Journalism in the Public Interest

Can Turning Foreclosures Into Rental Properties Save the Housing Market?


(Mark Ralston/AFP/Getty Images)

Earlier this week, the federal government put out a request for ideas on how to transform some of the roughly 250,000 government-owned foreclosed homes into rental properties.

The goal is to create more options in an increasingly expensive rental market, while dealing with the glut of foreclosed homes dragging down the housing market.

In the first six months of this year, more than 1 million properties had foreclosure filings against them. About 800,000 foreclosed properties are owned by banks, and roughly a third of those belong to the federal government through Fannie Mae and Freddie Mac and the Federal Housing Administration.

About 20 percent of those 800,000 properties are on the market, according to RealtyTrac, a foreclosure data service. Each month, 50,000 to 60,000 foreclosed properties are sold, according to RealtyTrac, but a slightly higher number are added to the market. In other words, sales aren't making a dent in the total inventory of foreclosed homes, and in high-foreclosure-areas, empty houses are doing damage to neighborhood property values.

Meanwhile, according to a recent Harvard study, 10 million Americans are paying more than 50 percent of their income in rent.

The government is looking for win-win solutions for taxpayers, renters, investors and neighborhoods, but there's plenty of skepticism about the foreclosure-to-rental concept.

Here's our guide to some potential problems with the idea

and responses from an economist who supports the program.

Problem 1: If this is a good idea, why isn't it being done already?

The government is looking to investors who might want to buy foreclosed homes in bulk and transform them into rental properties. But, as blogger Kevin Drum of Mother Jones asked, if the plan were profitable, wouldn't investors be doing it already?

One answer: The government doesn't make this process easy or cost-efficient for investors but is looking for ways to do so. Enabling bulk sales of government-owned, foreclosed homes, which is not currently standard practice, would be one incentive for investors. Providing bulk-price discounts would likely be another. The government's call for ideas is an opportunity for investors to lay out exactly what incentives would make the foreclosure-to-rental plan attractive.

One real-estate investor from Phoenix told the Wall Street Journal that a crucial incentive for small businesses would be better access to loans that would allow them to take out multiple mortgages at the same time.

Problem 2: If investors benefit from the deal, taxpayers lose?

Government-owned properties are ultimately owned by taxpayers, so if the government gets a low price for homes in foreclosure-to-rental deals, taxpayers ultimately lose out.

Because foreclosed homes are selling steadily in one-off deals, real-estate executive Richard Smith called the foreclosure-to-rental plan "the stupidest idea I've ever heard in my life."

"Foreclosed homes sold by government entities are already providing the taxpayer with a pretty lousy return," economist Jared Bernstein, a former member of President Obama's economic team and a proponent of the foreclosure-to-rental idea, said in a phone interview. "Will that return get lousier? It probably will."

But economists argue that the booming market in foreclosures is having a negative impact on the housing market in general.

The Wall Street Journal's Nick Timiraos explained how this process works:

You agree to pay $200,000 for my house. You are making a 20% down payment and are approved for a $160,000 mortgage. But a vacant, shabbier house down the street just sold for $150,000 to an investor in a foreclosure. When an appraiser tells the bank how much my home is worth, they use that foreclosure as a "comparable" sale and tell the bank that my house is only worth $150,000. Now, to sell my house, I'll either have to lower my price, or you'll need to double your down payment.

Foreclosed homes "may be selling like hotcakes," but "that's contributing to lower prices, and that in itself is actually a non-trivial cost to taxpayers," Bernstein argued. Because government agenciesand thus taxpayersown a giant pool of mortgages, it's in their interest to stabilize the housing market, rather than allowing home prices to spiral downward and releasing more and more foreclosed houses onto the market.

It's a tradeoff, Bernstein said. "You're selling a bunch of foreclosed properties for less than you otherwise would if you sold them as one-offs, but you're ultimately reducing your credit risk with your outstanding properties."

Problem 3: Can investors be trusted to maintain rental properties across the United States?

Even if the government finds investors willing to buy up big chunks of foreclosed properties to transform into rentals, or invest in a joint effort with the government to do so, there's some concern that the process could lead to whole neighborhoods of shoddily maintained rental properties.

Richard Smith, the same real-estate executive who expressed skepticism about the value of renting rather than selling foreclosed homes, told the Wall Street Journal that investors in a bulk-rental plan would face the daunting expense of managing rental properties in many areas of the country.

"The hedge-fund approach to this is a pipe dream. It's not going to happen," he told the Journal. "The marketplace would much prefer that these go to small investors who manage them in their own backyard."

Regarding the problem that "investors buying foreclosed properties in bulk make lousy landlords," Bernstein wrote on his blog, "It's a valid concern, but there's a policy wrinkle in the FHFA/admin's plan that should help: the proposalthe RFI noted aboveshould include requirements regarding property management and the Feds should reject proposals that aren't convincing in that regard."

The bottom line:

It's true that the government doesn't have a great track record in dealing with foreclosures. But Bernstein called it a "nothing-ventured-nothing-gained" situation.

"If it doesn't work, it's not going to hurt the budget. It just means that another idea didn't work," he said.

"At some level, the worst that can happen is this is another underwhelming government housing program."

Or…we can realize that the housing market is tanking because the houses are too expensive.  Let the market settle, let the “real estate always goes up” people take a hit, and then we existing renters will buy the houses at reasonable rates.

Subprime mortgages aside, if a house cost half what people were buying them for, they would’ve made the payments.  Half a million bucks for a small two bedroom house is “normal” by me.  That’s not healthy.

