowner bailout," Making Home Affordable, in the spring of 2009, with the aim of helping at least 3 million to 4 million homeowners avoid foreclosure. The program gives banks and other mortgage servicers modest incentives to adjust the terms of mortgages so that homeowners who can't afford their current monthly payments can stay in their homes.

Reality: Mistakes, lost documents, lax oversight; billions remain unspent

As we've detailed, the program has been marked by deep dysfunction. Mortgage servicers mishandled cases, made errors and lost documents, while government watchdogs looked on and did almost nothing. In one case, a government auditor found that mortgage servicer GMAC had made errors on 80 percent of audited cases — but kept the mistakes secret. GMAC said it didn't reverse a single foreclosure action as a result of the sobering audit results.

Meanwhile, as of August, only about 816,000 homeowners had received loan modifications through the program, or fewer than one in four of those who applied. The government is on track to spend only about $7 billion of the $45.6 billion in bailout funds set aside to help homeowners. As a result, nearly $30 billion meant to address the foreclosure crisis may instead be used to pay down the deficit.

Plan: Allow millions of homeowners to refinance their mortgages at lower interest rates

Launched in 2009, the Home Affordable Refinance Program was designed to allow some homeowners to take advantage of this year's historically low interest rates and refinance their loans. The administration estimated "up to 4 [million] to 5 million" homeowners would be able to take part. In his jobs speech in early September, Obama promised to work with federal agencies to make this option available to more people.

Reality: May not help the hardest-hit, and a government regulator stands in the way of change

As of June 2011, just 838,000 homeowners had refinanced through the program. While Obama promised to increase the number of homeowners in the program, the government regulator who oversees Fannie Mae and Freddie Mac may make this difficult. While refinancing is good for homeowners, it means more risk for taxpayer-owned Fannie and Freddie, which own or guarantee 5 million mortgages that are higher than the value of the home.

Meanwhile, even if Obama succeeds in giving more homeowners access to the program, refinancing may not do much to address the underlying crisis. "Anything that is called a ‘refinancing' program is just a joke," a member of the National Association of Consumer Bankruptcy Attorneys told iWatch News.

Plan: Loan money to jobless homeowners so they can avoid foreclosure

The $1 billion Emergency Homeowners' Loan Program, introduced last year, aimed to reach 30,000 families. It offered interest-free federal loans of up to $50,000 to qualifying homeowners who had lost income because of unemployment or a medical condition.

Reality: Slow start, few people qualified; at least half of money left unused

The program, which got off the ground only in June, had a deadline of Sept. 30 for giving out money to eligible homeowners before the unused funds were to be returned to the Treasury. As CNN Money reported, its success was hampered by delays and a tangle of stringent requirements. A spokesman from the Housing Department, which ran the program, said earlier this week that at best the program would only succeed in loaning out half the allotted money. Only 10,000 to 15,000 of the roughly 100,000 applicants qualified for the loans.

Plan: Give money to states to experiment with programs for homeowners

In February 2010, the government promised $7.6 billion to finance innovative programs to deal with foreclosures in states hit hardest by the crisis.

In Arizona, for instance, where nearly half of homeowners with mortgages owe more than their homes are worth, the state Housing Department launched a loan reduction program that the agency hoped would aid 3,500 to 4,000 homeowners.

Reality: A small fraction of the money has been used

As of July, only $478 million of the government's $7.6 billion had been actually loaned, used or spent, and some states that implemented new programs have struggled with their enrollment levels.

For instance, as The New York Times reported yesterday, in the first year of the Arizona program, the state approved only three homeowners for the reduction. The problem? Banks have declined to participate, even though the state was willing to pay half the cost — and taxpayer-owned Fannie Mae and Freddie Mac have also been an obstacle.

The Road Not Taken

Undelivered promise: Giving bankruptcy judges the power to lower mortgage payments

During his campaign, Obama promised to change bankruptcy laws to give judges the authority to lower mortgage payments — a tactic called "cramdown." Democrats pushed for the change after Obama's election, but his economic advisers privately dismissed the plan, and Obama's promised support never came. With the administration silent, and banks fighting hard against the change, the measure was voted down.

Popular idea: Reducing the amount people owe on 'underwater' mortgages

With millions of homeowners owing more on their mortgages than their homes are worth, one popular proposal for dealing with the financial crisis is principal reduction, or asking banks to adjust the total amount owed on a mortgage based on the post-bubble value of a home. The idea is controversial, since some economists argue it would create an incentive for borrowers to take out riskier loans in the future.

But it is also seen as a way to address one of key underlying factors of the housing crisis: that American mortgage-holders owe an estimated $700 billion to $800 billion more than their homes are actually worth.

Because the American people ultimately own or guarantee the majority of the country's home loans through taxpayer-owned Fannie Mae or Freddie Mac, a government-approved program of principal reduction could have an enormous impact, even without buy-in from other mortgage servicers.

