Bail Out the Insolvent Banks, One Last Time, to Help Us All?

Claire Hill and Prentiss Cox: Help banks, one last time, and help us all

How to clear the way for both foreclosures and loan modifications.

As America’s housing bubble has collapsed, it is clear that banks eager to foreclose quickly on defaulting homeowners have cut corners. In some cases, they have lied to courts and to the public. Banks have been foreclosing on homes whether or not they could prove that they had a legal right to do so.

The result has been to further destabilize housing markets, injecting increased uncertainty into home selling and buying. Distressed homeowners are looking for help to save their homes, or, if that isn’t possible, to find a buyer. Would-be buyers or sellers of homes may not be willing to proceed without knowing more about the foreclosure situation.

Financial markets are destabilized as well. Existing stakeholders in mortgages — including investors holding securities backed by home loans and stockholders in financial firms — are having difficulty valuing their holdings. Potential investors are reluctant to buy except at very low prices.

If nothing is done, we could face continued sluggish and restricted investment in real estate and the broader economy if the titles to foreclosed properties are seen as tainted. We could even see a second financial implosion if the scope of the problem appears large enough and uncertain enough to potentially overwhelm fragile bank balance sheets.

One solution is to stop foreclosures until ownership records can be sorted out. But while we may not know precisely who the homeowners being foreclosed on owe money to, we know that they owe it to someone. Distressed homeowners should not be able to avoid foreclosure simply because the right party to foreclose cannot easily prove that it is the right party.

More important, we can find a better solution. We can provide an impetus for mutually beneficial loan modifications, thereby helping get the housing recovery back on track.

Let’s bail the banks out of their self-inflicted wounds one more time, but this time extract a serious price that helps address the underlying problems.

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22 Responses to “Bail Out the Insolvent Banks, One Last Time, to Help Us All?”
  1. Are you nuts? Do you have any idea that the so called modifications started as far back as 2008? Most persons have purchased new homes at a third of what original home was, the rest are stuck, then those totaly wrecked life styles are eithet renting moteling or homeless!!

  2. Herman Vergara says:

    Visit: And you will find all about HSBC Bank USA “Money Laundering Operations” around the world. Bank crime shouldn’t pay.

  3. l vent says:

    What? Loan Modifications to paper over the origination fraud? This is just getting to be too much. Do these idiots not know that the reason the banks DID NOT GIVE Loan Mods. in the first place was because the BANKSTERS COULD NOT GIVE A LOAN MODIFICATION ON AN UNSECURED DEBT. Why? Because the BANKSTERS would be committing fraud on fraud like they are doing with fraudclosures. This is getting ridiculous. There is no way to paper over this and make fraudclosures legal. These so called law professors need to do their homework about SECURITAZATION or get a reality check or something. They are just spouting out the same B.S. as the mainstream media and trying to pretend that Fraudclosuregate is a fixable problem when we all know all of their so called fixes are no more than a bunch of nonsense, just a band aid on a gaping financial wound. How long are they going to keep pretending they will be able to “fix” this? Maybe they think the American People just don’t get it but I think they are wrong. If this Government gives the banksters another bailout I think we could be looking at an American Revolution on a massive scale. They will be bringing on Armegeddon in our own Country, forget about the Middle East. Too many Americans know the truth about the whole cabal and their INTENTIONAL FINANCIAL COLLAPSE. The INTENTIONAL THEFT of OUR Freedom and now OUR WEALTH. I think finally the American People will have reached the tipping point if they bailout any more of these crooks. The banksters had their chance to do the right thing and modify loans when we were none the wiser. Now we are the wiser and we will say to the banksters RESCIND MY LOAN. You broke the law and used OUR good names to commit your crimes and made a lot of money and did not share it with US. Then you gambled on the chance that WE would fail after you INTENTIONALLY COLLAPSED the whole financial system. Then if that was not enough for you, now you want to continue to STEAL OUR HOMES or worse throw us into your debtor’s prison and make us pay for our homes over and over again for say another 40 years? I SAY, SEND THE SHEISTERS TO PRISON.