As a sidenote, when the subprime mortgages started flowing, it was suggested by many that the purpose of the program was to turn us from a society of property owners to a society of tenants.  I’m not saying this is intentional, but the solidity of the prediction is pretty impressive, especially alongside calls for us to do our computing on “cloud” mainframes and urges for us to drive shared automobiles because “they’re usually idle.”

The homeowner spend years trying to lower their mortgage payment (I’m still trying after two years). The banks refuse to help. The banks do a short sale to an investor at a massive loss on the loan. The investor turns around and rents the property to the original owner for the same amount as the owner would have paid if the bank had been helpful in the first place. Seems backwards to me.

There’s a group in Boston buying distressed homes and selling them back to the original owners at lower interest rates & lower value.

If we can not afford the mortgage how can we afford the rent?
We can not pay either way without jobs.
My home i bought as a major handyman speical and both of our vehicles have over one hundred thousand miles on them.I was raised by the ww2 generation and was always tought to live within my means.
But after being out of work for two and a half years my home will be going into foreclosure soon this after i broke my butt for seven years fixing our home up and this my wifes first home.All this for doing the right thing by becoming a whistleblower and thinking OSHA had my back! I will be damed if i leave this house in the condition it is in now, im shure the new owners would not like our taste so ill start the demo for them!
Im tired and if they lock me up for it so be it atleast i will have medical coverage in there and three meals a day.
Gregg S

Fred Donaldson

Aug. 12, 2011, 3:31 p.m.

Gregg represents millions of Americans who have been raped by the elites, our rich masters and lords,  who hate working people, love money, send other people to war, and deserve another French Revolution.

Robert Proctor

Aug. 12, 2011, 3:35 p.m.

Scattered site rental property management in a troubled market is a difficult task for a seasoned property manager. Even with favorable financing provided the long term prospect of maintaining occupancy levels that will allow the investor to meet their obligations is problematic. Many CDC’s with all the help in the world available to them have not been able to make this work. Avoid a “Gold Rush” mentality and go with capable people with deep reserves of patience, time and money.

Promote owners that have “underwater” mortgages give the loan/mortgage back to the lenders.  Then lease that same property back at preferable rates, possibly along with an option to buy that can be exercised in the future.  This will add incentive to maintain property as they will have vested interest in it’s raising value.

Mortgage owners (likely a conglomeration of loans that are part of a bond) would turn their mortgage backed investment into an evolution of a REIT.  I don’t understand the details of tax consequence for this but whatever it is should be solvable with changes in the law to allow such as this.  They will still receive cash flow (rental income vs. mortgage payment), still retain the asset which can be later sold when and if the market returns. 

There would be clear incentives to maintain their asset (can be made to be loan service firm requirement to either provide or oversee) and this would spark emergence of maintenance and management of rental properties small businesses.  They would be low cost to entry, low overhead enterprises primarily abor , and in turn help with unemployment. 

Voila!  Everyone wins.  The “debt overhead” gets relieved on a major scale, communities stabilized, real estate hopefully finds it’s floor as the old ratio of rental v. ownership would come back into play.  What’s not to like?

Let’s face it folks, we are being raped. The future of the world is steeped in a form of government that boasts less ownership of everything. This is no mistake, what is being done. It’s just a continuation of the plunder and pillaging of the American people, ergo the American Dream.

I have similar thoughts to Mike.  Create a lease/buy option for someone to get in.  Perhaps qualify after a given amount of time.

I was proactive - knowing a had a 5 yr interest-only loan, and contacted my bank for a mod.  That was in 2009.  I am retired, disabledy, Navy, and want to keep my home, but I can’t at the current market.  It’s puzzling how the banks will foreclose and short sale but won’t revamp the owner’s mortgage.  I guess they get paid to service the loan so it doesn’t matter…...

I asked my “servicer” to prove assignment on my house and they couldn’t answer (like repo the car without a pink slip), so I’ve got an attorney and moving forward with a lawsuit.  Wish me luck.

why, not rent them?..Just apply differant rules( yep, more goverment) .
but what the heck, better than leaving some home empty to be raped by thieves. Take a family out from under a bridge..Put some people back to work in some form.
works, great, doesn’t, what the heck differance in the end does it make?

J. Steven Livacich

Aug. 12, 2011, 4:32 p.m.

It should be noted that the book titled the Two Income Trap, by a Harvard University family economist found that more children had one or more parental figures that had been through bankruptcy in 2003—than had been through divorce. This portended a debt crisis prior to the 2004 elections.
Furthermore, the major cause was the lack of affordable housing in areas with academically efficient and safe schools—rather than the the “Mac Mansion” large home itself (although that was almost all that has been built—in many instances and areas).  A high number of people over-reached to obtain good education possibilities for their children, rather than expensive homes, or large real estate returns and tax sheltered housing for themselves.
This suggested that the current crises was to come much as it has, and that also, no return to previous housing price levels are likely for the near future, for there are not enough probable home purchasers to sustain the previous market level—and current market prices devalue the remaining occupied housing.  Yet with homelessness unabated in the past thirty years,  actual need for inhabitable dwellings remains high as market falls; having had its prices inflated by the Bush era tax cuts.

No.  Why turn more housing over to the investment and real estate markets when they caused much of this problem?  I think the government should partner with a group like Habitat for Humanity and help people, maybe even previous owners, rehabilitate the properties with partial sweat equity, low interest materials loans, and low interst mortgates.  There are so many homeless and high-rent people who were adversely affected by the housing crisis that we should help them get reestablished as home owners.  This would not be a handout, but a leg up, much like the FHA 236 program of years ago.  It would help salvage and reinvigorate communities to have home owners instead of absentee or uncaring landlords.  I see this as America’s big chance to level the playing field and get stability back.

joyce Cauthen

Aug. 12, 2011, 4:38 p.m.