But the federal regulator who oversees Fannie Mae and Freddie Mac has refused to consider principal reduction because it would be bad for Fannie and Freddie's bottom line. (They are still $141 billion in the red after a taxpayer bailout.) Proponents of principal reduction argue that Fannie Mae and Freddie Mac will have to deal with the decline in home values eventually — and by keeping losses off their books at the moment, they are costing Americans their homes.

Back to the Drawing Board — With Few Options Left

In July, President Obama noted that his administration had not made enough progress on dealing with the foreclosure crisis. "We're going back to the drawing board," he said. But the administration's new proposals for tackling the crisis are modest. Part of the problem is that an estimated $30 billion in unused bailout money from the previous foreclosure programs cannot be used to fund new programs.

Proposed plan: Turning foreclosed homes into rental properties

Over the summer, the administration put out a call for proposals about how to turn foreclosed houses into rental properties, a way of simultaneously dealing with the glut of foreclosed properties and addressing the steeply rising prices of rental units. No version of the plan has been implemented yet, and the idea itself has gotten mixed reviews.

Proposed plan: Dedicating $15 billion to refurbish foreclosed and vacant properties

As part of his jobs bill, President Obama would spend $15 billion to refurbish vacant and foreclosed homes or businesses, a way to help neighborhoods blighted by foreclosure while creating more construction jobs. Obama is pressing Congress to pass the bill quickly, but this seems unlikely to happen.

All talk of “underwater” mortgages is just subsidizing people who bought a house as an investment.  If it was a bad investment, it was a bad investment, and shouldn’t be on the government’s agenda.  The agenda should be keeping people in houses, not maintaining their selling prices.

Likewise, giving/selling foreclosed properties to developers is just handing taxpayer money to private industry.  If you’re going to dump them, why not dump them on the people who were kicked out for the same price unless we’re aiming for serfdom?

It seems to me that the cleanest approach is to actually require banks to prove their standing in each foreclosure case and that they’re taking action in good faith after trying to negotiate with their customer.

If the bank isn’t playing fairly, fine them and put the payments in an escrow account for the true lender if they come forward.  If nobody comes forward by the time the last payment is made, give the money to the local government, which would make the towns more willing to help their residents.

The fact that Washington is interested in lending support to customers who can’t pay their bills and banks who are abusing the courts is fascinating (or third-party developers), but it isn’t helping the people who can be helped and are trying to act in good faith.

I could also argue that the credit rating agencies should be eliminated for a variety of reasons, but too much relies on them now to just drop the idea without a replacement strategy.

Barry Schmittou

Oct. 7, 2011, 2:13 p.m.

Lois wrote :

“Mortgage servicers mishandled cases, made errors and lost documents, while government watchdogs looked on and did almost nothing.”

(1) There have been many commenters who wrote that they sent paperwork repeatedly and the mortgage servicers insisted they were not received. The DOJ will never research this so I hope ProPublica, Frontline and additional organizations will.

(2) Lois wrote :

“government watchdogs looked on and did almost nothing”

The following four examples prove this is standard treasonous operating procedure. This pattern increases the dangers to all citizens exponentially because we government regulators in all agencies are ignoring their profound duties !!

(a) ProPublica wrote these quotes about insurance companies destroying injured war zone contractors lives :

“Workers fought long battles for medical care, including such things as prosthetic devices and treatment for post-traumatic stress. The Labor Department seldom took action to enforce the law. One official called the system a “fiasco.”

“Labor officials can recommend cases for prosecution to the Justice Department–but have only done so once in the past two decades, according to Labor officials.”

(b) This quote about Federal government enforcement of U.S. health care laws was written by Joseph Belth, Professor Emeritus for Insurance at Indiana University :

“They’ve turned Erisa on its head,”  “It was supposed to protect employees, and it’s being used to protect insurers.”

John Marshall Law School Professor Mark Debofsky wrote:

“empirical evidence is now available that shows insurers operating under ERISA have systematically engaged in the wrongful denial of claims. Cases of abusive benefit denials involving other disability insurers abound. Unum turns out to have been a clumsy villain, but in the hands of subtler operators such misbehavior is much harder to detect.”

(end of quote)

I have presented all this evidence and much more to Obama and Bush’s DOL and DOJ Directors but they have done nothing !!

(c) Here’s a quote from WFAA’s Peabody Award winning series about Workers Comp :

“Several stories detail possible fraud or questionable actions practiced by at least several major insurance carriers, but ignored and unpunished by regulators. A remarkable number of Texans committed suicide because they could no longer endure the pain caused by their injuries and they had been repeatedly turned down for worker’s comp care. Some insurance companies send peer review doctors medical files “stripped” of records important to the possible approval of workers’ comp claims.”

WFAA also wrote the following regarding criminal prosecutions of insurance companies in Texas:

“the number of insurance companies referred since 2000? Zero.”

I personally challenged the Tennessee Bureau of Investigation’s Special Workers Comp Fraud Unit failure to post employer convictions on their press release web pages. Here is an exact quote from a letter I received from the T.B.I.‘s Karen Alexander :

” The other question that you asked is why there are only press releases on employees who have been prosecuted. So far, only employees have been successfully prosecuted.”