Will someone from ProPublica give me a call so I can explain to l them how the housing crisis can be remedied and asap and why they need to pass it on.  This is ridiculous.

Joyce Cauthen

Aug. 12, 2011, 4:41 p.m.

Send a contact number to me so I can return your call.  This has gone on long enough.  .(JavaScript must be enabled to view this email address)

I have a comprehensive knowledge of the mortgage industry and do not believe in the government getting involved or using tax payer money to clean this mess up.

Thank you for your consideration

Joyce Cauthen

Aug. 12, 2011, 5:03 p.m.

The american taxpayer should not stand for this ridiculous idea.  The investors are attempting to cut deals with the government and the banks to sell in bulk .  We have had just about enough of this foolishness.  The taxpayers are not going to have to pay again and again and again.  Will someone please call me so we can put the expense of these homes back on the backs of the banks where it belongs.  How dare the feds announce -  well the people own these reos.  I don’t think the feds had the right to negotaite a sale of these homes using taxpayer money.

Let’s talk once and for all.

.(JavaScript must be enabled to view this email address)

Go get ‘em Joyce. Enough is enough. Someone needs to listen…then impliment plans that will not involve taxpayers taking the brunt of it AGAIN! The banks were made whole with our money (TARP) and all the backdoor “Monopoly” money from the FED. Pau already!

@Joyce-The staff at Propublica has most likely gone home for the weekend. I’d take the weekend to put things together and give Paul Kiel (reporter who has worked on many articles in here and is very knowlegeable) or Paul Steiger who is the CEO and main person in charge. Nonetheless their contact # is (212) 514-5250. Enjoy YOUR weekend. p.s. if you were curious “pau” means-finished,done or stop in Hawaii.

I have to thank Pro Publica for their continued coverage of this crisis.

There’s a non-profit group called Boston Community Capital who is buying distressed properties in Massachusetts, then selling them back to the owners at a significant discount. In one instance, covered by the Boston Globe in 2009, the group saved a family $1,000 a month in mortgage payments and in turn allowed them to remain in their home. I’m not sure how it’s better to transfer the property to a third party who would then behave as a landlord (who may or may not take care of the property).

Here’s a clip on YouTube from PBS Newshour:

sign! Oh my gosh!
Didn’t think i would ever do this but ok…
The reason for a comment site is to most your comments. not to search for a way to personally attack a media source for relaying, or asking , or stating an opinion good,bad or against everything you believe in!
Drop the site, become a reporter/ commentator yourself or just post your thoughts and let it go at that but don’t attack the mail person..
opps, another touchy subject unto it’ self..
thankyou for reading.

Joyce Cauthen

Aug. 12, 2011, 8:32 p.m.

Non profits made up of realtors who have a real interest in selling these properties -  Where did the Boston Community Non profit get their money to purchase the homes to sell back to the individuals.  Some monies had to flow back to the banks in order for the non profit to get possession of them which means, the taxpayer is once again involved I do believe.  I wanted to see the general ledgers on each house after the sale agreements were executed between the non profit and the bank -  what was the price of that home.  If they purchased it from the bank at the same price, plus realtor commission and some closing cost, then great!!!  Not even sure I am happy about that, but if they purchased it for 75 to 80 cents plus on the dollar from the bank, I am not going to be a happy camper -  looks like the taxpayer got snookerd again.  I would like as others, to know how the baks were paid for the homes which the non profit Boston purchased them for.  Nothing wrong with that, but we have to know.

That is a cost that must be absorbed by the bank and if not, then the scam goes on.

Usually the non profits do not want to answer my question and when I call, I am very very nice.  Just asking a few questions, what is wrong with that.  REaltors are generating income for themselves.  I even believe that the investors buying from the banks on a bulk sale basis, is or could be an issue as well. 

In the hands of a few go the reward of many -  let’s take a look, once and for all.  Although I am only attempting to check out the feasibility of these programs, I will apologize if I am out of order.

Certainly in the above case, we do not want slum landlords taken over the communities and devaluing our properties will be the ultimate result.  And it can happen.  All the investor has to do is hold on for 5 to 10 years and he will make a “bunch”, you know, the equity that used to be the original owners before the banks stripped them of that.

Yes, I will try to get some numbers ready and a game plan and a strategy for pulling it off.  Now keep in mind that no one is going to pay one bit of attention to me.

Thank you all.

Joyce Cauthen

Aug. 12, 2011, 8:37 p.m.

There are other ways to effect home ownership of these reo properties and rental is NOT ONE OF THEM.  Wonder where the investors got all of their money to buy in bulk sale or did they even need it.  Probably a pass through of some kind to be paid out on a, you got it, a future’s while the investors book a fortune.  Never known. 

Remember the reporter I believe that said wasn’t it outstanding of the administration to loan the investors money at low interest, no personal liability and little of their own money put in the deal.  I have to tell you, we need to see how that program fit into the scheme of things.  Could be they investors have finalized their programs with the government to allow them to buy the homes from the banks at very low prices with a subsidy by the taxpayer.  Don’t lose this opportunity.  WE simply do not know what programs are being designed and developed for the private investors.  AGain, if this is a good thing, thanks to the administration, but if it is not, we need to know it.  We have closed our minds way to long.

@bill-The etiquette lesson was appreciated, but if you were referencing my comment to Joyce it was only to inform her of those who might help her get a message out to those in Propublica. I have always been in support of the fine work they have presented…sometimes I have shown that same support with my wallet. And yourself?



“There was never any valid sale of loans — and the loans were never actually loans — they were collection rights.
Since the “loan” refinances (subprime/­­alt-a) and jumbo new purchases were non-compli­­ant and non-perfor­­ming manufactur­­ed defaults, no ‘funding’ at all was necessary (except for the cash-out for the loans). The warehouse lines of credit never actually transferre­­d any actual cash for funding. These lines of credit were simply “credit lines” that the “Depositor­­” would provide to their correspond­­ent lenders. Once the “loan” refinance originatio­­n was completed the Depositor would then reverse the “credit” owed by the correspond­­ent (originato­­r). This never involved any actual deposit of cash proceeds —- the “funding” payoff check is never “deposited­­” into any bank account. The check is routed to a security derivative clearing house — who then simply cancels the credit-lin­­e transactio­­n. : “Mortgage loan” from onset was not a mortgage but, instead, collection rights. This admission would also mean that the “debt” is unsecured and can be discharged in BK.
...nothing more than a transfer of servicing rights to false collection rights. And, jumbo new purchases fit in the same category.
Subprime/a­­lt-a/jumb­o — were not mortgages — they were transfers of collection rights.
The “investors­­” were the debt buyers that purchased the collection rights — period.
CDOs? Nothing more than derivative­­s from the false assets that the false securitiza­­tions were based upon to begin with!”


Joyce Cauthen

Aug. 12, 2011, 9:47 p.m.


Getting the plan together this weekend and perhaps someone at Pro Publica will listen.  Thanks for your support.

Carie:  I am delving into your post to reconfirm what you say is happening.  This is very scary and I am trying to find out what percentage of the loans which you say are refinances of subprime and alt A, are at steak.  This is a critical issue in order to determine how to approach the situation and how far one can go with the fraud charges, if any.  The plan at one time included a strategy to save those loans from foreclosure before the trickle down effect to our economy took place.  In 2007 we had one in mind, but instead of spending 30 to 40 billion over a three to five year period, we threw away billions and now we are trillions into the crisis that still stands before us as though we never spent a dime.  Now that is some management, right?

I’m thinking a pay rent on time, take care of the house, and give an “option to buy” to those that keep their part of the contract.  It would give people that are presently less credit worthy ability to prove their “worth” again and start anew.  Some people are more than willing to do sweat equity by repairing, cleaning up, etc., then having the opportunity to buy the home they are invested in.  Bugs to work out, but it is certainly worth looking for a solution.




Joyce Cauthen

Aug. 13, 2011, 3:09 a.m.

Okay Carie:

That is good.  Let’s remain calm and take it to the bank so to speak.  So far no one has been successful in resolving this devastating issue but yet it exist and it is there.  But most certainly it is not being approached the right way and the players and the target keep moving because no one objective to clear up this matter, at least one that would work, has been successful.  Everyone is scattered -  Let’s change that.

If you would be so kind as to help me with a few questions which I have, this can save us a great deal of time, then we can begin to get some work done.  Up until now, everyone keeps talking talking talking even though the whole nation and our law enforcement is aware of what has happened.  A lot of people think that even the feds do not know what to do.  But it will be a matter of weighing and measuring the exact issue and how we can get the banks to move over to our side.  I know that sounds out rageous, but it must be done.  You are right, what has happened to the homeowners and America as a whole is quite extroadinary and must not continue. 

Believe it or not, it is a matter of the people cutting a deal with the banks, as if that could be done, right?  It can because I have been saying it for years, there is a time and place to make a move to get the most worth out of the deal for the people and the time is now.  If you want to write to me, I wish you would do so.  Seems like I posted my information earlier:  .(JavaScript must be enabled to view this email address)

The best of them have been so compassionate about coming up with a plan, yet we are denied.  You can do much to help with this demise and thank you for your effort.  Sorry about that steak in a prior posting, I meant to type stake.  The mystery here, or is it, this mess can be cleaned up with regard to the housing issues now that the whole thing has caved, but the other acts by Wall Street will most certainly have to be kept separate and apart for now.  Let’s get started.

Joyce Cauthen

Aug. 13, 2011, 3:26 a.m.

There was not a word said at the Debate about what could be done to resolve the housing crisis, yet it has been before us all these long years with everyone knowing that the American economy will continue to suffer until this demise is resolved.

What is missing here is a leader needs to step up.  The fraud, etc. is now well known, but everyone just turns their back on it.  I am not sure why other than, that other 95% doesn’t want to upset their own apple cart.  The problem is, and they just don’t realize it, is that it will come back to haunt them.  We almost lost it this time around and we are not out of the woods yet.

The banks can work with us.  They must,  because we have to stop the bleeding.  If Obama does not do one more thing for the people, he should arrange for the voice of the people to be heard at the table along with the banks and then the government needs to step out of the room.

Once again, the gov’t is the PROBLEM!!!  The “government” were teh ones who allowed Fannie/Freddie to run wild and the “government” and community agitators like Obama were the ones who pressured banks to give loans to those who couldn’t afford them and look at the mess the “government” created! 