You can see many examples of Obama and Bush’ regulators protecting criminal acts, including Wachovia laundering $378 BILLION dollars of drug money for mass murdering Mexican Drug cartels by going to

He will pervail

Oct. 7, 2011, 3:36 p.m.

What ever program President Obama implemented to help the US it was assured to received oppositions.  But He as well as others knew the programs would have work.

Why blame the victim?  My 10-year old mortgage just recently went underwater with housing prices tanking to pre-purchase levels.  My difficulty is not speculation or bad judgment—it is the major stroke that fully disabled me just after the death of the mother for whose care I bought the house in the first place.  Now if I had chosen not to be born an only child, if I had stayed out West in a tenured job, or if I had chosen to let my 90+ mother die alone, I would indeed not be in this situation.  The mortgage payment is always paid, always has been, even if there isn’t enough left over to heat the house.  If the FHFA would allow FreddieMac to refinance my loan at today’s interest rates—no loss of principal, mind you—life would be easier.  But eager to take shots at those unlike him, self-righteous “John” would rather mock those who, despite careful planning and good judgment, find themselves at the bottom of the heap.  When did it become acceptable for such views as his to be noised about so freely?

Legislate to allow the underwater homeowner to walk away from her home and mortgage without spectre of an anti-deficiency judgment.  Then, allow her to get a new mortgage within a year or two by tweaking Transunion etc reporting.  No loans without 15% down.  Although the banks, Fannie and Freddy will take a hit, it’s coming eventually; take the hemlock and be done with it.

Thomas Lawler

Oct. 7, 2011, 4:34 p.m.

There are so many things here!
1.  The administration’s Making Home Affordable Program’s original estimate of how many homeowners would be “helped” assumed that most of the troubled borrowers owned their home and couldn’t pay because of the mortgage payment was “too high” relative to their income, and htat borrorwers would be more than happy to give servicers all of their financial information in order to show that was true.

Well, that just wasn’t the case.  A surprising and disturbing number of borrowers were unable or unwilling to give servicers all of their updated financial information—though whether servicers processed things right is open to question.  In addition, a suprisingly larger number of borrowers that were delinquent did not have abnormally higher mortgage debt to income ratios, but were still delinquent, and as such didn’t qualify for the HAMP—probably because they were really underwater.

2. Mortgage servicers have done a HORRIBLE job, circumventing state foreclosure laws and generally doing a terrible job.  However, a de minimus (miniscule) share of their “screwups” have been foreclosing on borrowers who actually had been paying their mortgages.  Losing or not being able to document clear title is a BFD, but in very few cases has the borrower actually not “defaulted,” defined as not paying his/her mortgage.

“While refinancing is good for homeowners, it means more risk for taxpayer-owned Fannie and Freddie, which own or guarantee 5 million mortgages that are higher than the value of the home.”

I’m not clear on why this is the case. It seems that lowering the monthly payment for the borrowers (it would be about $400 a month in my case), would be less risk for Fannie and Freddie. I’m far more likely to default without the refinance.

This problem is like it’s been handled by a “Christian” convention, where every denomination addresses his take and fails to consider all the roots of the problem and here lies the real cause.
First, some homeowners did abuse the system by trying to buy more than they could chew, but I don’t think that is the main cause of the foreclosures.  Second and according to finacial experts, one of the main reasons for this home foreclosure tsunami is, was the losing of jobs during the pervert retard coward from Texas through no fault of their own.  These owners made a mistake in their projections of the future and miscalculated, ergo, they are in part guilty for using rosy projections and not taking steps to secure a future when they failed to predict the seven years of famine.  They lived life like there was no tomorrow and tomorrow came yesterday for them.
Third and here the main reason for the foreclosure tsunami falls on the shoulders of the corrupt politicians, and corrupt corporations for playing monopoly with money that wasn’t theirs and that has to be a crime, no ifs, buts about it.
Banks received money at 0% interest just because they have given millions to our politicians, including the Obama administration, when this money should had been given to those owners that through no fault of their own and lost their jobs and I’m sure most of the problem should had been solved by now, but since common sense is Greek to the government, including congress and the courts, we continue on this path to destruction just because tea partiers, republicans ans some democrats want Bush the third, AKA Obama to have his Waterloo and this desire doesn’t have to do any thing with finances, but racism and that, unless acknowledged by the culprits, will never be solved.
But who is mostly responsible for the whole debacle?  We, the people who keep electing people cut with the same scissors over and over and expecting different results.  In other words and according to Einstein, we are a mad nation.  America could have elected a Dennis Kucinich, or Mike Gravel, or a Bernie Sanders, but and according to ex-senator Phil Graham form Texas, we are a nation of whiners and will rather whine than have bonanza years.  So, stop complaining, bitching and get out and support the take down Wall Street movement.  If we let this opportunity go by and not seize it, I’m sure a Tara plantation mentality is just around the corner, with an added bonus, it won’t be, this time, only blacks, but we the people.  You have been warned.

Instead of being held back by those who whine that some bankruptcies and foreclosures are “deserved” because those owners were trying to make a fast buck (Don’t make me laugh—isn’t that what the banks themselves were doing?? And isn’t that the reason banks used to entice everyone buying real estate?), why don’t we INSIST the banksters, WHO CAUSED THE BUBBLE IN THE FIRST PLACE, eat the consequences? Every mortgage in the country should be crammed down. It shouldn’t matter if the home owner is rich or poor, up to date on payments or about to be foreclosed upon—they screwed EVERYONE. I am up to date on my payments, but the value of my house has gone down 150k, so my mortgage now equals its value and I have no equity. A little more (and, trust me, we have NOT reached bottom!) and I’ll be wondering why I should keep paying them. I’d love to see them all go to jail, but it might be more satisfying to see them all go broke. Talk about jump-starting the economy!

Robert I. Laitres

Oct. 8, 2011, 7:55 p.m.

Is the problem the program itself or those that were relied upon to actually perform the tasks; i.e. the banks and finance companies? That to some of us is an extremely important point that, if any rational answer is to be obtained, must be looked into.  For, if there was/is wrong with what was the intent of the bill, the only thing that may have been missing were the procedures and monitoring of how the agents were performing with the funds.  If that is the case, then the solution is to rewrite that portion of the law or the regulations governing that performance.  Perhaps someone else can provide some insight on this issue.

I get the feeling that more than a few still want to lay the problems first and foremost at people who “bought too much house”.  Which is very sad, if that’s the case.  While my home is comfortable and livable, I doubt I could find one much cheaper that would pass a codes inspection and that wasn’t deep in the heart of the ghetto where you have to have bars on yours windows.

the house next door to me, after sitting on the market for a couple of years, just sold for $32,000.  Five years ago the previous owners paid $110,000.

Myself, I owe twice what i could get for it, I guess, going by what my neighbor’s house went for.

Laying all this on the little people just trying to get by is really annoying and disheartening.  From what I understand big businesses can walk away from property w/o much problem.  Not so the commoner.

And the banks and lenders steadfastly resisted any “cramdown” clauses.  No, the lenders who got a really good deal swindling people for years now object to trying to keep owners in their homes.  So rather than reduce the principal by ten or twenty thousand dollars they prefer to see it go into foreclosure and then pay someone with no investment in the house at all to take it over, giving them tax credits, etc. so that the home sells for much less than they would have gotten if they had worked with that deadbeat borrower they are so convinced caused all this and is now trying to pull a fast one?

@John…..My home is “underwater” and I did not buy it for an investment.  I bought it for a place to live in and I did for many years.  Now the economy is shot to hell, the neighborhood is getting dangerous and I’m stuck here or else walk away”.

How were my neighbors who bought the house next door six years or so ago for $110,000 know that in five years it would go for $32,000?

My home equity loan turns out to have been a huge mistake on my part but I figured if my neighbors paid $110,000 for their house and mine was in as good or better shape it would be worth that too so I felt okay getting a loan whereby I’d still have at least $30,000 equity?

I’m not sure how any of us should have known this.

Lots of empty houses now, the one behind me has been empty several years and someone broke in to do what I don’t know, its empty.  My house was broken into last summer and the one next door to me was broken into the 2nd time in five years about 2 months ago.

Happy days are here again!

Dear God:  I don’t know if you’re a Christan, a Muslim, or a Jew.  Or a Buddhist (they make better lovers), a Shintoist, or a Nihilist.

But please, God…make anybody who reads this link think, for a change…$440 billion, “created” the command of a Republican President.

If you can’t put the clues together…you, the voter…you, the American…you the patriot…if you cannot read this speech and see the launch of the mortgage-backed securities pyramid scam…

Well, our kids are screwed because you are stupid.  Read it for yourself:

You have to add your own http.

While I was reviewing my latest example of “Duh.” - it occured to me “they make better lovers” was either arrogant or congratulatory.

I dunno…one or the other.  “In my experience”, women who practice Buddhism are into that most basic of all human relationships: “Love me, and I will love you.”

Is probably too complex for Western civilization.

I am getting seriously tired of Boehner, Cantor, and the other nazis messing my country up.

If anybody has a reason why I shouldn’t launch the game (to include the U.S. version of Wikileaks….of which McClatchy has a tepid translation….to which all is can say is….man…wealthy people are arrogant) speak now.

It is remotely possible that I won’t click “Send to the Hague”.

<—is bluffing.

Trust him.  Is what AFQTs of 98+ across all batteries do.  Make stuff up.

Me personally, I liked those other tests better…more creative.  And they added a unique spin to my Army life: My very first day in the Army, I was threatened with courts-martial and pummeled into the ground by MPs.

lollll…appears nobody was supposed to score that high - and if they did, they were “obviously” cheating.

Ever since, I been bending the wicket with high-end computer time…so far, I’ve not been wrong.

Wonder if I’ll be wrong in my prediction that, once the right and the neoliberals have destroyed enough of America’s economy, they’ll start charging us steakhouse prices for bologna food?

Beg yer forgiveness for yammering.  Is either gong to be a massive earthquake, or a stupid political decision.

Itches like that.  If its an earthquake, is…oh..either LA or Haiti.

lollll…bogus..wherever Ma Nature wants it, is where.