It sickens me that millions of Americans have lost their homes because of loss of jobs and getting behind.  Why didn’t the “government” forecast this huge problem and nip it in the bud?!?  Why didn’t the “government” offer a program that REALLY worked instead of that Obama joke HAMP—Home Affordable Mortgage Program?!?  They put us through the ringer and dragged it out forever.  Thankfully, by the grace of God, we were never behind and were able to make our payments, but some of these people didn’t have that luxury and the banks, rather MORTGAGE SERVICERS (not the owners of the note, but the SERVICER who earns the late fees, etc.) had no interest in modifying loans.  Why would they?  The mortgage servicing banks made more money letting properties go into foreclosure!  It’s outrageous—and the politicians know how this has all gone down and did nothing about it but bailout the big shots who made campaign contributions to them!  See:  (money in politics).  Do a search of Fannie/Freddie and campaign contributions.  #1 was former Sen. Chris Dodd (D-CT), #2 was Barack Hussein Obama (D-IL) and #3 Sen. John Kerry (D-MA), and the latter was former senator unfortunately.  GOPer’s also took money, but they were far down the list.  My point is the Democrats are always pointing the finger at the GOP and anyone else, but themselves.  The Democrats are mostly to blame for this mess—they all fought any kind of regulation of Fannie or Freddie (Maxine Waters comes to mind especially since she outed herself at a hearing that “we just want to socia…uh, we just want to…take over”)—she was going to say SOCIALIZE—You Tube it.  Well, they’ve done it and look at how this economy is in the crapper, our national security is a joke, and millions of people are homeless and have lost their entire life savings because of irresponsible politicians.  Government needs to get out of the private market and take care of national security, infrastructure and basics—that’s it.

Carie, if you have proof of something huge, call Wall St. Journal reporters, Washington Examiner, The Washington Post, Fox News—any conservative media outlet.  The left will just sugarcoat it or bury it. 

If it’s verifiable and legitimate, a reporter will be all over it—they always want to break that big story!  Just tell them that you want to remain anonymous…for security/safety reasons.  OUT the idiots who have ruined so many good people and profited from it!  That would be the bankers and the politicians….they’re in bed together, most of them.

Yes we have a problem!

A letter Edward J. DeMarco .
Realtors have been waiting for the release of these listing for the last three years. Why don’t you make this Army of realtors work for you, this way you don’t make any body rich in the process. Make the information publicly available, I mean really publicly available, not by some other company trying to capitalize on these listing. We still have active buyers don’t we?
The information concerning the bulk sell of these properties tells me that our government is about to screw-up again or make someone very rich.

Joyce Cauthen

Aug. 13, 2011, 9:03 a.m.

Before another house is listed with another realtor or sold to another investor, we must meet at the table to establish who those houses really belong to.

The realtors have as Anthony said, been waiting not only in the wings for it to happen, but knew from the beginning that once the defaults started happening as a result of the loans which they sat at the table and watched closed without opening their mouths, that they, the realtors would get that product back to sell.  However, what they did not count on was that the Banks would not be so willing to work with them this time around.  It was simply better to unload them off on the investors, get the taxpayers to maintain them while they sat as a Reo asset - for example the 3.92 billion that went to Twin Cities Minnesota, for realtors (as non profits)  to buy up and resell to the community.

No, not one house should be listed with a realtor or sold in bulk to investors until the people have first choice about getting their home back before that happens.  It won’t take us long to clear the way for that to happen and then the economy can recover.

There is someone I believe that can get the banksters back to the table and do it quickly -  and I am going to make that call on Monday.  Had not thought of it before, but if we can get that done, at least we will have a starting place.  The AG’s and the feds not only have screwed things up for us virtually, but it appears they ae getting ready to do it all over again.

We can do this -  and unfortunately, the banks will be in a win win situation, but most importantly, so will the people.

The grand scheme of housing bubble created a long and steady flow of debt slaves or generations tocome.Goldman , AIG, and TBTF are happy , for ever…The private collage bubble does the same thing…Debt slaves,before you even know how to handle it…
The same that created the problems,banks and specially connected with insider knowledge"INVESORS” ,instead of being jailed, want tobecome the saviors…
Rent debt is the next step of our ...DEBT based economy…Why and how someone can aford a rent of $1000/mo,with an income of 25K?

Arthur J Beauchamp III

Aug. 13, 2011, 1:36 p.m.

Why can’t homeowners who are unable to afford their homes kicked out? Maybe allowing them homeowner to located another home that is lower and swapping out their home for a lower priced home may help people keep buying homes while stopping the rate of high foreclosures. The problem isn’t that people don’t have the money, the problem is that they are no longer able to afford the home they are in. If you purchased a 250k home and are on the cusp of losing it, why not allow the homeowner to find another “bankowned” home without a downpayment or closing costs (or allow the closing to be rolled into a new mortgage) that is within their budget? Instead of 250K, allow them to find a home for 150k or less. This allows the homeowner to reduce their financial burden while the bank now only has one house on its books instead of having 2 homes on their books.

The county and state goverments already have rental programs - it’s called section 8 - Just run go out to East Contra Costa / Antioch near San Francisco and you can see how well that program has been working - the police in Antioch will not even deal with common theft they are too busy dealing with shootings and murders in that once quiet bedroom community

Joyce Cauthen

Aug. 13, 2011, 3:10 p.m.

Well there you go.!!! Arthur and Hobbie are right on.  These two suggestions by the way were put into the documentation just this morning for the Plan that is to to be submitted to the banksters as the Voice of the people.  We are going to get our place at the table without the help of the feds and the AG’s who expect us to keep on paying.  I don’t think so and the resolution to this housing crisis will be one that those who want to may read it, scrutinize it and we will literally take it to the banks.  No feds allowed at the table.

If the people themselves can come up with such meaningful resolutions, why in the world won’t the feds and the AG’s listen.  Because they think they have to appease the banks plus a lot more we won’t go into right now - but folks, now is the time.  Regardless of whether or not we get another contribution, A PLAN WILL GO FORWARD AND LAID OUT BY THE PEOPLE.  IN FACT, I AM WILLING TO BET THE OTHER 95% WILL LIKE IT.