Deer Headlights:

Yes, I’m making stuff up.

But on the legitimate side…are you swear to God you cannot find a regulator with the ballz to tell JPM or whoever their “right to profit” is bounded by the interests of the American people and the United States of America?

And if they don’t like it, they should say their “right to profit” trumps America on national TV?  And GTFO of America?  Go hang with the other totalitarians in commie China, where their arrogance is more appropriate?

lollll…i’m getting hungry…and my platoon/company/battalion/brigade/army sez bankers are on the menu.

Sigh…here I am:  Either ‘lert NORAD and send ‘em into war, or wait for the Republicans and the neoliberal Democrats to finish the destruction of our manufacturing capacity…’

Must be OK to let America collapse, or all of those four-star generals wouldn’t be token Corporate Americans and lobbyists.

lollll..although I haven’t been paying attention:  Is there any chance West Point is called “Sam’s Club” now?

Step 1. Allow a 125%, low interest mortgage based on nothing but no past due payments in the last 36 months. These are the people that will find a way to pay their debts.
These are the people who have ran up credit card debt, exhausted their savings plan and cut back on everything vacations to healthcare.
Come he’ll or high water these people will find a way to pay their debts. This will add about 10 million people to enter the housing market.
Step 2. New walk-away program. Allow any homeowner to walk away from an underwater mortgage without any credit consequence whatsoever. This will force banks to do principle reductions, etc. And this will allow another 10 million people to enter the housing market.
With this many new potential home buyers in the market we will see home values start to improve.


Martha Semprini

Oct. 10, 2011, 7:51 a.m.

As long as Tim Geithner is attached to the White House, like a curly-haired tick, then don’t expect any kind of financial reforms or accountability from the Obama Administration.  Geithner’s real job is to make sure that doesn’t happen and he’s very good at it.

Bel, I’m not blaming you for anything, but you make most of my point for me in that your problems are NOT because your house can’t be sold for the purchase price.  Call me sanctimonious if you want, but you’re the one suggesting that investors be bailed out because it’ll help you collaterally.

Anne, sort of the same thing.  I sympathize and think something should be done to help you, but I’d rather the neighborhoods get cleaned up than people get paid to leave their homes, don’t you?  Wouldn’t you rather live in a world where a clean-cut family can afford to move in next door than be reimbursed for what you call a bad decision?

This is why I’m adamant about the banks proving they’ve worked to solve the problem before bringing in the courts.  If the burden of proof is on the banks and if it’s high, they’ll help someone like Bel out and they’ll make sure your neighborhood doesn’t become a cesspool, because it’s cheaper than proving you’re somehow at fault.

That will help the people that need help.  It won’t help the people and companies that have abused the system.  That’s an important balance unless we’re hoping for another government-sanctioned bubble for Wall Street to exploit.

The Banks created a Servicing arm to robo sign documents as to ownership…Illegal and onerous.  It became less costly to foreclose than service the mortgages!

The Banks told Homeowners that they. could do a work out…not to pay their payments while doing the workout ...then used the non payments to foreclose!

The CDS and MBS were packaged so that no ownership could be proved with considerable cost!

The ‘Street’ has basterdazied the whole industry allowed by the repeal of Glass Stegeall Act…by the Congress repub and bclinton!

Banks tried to take advantage of Homeowners by high interest rates,penaltys for late payments and not accepting partial payments and telling the Homeowners that to get help in modifacations they had to fall behind so many months,meanwhile they were making arrangements to Foreclose on them anyway.The Banks should go down with the Sinking Ship that they put holes in as well as they let the Homeowners down also.And because of ALL the Foreclosers around the Country,Home values have drop to the point of Underwater Homes.So to nipp it in the bud(shall I say) Banks started a down whirl affect on Housing and its future values,which is know crumbled in wreckage.

They really need to hold these people accountable for their practices! Either they fix what they already screwed up or take back all the money We as Americans gave them and send them to jail. This is outright theft. To ignore me since Sept 2010 with only two months behind on a home I have own for 13yrs and then hit me with 20K in late fees and penalties is an outright crime when Bank of America told me to let myself get a little more behind.And they screwed me. I total them I would pay the late mortgage payment and I could have but they would not work with me. My mortgage is $1,282.86 Principal 125.00 Interest 930.00 7.25% 356.86 in property taxes. Went through HAMP with the promise all negative reporting for the mortgage would stop since I applied for a mod. My credit is ruined.  If they locked up Bernie Madoff they should lock up the rest. I have no idea how these people sleep at night or look at themselves in the mirror in their million dollar + homes!!!

Going “back to the drawing board” means admitting that ALL subprime is UNSECURED DEBT—-fabricated collection rights—-fraudulently obtained:


ANONYMOUS, on October 12, 2011 at 5:31 am said:

“First, derivatives are not securities and not bonds — they are contracts that are derived from the mezzanine (credit enhancement) lower tranches in “pooled” structuring – and protection on top pass-through tranches.
Second, the upper tranche “security investors” were already paid “investment” back by credit default swap protection.
Third, the percentage value of lower tranches investment was significantly lower than the total “pool” investment. In subprime (and Freddie/Fannie also purchased subprime securities), these bottom tranches were sold first with the banks (security underwriters) retaining the upper “security” tranches. Since these bottom tranches did not have direct swap protection — but rather provided swap enhancement — it is these lower tranche holders (including residual tranche) that guarantee purchase of default loans by removal of the defaults from the trusts.
Fourth, since the distressed debt buyers could not perform obligation due to mass default and, therefore could not purchase defaults by derivative contract obligation — government also had to bail-out the contract facilitators — including AIG (who in turn sold their contracts elsewhere).
Fifth, government intention when they purchased derivatives and remnant securities was to take off banks books (they were also derivative contract holders– who likely purchased “loans” from originator to begin with) because securities and derivatives on banks books had become worthless due to collapsed value of the “assets” that supported the securities and derivatives. Government’s goal was to repackage these worthless securities and derivatives into one big Trust — and sell off to new distressed debt buyers — which is what has been done.
Sixth, security investor law suits are primarily about lost income investment — that is they cannot find “alternative” investments that pay the same usury rates.
Problem with all of this — is that securities never transferred “collection rights” to loans (and that is what subprime was — fabricated collection rights). Securities can only be current cash pass-through — that is all securities can do. But, derivatives can transfer collection rights. Because derivatives are NOT securities but rather a “contract” that can sell/assign collection rights. So, as stated above, the “bank” that purchased loans from originators — were also likely derivative contract owner — assuring that the bank would make money on falsified securities – AND — retain the false collection rights by derivative contract (until they dispose of collection rights elsewhere by sale of contract –or direct sale).
Foreclosure attorneys try to attach derivatives (ownership not disclosed due to deregulation) — to the securities trust — this is false since derivatives are not part of the trust –and not a security — they are DERIVED.
Finally, just try to figure out who owns collection rights today given the above — it is impossible. But, IT IS NOT the party standing before you — or in court — claiming the right to foreclose.
Security investors — get over it — you are not going to make 14% interest for a very long time.
Derivative contract “investors” — you are being allowed to hugely profit by fraudulent foreclosures. Government is protecting your “investment” — but can only do this if courts accept the fraud of a faceless creditor stealing your home — and making a huge profit on it – especially if sold by the bank. Servicers also cover for you. But, there can be no future “secondary market” if fraud now is not brought to surface. And, economy cannot grow without a healthy housing market.
Government and Congress — admit and fix your mistakes — you allowed.all to happen — by deregulation.
Subprime refinance homeowners — you were put in false default before you ever even actually defaulted. “Mortgage” contract was not a valid contract — all securities and derivatives — a “sham” to start with. The only party still not being helped is the victim and “targeted” homeowners.”






please join the fight—-sign the petition to get money out of politics:

thank you.

I like the choice of “floundering” in the caption for the article. For a candidate for president that held out as much promise as many of us believed, President Obama has floundered. He could have chosen to continue to lead the parade, riding the crest of his election victory and holding on to the hope of change and his base would have enthusiastically followed and had his back. Instead out of the box he appointed numerous recycled beltway insiders to key cabinet posts with unquestionable loyalties to Wall Street and the Obama followers started to cry foul and the enthusiastic ranks started to thin. He clearly dropped the ball on health care reform never even taking possession as the presumed quarterback. His initial stimulus package though large was largely misguided as it was filled with pork.

Now we have the foreclosure problem which is only getting worse by the day. I have hopes that the 99% movement continues to gain momentum and demands that Obama and the Congress take specific actions other than the ones only to shore up misguided bankers and the wealthy. We saw results with the gay and lesbian groups relentless pursuit of the revocation of “don’t ask, don’t tell”. Politicians don’t respond unless we are collectively pounding on the table.

Barry Schmittou

Oct. 13, 2011, 1:54 p.m.

Steve I agree with everything you said except I think Obama, Bush and Clinton have been very intentional in their failures, and big money causes their pattern of psychopathic injustices.

(For examples of Obama and Bush’ regulators protecting criminal acts, including Wachovia laundering $378 BILLION dollars of drug money for mass murdering Mexican Drug cartels by pasting )

I feel strongly that Obama and Bush are so evil they must be the wickedness in high places mentioned in Ephesians 6:12

If their evil is not Biblical I am certain they are still very evil.

We all have our own perceptions, but if anyone tries really hard to imagine that your life and many families lives are being destroyed by these open violations of law, I believe you will understand this is all very evil … while at the same time Obama and Bush act like they are great spiritual leaders and both have led prayers on TV.

I am not sure if the author reads these comments…  There are a number to get through with more heat than light, so I can’t blame her if she doesn’t get down this far.

For the patient souls that do read this, I hope you take a look at what we are doing here at HomeLiberty.  We have worked hard to create a program that is fair to the lenders, but that allows honest homeowners to force principal reduction when the banks are unwilling to do so.

In the analysis of the government programs, what remains unemphasized is that these programs do not address the fundamental problem,  If you believe the problem facing the US residential housing market is Negative Equity (the 6 million families that the author identifies at the start of the article), then your solution should target the negative equity.