Excuse ME, Joyce. I have been a Section 8 participant for quite a few years. My town in Norcal has no problem with Section 8 renters, so maybe you just have terrible LANDLORDS in your area. The GREAT majority of Section 8 renters are wonderful tenants that landlords prefer, since their rent is more likely to be paid on a regular basis, since they can afford to pay their rent at the ratio determined by the Housing Authority. I hope your ideas are better than your bias against poor people signals. I was reading with interest-and then you threw a gratuitous, unproven insult toward let’s say the bottom hundred million nowadays that probably qualify for Section 8, though not everyone applies or bothers to get on the waiting lists -especially in coastal California where they are uber long. I notice that your area Antioch had a median housing price of 500K in 2005 and 2006. With so many section 8 qualified people living in the city - how on earth did so many Antioch home buyers imagine they could afford such a high cost real estate, Joyce? Were they the Section 8 landlords? I would venture they were. Whereas, people like me, who live within the meager wages afforded after 40 years of real wage depression rolled our eyes as our LANDLORDS leveraged our rental properties, paid for by us and the rest of the taxpayers, so they could try to get several properties under their belt. How many of your Section 8 recipients in Antioch have been thrown out because their landlord lost the property to foreclosure, Joyce? I don’t see that info in “”.

I apologize to JOYCE! I’ve been enjoying reading your ideas and plan of action and wish you the best.

I meant to address my retort to HOBBIE!
HOBBIE! that is

I wonder which of the corporate goody chasers are going to get the franchise for this new creation of employer owned housing for wage slaves.  The rent can be deducted from the minimum wage pay envelope, and a rent to own option can be part of the labor negotiations. 
all funded by our taxes… Paid of course by you and me, and not by the corporations.

“There was never any valid sale of loans — NEVER any “mortgage” backed securities—-and the loans were never actually loans — they were collection rights. NOT “FUNDED”=FRAUDULENT CONTRACT AT ORIGINATION.
Since the “loan” refinances (subprime/­­alt-a) and jumbo new purchases were non-compli­­ant and non-perfor­­ming manufactur­­ed defaults, no ‘funding’ at all was necessary (except for the cash-out for the loans—-cash-out meaning payments from borrowers). The warehouse lines of credit never actually transferre­­d any actual cash for funding. These lines of credit were simply “credit lines” that the “Depositor­­” would provide to their correspond­­ent lenders. Once the “loan” refinance originatio­­n was completed the Depositor would then reverse the “credit” owed by the correspond­­ent (originato­­r). This never involved any actual deposit of cash proceeds —- the “funding” payoff check is never “deposited­­” into any bank account. The check is routed to a security derivative clearing house — who then simply cancels the credit-lin­­e transactio­­n. : “Mortgage loan” from onset was not a mortgage but, instead, collection rights. This admission would also mean that the “debt” is unsecured and can be discharged in BK.
...nothing more than a transfer of servicing rights to false collection rights. And, jumbo new purchases fit in the same category.
Subprime/a­­lt-a/jumb­o — were not mortgages — they were transfers of collection rights.
The “investors­­” were the debt buyers that purchased the collection rights — period.
CDOs? Nothing more than derivative­­s from the false assets that the false securitiza­­tions were based upon to begin with!”


“What has been orchestrated by foreclosure mill attorneys is an attempt to portray security investors as the “lender/creditor” i.e. –in some eyes — the “funder.” equates to “lender.” This is bogus and false — and is slowly being exposed as fraudulent in courts across the US. NO security investors EVER directly funded ANY mortgage originated loan. Do not care about pre-funding — or anything else. Security investors are simply not qualified to ever fund a mortgage loan — they do not own collection rights — they are NEVER the creditor or lender. They do not fund mortgage loans — bogus or not — to borrowers. And, if some here do not get off this kick — you will lose — lose –lose.
Once any person/party/individual starts portraying the security investor as the “lender” of “funder” — you have lost the battle. Again, and Again, security investors are NEVER the lender/creditor/mortgagee – or funder directly to the borrower. Borrowers must have a lender/creditor that is approved to lend money — security investors are NOT approved to lend any money directly to borrowers. Any transaction derived from such a fraudulent non-existent contract — is invalid. .Security investors are NOT qualified to be mortgage “lenders/creditors.” They are simply recipients of cash pass-through assigned receivables — that is all.”


Joyce Cauthen

Aug. 13, 2011, 7:35 p.m.

I have been defending people for years and never charged for my services.  And I worked hard in the 80’s and 90’s to help individuals buy homes they could afford and made sure they got down payments to help them do it.  WE knew what it took to get the recovery going in 1984-90. 

There are others just like me trying to help people stay in their homes before these banksters and the GSE’s threw them out.  I have case after case and fortuntely we were able to win and they did not lose their homes nor did they go to court.  We had a Katrina victim who came to Houston with her mother and paid her own way while she was on dialysis.  They never asked for money for anything and used their SS to stay here.  She called me about 11:30 one night and said she had been to four different non profits, none that could help her so the NACCP said give us a call.  She did and I told her, just go to bed now and don’t worry, you won’t hear from Washington Mutual again who had been trying to overbill her for some $12,000 after she had paid her loan off from an insurance claim.  Well we fought and we fought hard for one year and a half and she was a very fine lady.  Unfortunately, three days after I called to tell her that her lien was being released, she was killed by a drug person along with her 80 year old mother and both were sent back to New Orleans in a coffin.  This is what she did the last 18 months of her life.  Waiting to see if she could get a release, one which she never would have a chance to hold in her hands. 