If you believe the problem is excessive foreclosures driving down home values, then you would do something to prevent foreclosures (or even worse to prop up home values).  I don’t believe the problem is excessive foreclosures, and I question whether a foreclosure that is required can be prevented.  If it is only being postponed, I can’t think of anything more cruel.  It would be like a surgeon hesitating to amputate a gangrenous limb because of the agony and disfigurement the operation causes.  The longer an inevitable foreclosure is postponed, the more pain the family endures, the longer home prices do not recover, and the more likely the family cannot recover in the end.

Foreclosure is not a bad thing in and of itself.  It is a means (*the* means) for a lender and borrower to unwind an agreement when they cannot find a mutually agreeable compromise.  In the same way that bankruptcy is preferable to debtors prison or indentured servitude, foreclosure is far better than keeping the very best economic players locked into a severely underwater loan throwing away their family’s financial future and dragging the US economy towards recession or even economic depression.

Banks will not forgive principal until there is a market pressure to do so.  HomeLiberty is dedicated to creating that free market pressure, and we hope to save a number of homes for good families along the way.

Mark Moore, CEO
HomeLiberty, Inc.

How do you decide who is a deadbeat and who is collateral damage?

“The fact that Washington is interested in lending support to customers who can’t pay their bills and banks who are abusing the courts is fascinating (or third-party developers), but it isn’t helping the people who can be helped and are trying to act in good faith.”

It seems to me that a big part of the problem is that, absent a few disciplines “for show” the majority of the liars/cheaters/perpetrators of fraud in the financial industry (and their legal bozo’s who aided them) who got caught OR SHOULD HAVE GOTTEN CAUGHT with fraudulent intentions and slight of hand were not disciplined.  They were told to go away, basically, and come back when they had more convincing fraudulent documents, a better forgery perhaps?  The banks got theirs and got us and they are still living high on the hog.  It is interesting to note their being in a huff about possible changes to the fees banks can collect for debit card usage.  Let anything at all negative happen in “their world” and the world vibrates with their resonating voices of indignation (while they run for their checkbooks to buy another senator or congressman or two). 

In my own case, my home is now worth $14,000 less than I bought it for in 1993 ($43,000).  I arrive at that figure based in large part on the selling price this past spring of the house next door which is mostly equivalent to mine (I do have to say my landscaping efforts results were such that the yard of the recently purchased property next to me is pathetic compared to mine - in fact there is no landscaping unless you want to count pernicious huge weeds as landscaping).  So now, having invested much time and labor in making my garden very attractive - after adding a new roof, new gutters, many repairs, a new furnace - after all this time my house is worth much less than what I bought it for.    So having a home equity loan with a current balance of $67,000 I can either continue to pay for years and years just to get “even” never mind upside down and do so in a neighborhood which grows increasingly unsafe - I have to drive for miles to find a decent market to shop where you can actually hope to find all the things on your list - and it is depressing to say the least.  I live on fixed income so there is no increase on the horizon - prices go up and my COLA disappeared thanks to greedy but self-serving Congress.

I think increasingly of just walking away.  Leave the keys under the front stoop and head for the hills or at least for someplace without roving gangs of miscreant thugs searching for their next home invasion candidate.

The banks rumbled at talk of cram down possibilities in bankruptcy.  They have fought like hell to avoid making any modifications to homes and those they do are of questionable benefit and certainly no reduction in principal (even though I’m constantly beset with whiners about home mods where people are getting their homes practically given to them in return for being lousy homeowners).  So many people out of necessity or desperation or just “whatever” have left empty homes dot the landscape.  Now there is a new program afoot to give financial assistance/breaks etc to the “new owners” and I have to wonder at why they were unwilling to help the previous owners and save a lot of domino shuffling.

It is discouraging.  And I mostly see that we, the little people, are still pawns in a rich man’s game.  My time is running out to (lol) make my fortune.  I hang on - surviving - trying to find a way to take care of my medical needs on what little is left after all the price increases and so forth.

I don’t hold out much hope.  With the current Buy/Rent a Congressman plan there isn’t much on the horizon that’s encouraging.  I am shifting directions.  I now am much less willing to do anything other than what is absolutely necessary to my home.  I’m trying to think up a “getaway” plan.  How do I find a place to live with my credit shot to hell?  How do I just leave this place I invested my time and myself and my dreams in and which has a little pet cemetery where five of my precious pets are buried - who will know they are there?  What if their little graves are disturbed by the new owner?  Different directions - trying to organize things with an eye toward eventually just leaving probably.  A significant portion of my dissatisfaction is that taxes on this almost worthless property continue to rise along with costs - water is twice what it used to be - the cities infrastructure is in need of repair and somebody has to pay.

I’m not in a happy frame of mind the past few years.  My “Golden Years” are more like tarnished scrap metal than anything approaching gold I’m afraid.