It sounds like Cynthia is doing well in her present community, but this is not always the case because people have become so fraustrated about their own personal circumstances and the investors who operate some of these communities simply add fuel to the fire.  Fannie and Freddie were the best of the best at one time, but they jumped ship and let most of their borrowers go down with the ship with no life raft.  This is why I do not trust them to allow the homes to be bid out to investors who turn them into profits for themselves at the expense of those who once owned their homes and where their children were safe.  An awful lot has changed.  I am surprised that Fannie and Freddie are even inquiring of the American people.  If they would return the $150 billion that was given to them in 2007-08 and in other ways that will not be mentioned here, there would be no need to sell the homes to investors, but they would cut a deal with the homeowner who owned the home in the first place.  This is not over with yet.  Fair dealing and good faith once again will take its place at the table when we argue to get the proper restitution for those who have been harmed.  I know I am off subject but don’t mean to be.

Section 8 can be a good thing.  But I am afraid the feds are going to take away even that for the people if we are not careful. Yes, it has worked beautifully for many people, the deal is to make sure that it works in the proper way.  What has upset me so is the way the private investors are bidding on properties in bulk and buying at a price that will bring them millions as they spin the story they are putting the homeowners back in those homes. If the homeowners had the civil treatment they deserved and a chance to hang on until we get this thing turned around, they never would have lost their homes in the first place.

What our plan is about is to first of all, halt the current potential foreclosures coming down the pike.  Then we will provide the plan to make sure that we understand why it is that GSE’s and the banks want to allow such handling of the very homes that were taken from homeownrs simply because they had a hardship.  Hardships that were the direct result of the trickle down effect of the greed by the banksters and yes, the GSE’s.

  If homeowners were in a home that they could not afford because some mortgage broker (with the stamp of approval from the bankster) ran the loan through anyway, and their home had already foreclosed,  then they get a shot at taking one of the REO properties.  The banksters and the GSE’s know they caused this situation along with Wall Street which made so many homeowners victims to the trickle down effect (lost their jobs) because of the wrong doing of these banks, then that is different.

Like I said, now they want to rent out the very house that was needlessly taken from a homeowner who was experiencing some hardship (in most cases) or the homeowner was subject to the wrong doing of the bank during the foreclosure process and hand it over to private investors to buy and/or rent out.  There is a better way and we need to get started.

For years we have brought such notice to the people that they need to unify - but no action.  This will be my last effort as I do intend to talk to the one person that I think can get the banksters to the table and it sure isn’t the banksters federal buddies.

The banksters don’t DESERVE to be “at the table”—-they need to FAIL and be in JAIL…with the Wall Street fraudsters…

They “dangled the carrot” of homeownership/refinances/real money to the American people…we “bit”...not knowing that they weren’t REAL mortgages—-like the “old days”—-before deregulation…we didn’t know that there would be no “funding”—-just a transfer of “collection rights”, transferred by assignment at closing…and all was presented to borrowers as a NEW NOTE/LOAN…no notes validly sold to trusts…ALL IS FRAUDULENT—-GOVERNMENT IS COVERING UP…the banksters/wall street criminals…devised their brilliant scheme to make trillions and destroy the economy and destroy the lives of Americans because they don’t give a crap about ANYTHING EXCEPT MONEY AND THEIR OWN PLEASURE…rampant sociopathic materialism…the hell with people they say…we didn’t know this…we trusted…we trusted that the people loaning us money knew what they were doing…in good faith…we didn’t know it was all a MASSIVE FRAUD AND LIES FROM THE BEGINNING OF LOAN ORIGINATION…even BEFORE we signed the docs it was FRAUD.
WHO DO WE TURN TO?  Is there ANYONE in power who is REALLY on the side of the people??? ANYONE—-ANYWHERE???

Joyce Cauthen

Aug. 13, 2011, 8:27 p.m.


Something is going to be done.  No one to date has done one thing to put these people behind bars and in fact, all of those that were supposed to be protecting us and our rights did not do so.  Forget that for now because the deal is to bring about a recovery so millions will stop suffering and I am not just talking about homeowners who lost their homes.

Do not give up on the American people.  Whether or not we are successful depends on the support of millions of american taxpayers and right now, that doesn’t look good for us.  But let’s not just give in.  Your point is well taken but you have to give us time since to try to work through the whole demise.

Joyce Cauthen

Aug. 13, 2011, 9:38 p.m.

The answer is NO!

Joyce Cauthen

Aug. 13, 2011, 9:53 p.m.

To Dale, Margaret and Roy:

This is not the disertation I promised - that will come tomorrow.  But think about Margaret’s concern about who she is supposed to pay.

Recently I worked on a case whereby the 4 yr statute was invoked and the owner of the note had to release the lien -  they agreed to do so without delay and sent us a copy of the release they were filing for record.  What is that release worth?  Nothing.  Why?  Because the entity which is one of the major banks who executed the release never filed anything of record to show that they were the owner and proper party to release the lien.  What does that mean?  It means that our lien is not released because the record owner did not release it and a party that had not been shown to own any part of the note and lien executed the release.  All of this an be fixed, but we need the people to understand that they must not desert those that are the victims of such wrong doing.  When chain of ownership is not legally recorded or cannot be proven, then you can just sit and wait for a seond party to step in and claim you never paid him either.  Here again, this can be straightened out.  Title companies will know how to do it, owners of loans must assure that it is done and the current owners must demand that the records be legally correct.  Guess what, the lenders will end up getting a second chance to do it right before they can foreclose OR AND I HOPE THIS IS NOT THE CASE, THE CONGRESS AND THE FEDS WILL COME UP WITH A WAY TO WRITE OFF THE ILLEGAL RECORD KEEPING OF THE LENDERS AND THEIR SERVICERS AND ALLOW FORECLOSURES TO MOVE AHEAD.  AFTER ALL, THEY HAVE BEEN DOING IT SINCE 2002, I AM SURE.

I know Margaret and Roy will understand the concern of millions of homeowners who now feel they are paying their mortgage to an unknown and in doing so refinances, payoffs, assumptions or anything else they may wish to have done cannot be done unless the true ownership of the note and lien is of record when and if the original lender begin to sell the loan or assign it to some pool.  This is a very critical issue.  Dale, this is just one example of what good honest people who are making their payments are running into.  YOu just may not be aware or at best just may not understand what the banking industry and the GSE’s have done to this country.  We must recover this mortgage demise so concessions are going to have to be made so at least let’s put the energy in that.  As I said before, the feds are out and should not be allowed at the table with the people’s voice and the banksters, together with the deteriorating ethical and moral responsibility that used to be so important to the GSE’s.  Clearly that went down with the last ship.

Joyce Cauthen

Aug. 13, 2011, 9:59 p.m.

By the way, if the homes are bulk saled to investors by Fannie and Freddie or the banks for that matter, you can count on them arranging some blanket internal policy between themselves to assure that any future title issues are the responsibility of the private investor buyer so if he ends up renting to you with a contract for deed, etc., then you will be clearly setting yourself up for a huge disappointment.  Getting that title in your name just because the private investor is conveying the property to you (probably by special warranty deed), you will have no where to turn.

I cannot say that is going to happen but I know that it has in the past and like Carie said - you cannot trust any of them, so let’s do our home work and if the lender/servicer/private investor proves up, so be it.

Please, inform people like Lauren to check their history and timeline to know that President Obama was not even in office when this mortgage mess occured. This is the Bush/Cheney mess, which unfortunately President Obama has been forced to try to deal with and correct, coupled with bad advice and a sense of urgency to try to help the American People.
I can appreciate people like Carie and Joyce, who are positioning themselves as part of the solution, as opposed to part of the problem.
Let’s stop blaming, especially the wrong person, and work to resolve this whole mess. I need help myself.

All is NOT as THEY would like it to appear to be. Far from it. If you call them a “mortgage” — when it is not a mortgage — they will try to find some way to hold accountable —-this is wrong – and it is FRAUD. Just because it looks like a “duck” — does not mean it is a “duck” — no matter how it “quacks.”
Unsecured — name of the game. .
Subprime/alt-a/jumbo — were not mortgages — they were transfers of collection rights (albeit — with escalated balance owed and egregious terms). Once the Note/loan — is charged off — no more mortgage — only collection rights survive.
TARP Inspector General — Footnote 35 again — and again– and again.
“Without the note, a mortgage is unenforceable, while without the mortgage, a note is simply an unsecured debt obligation, no different from credit card debt.”
Securitiztion can be for any cash flows — but the security investors are NEVER the creditor. In the case of subprime/alt-a/jumbo securitization — there were no mortgage liens — the cash flow pass-through was only for pass-through of cash payments to collection rights. No mortgage lien – not mortgage — no pass-through of collection rights itself. Transfer of servicing rights only.
The “investors” were the debt buyers that purchased the collection rights — PERIOD. The security investors were DUPED to believing that the cash pass-through was to valid mortgage liens. But, these security investors NEVER were the lender, NEVER were the creditor, and NEVER were the mortgagee — because there was NEVER any valid mortgages!!!!! And, security investors are NEVER the creditor.
CDOs??? nothing more than derivatives from the FALSE ASSETS that the FALSE SECURITIZATIONS were based upon to begin with!!!”

Security investors—who are different from the debt-buying “investors”—are suing on the marketing of fraud in the securities themselves—that is—that the securities were derived from bogus “loans”—which they certainly were.  But, these security investor lawsuits can never directly sue against the borrower—because security investors are NEVER the creditor.  These security investors sue on the investment income lost because of fraud—and they sue the bank perpetrators.   

Remember, if security investors are naming themselves as the creditor in foreclosures (which would be false—but assume for a moment that it is valid)—- then they are collecting damages by the foreclosure itself.    The security investors cannot then go and sue the security underwriter for MORE damages.  This would be collecting damages—twice—dual damages..  And, would be fraud upon the courts.

Just look at demographics. The Boom generation is roughly 58M people and the Gen-Xers, just getting into the settling down stage of their lives, are about 39M. While Boomers are getting out of large houses, there aren’t enough Gen-Xers to replace them.

This is EXACTLY what the banks want, this is why they are NOT lending.  They want to turn everybody into renters just like Britain.  Very few people own their own homes in Britain, most live in rental flats. The only people who will be able to have a home in this stinkin’ country will be those whose parents hand them down.  Groups of investors are snapping up the foreclosed homes only to ultimately control the market.  Once the glut of homes are turned into rentals then rents can be cranked up.

There was a story in the money section of ABC News, ‘Solving Foreclosure Crisis, a Rental at a Time’ by Steve Osunsami. He cites an instance where a homeowner went from a $1,100 a month mortgage payent to a rental payment of $850 a month after an investor bought his property. They didn’t give the specifics, but to get to $1,100 a month, let’s pretend his loan was for around $165,000 at 7%. Now, if the bank had refinanced his loan at current rates, around 4.4%, guess how much his mortgage payment would have been? $860. How much is he rending for? $850. What does he get out of this situation? No guarantee that his rent will not increase and with no hope of recouping the money he already put into the property (and many many were not the 0% down we all hear about, myself among them). It doesn’t make any sense.

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