I would like to say that I do not feel I am guilty, as one commenter suggested of making plans based on “rosy projections”.  What I am is someone who did not plan/foresee that the banking industry et al were about to become the equivalent of highway robbers, feudal land barons while I became relegated to the status of peasant/sharecropper.

I think buying a house in 1993 for $43,000 and which is now worth about 30 percent less than that about 20 years later - it would be hard to accuse me of buying too much house.  Accuse me of being an idiot if you like, but please don’t suggest I had grandiose ideas.  I based my “plans” on what I knew - that people bought homes that increased in value over the years.  I DID NOT see this coming and I have lots of company.  I have a simple little ranch house with 3 small bedrooms and a basement and a lovely covered patio I added on with lots of nice flowers and shrubbery in a quaint up and coming seedy neighborhood where locks on the doors don’t mean much as they can easily be kicked in.

Fallacious concept, holding that Obama should be prosecuting this, that, or the other individual.  You have to be able to point to a prosecutable crime before you can haul somebody/some entity into court.

The great (and equally unprosecutable) crime committed by the Republicans and neoliberal Democrats was in enacting “deregulation”.  That changed the rules to “If it is not illegal, you can do it.”  Banking and Wall Street were freed to dream up any old scam as long as they took care to ensure that there was no current law or regulation prohibiting that particular scam.

What they do is intentionally made complex to ensure that it does not fall into a proscribed area; hence why they are forever telling Congress and the American people “It is too complex for you to understand.”

Regulating what the banks and Wall Street are doing post-deregulation is a dead-end; they can forever dream up new and complex transactions and financial instruments that fall outside of current regulations.  For that reason, expecting Congress and the regulatory agencies to keep up with them is silly. 

When you throw in the fact that banking and Wall Street own major positions in all of the Republicans and too many of the Democrats in Congress, then expecting the Federal government to create laws and regulations at the pace required to stay ahead of thousands of bankers, accountants, and lawyers focused solely upon evading existing law with creative transactions and financial instruments approaches insanity.

If America wants to stop banking and Wall Street’s vicious assault upon America’s soft financial underbelly, then America must tell banking and Wall Street what they can do.

I.e., “You can do this, and no more.”

lolll…more succinctly:  “Time for a paradigm shift.”

PLEASE PLEASE fight back, people—-don’t let the shysters steal any more homes!!!

ALL of the banksters are LYING.

ALL SUBPRIME is unsecured debt…only collection rights transferred…no actual “funding” (like in the old days before de-regulation), only receivables securitized—-MASSIVE PONZI SCHEME…government has blood on their hands and doesn’t want you to know the whole truth—-hence “letting” foreclosures go through…FIGHT BACK!!!
DEMAND that they show you an actual LEDGER with a BALANCE SHEET showing that your monthly payments have been going to an ACTUAL “MORTGAGE”...not just a SERVICER/DEBTCOLLECTOR!!!

Guess what—-big surprise—-they can’t show you this because they don’t have it…because they DIDN’T DO IT.

The cover-upis massive…ALL MODIFICATIONS OF FALSE DEFAULT DEBT IS A SCAM…just perpetuating the fraud…getting you to ‘sign your rights away” with a new contract before you figure out what the scam is…


check out for more info.

Also from ANONYMOUS on

“...The only way to prove not owned by any trust — is by production of the cash ledgers maintained by servicers and trustees. If servicer did not advance payments to trustees on behalf of “default” loan borrower, trust and trustee is entitled to nothing. Ledgers are the key. Unilaterally, servicers cease advancing payments before 180 days. At that time — swap out of “collection rights” occurs. No security transferred — the security is dead.
Government decided to let victims fall — no concern for fraud upon courts. No concern for fraud in “mortgage” origination, no concern for unidentified current “creditors”, no concern that homeowners have been denied right to directly confront their current creditor, no concern to divulge derivative swap holders, no concern that victims may not be heard in court, no concern that deregulation has prevented constitutional right to be heard.
And, the fraudsters know they have government backing. Congress granted that right by The Gramm–Leach–Bliley Act (GLB), also known as the Financial Services Modernization Act of 1999, which was signed into law by President Bill Clinton and it repealed part of the Glass–Steagall Act of 1933. The Glass–Steagall Act prohibited any one institution from acting as any combination of an INVESTMENT bank, a COMMERCIAL bank, and an INSURANCE company. Congress said — “we do not care” — we repeal.
Insurance, insurance, insurance — many avenues of fraud. And, why was this done??? Because Congress gave away US industrial manufacturing and needed to support the economy by SPENDING (and who went out to eat at restaurant franchise tonight??). Financial services provided that avenue. Fed. Res. further promoted by keeping interest rates low to provide a fertile ground for home equity extortion fraud — to keep consumption going — as that is all the US had left. Who influenced Congress to make these decisions??? CEO lobbyists — American HOMEOWNERS were their ticket to wealth.
And, this is what protesters are protesting. Media clueless.”

This article is part of an ongoing investigation:
Foreclosure Crisis

Foreclosure Crisis: Banks and Government Fail Homeowners

Banks and the government have fallen short in helping homeowners in danger of foreclosure.

The Story So Far

Systemic failures at the country’s banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.

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