    • internetasker says:

      Yes on the multiplying misrepresentations. One scenario could see: Borrowers being urged to fall behind in order to qualify for loan modifications … wheras in fact based on original loans they were positioned to default anyway. The loan modification-inducement /requirement that Borrower must be behind on payments in order to seek a mod (likely to be denied to borrower now well behind, after churnings and delays) … camoflage for built in inevitabilithy of default? As to both sincere borrowers or those not intending to pay form ‘el gitgo’ ?.

  4. J Glenn Lowe says:

    Bailing out private black hole institutions that crash world economies. That is true insanity, What happened to capitalism? Failure is a healthy part of reorganizing in favor of good competition. That is how you run a capitalistic system. The Fed is a private corporation that should be burned to the ground while Bernankie is inside. All of the top 6 insolvent banks should be forced to fail right now. That is the only way we can fix this problem. Any other action will guarantee the end of a failed empire and put countless children in the streets. If you have money in any of the top six banks you are part of the problem. Time to go back local banking only.

  5. sheila says:

    I too have lost my home to forcloser fraud . So there was no transfer. There was to modification. Just these crooks steeling my home. The right company that I took the loan out with was kicked out of 5 states for fraud and preditory lending. So how can it be transfered. A larger than life bank picks this up and forclose on me. Give the new owners a special tittle from the court……What the hell is that??????

    • internetasker says:

      Right on Sheila. Losing your home is so much more than losing a house. Hope your post is read by those with remedies.

  6. Buyer says:

    This article reads like a press release from the banking industry.
    It also seems to attempt to solve all of the banks’ problems without so much as a “too bad” for homeowners.

    Obviously, they don’t get it. And, have made no attempt to do so.
    Being a law school, you’d think they’d have at least some appreciation for law.
    I recommend the law school revoke their degrees and refund their tuition.
    Oh, never mind the refund, the school might could use it, let’s just call it a penalty.

  7. internetasker says:

    Well this is interesting but would appreciate some clarifications.

    (A) To start, roughly tracing the alleged history of “whose ox gets gored” even minimally, wouldn’t this be at least a 4th bailout? Considering these bail-outs and bail-ins:
    (1) (some) servicers squeezed for performance by investors upward “gave out” unsatisfiable mortgages (so in a sense the servicer didn’t face foreclosure);
    (2) the govt. (taxpayers including mortgagor taxpayers) bailed out big-time;
    (3) servicers foreclosed big-time as a bail-out or bail-in;
    (4) now a suggestion for govt. again… including foreclosed-upon often homeless taxpayers?

    Just a hypothetical sketch/query by an ultra- novice but appreciative of comments, corrections.

    Then (B) … but .. a foreclosure being a lawsuit, is the suggestion that wrong not right plaintiffs should have ‘standing’ in courts and invoke court jurisdiction? Not clear at all on this. Thanks for the forum.

  8. DanJS says:

    This article was written by an apolygist for those who have committed perjury thousands of times and who have not be held accountable to criminal charges and civil, monetary damages two-fold or threefold more than the embezzled assets. The most just way to do this would be to “forgive” the loan indebtedness and to establish clean title for the original borrower.

    After punitive remedies have been exercised and the integrity of clear title for ownwership of property has been restored will be the time for this kind of discussion, not before.

    The culprits who have foisted this scam upon our nationa and its taxpayers have literally and illegally transferred equity assets to their own control that have sufficient value to resolve this crisis. The courts should require that those assets be redeemed from the personally named, individual miscreants and restored to the owners of record who had clear title before MERS and its “partners” initiated this ponzi scheme.

    The only legitimate use for taxpayer funds should not be for “bailouts, but for “jail-ins.” If there are insufficient prison cells, have them built to house these scoundrels! ..And God forbid that any guilty party be considered a “white collar criminal” entiltled to “country club prison accomodations.” They should spend their time in “real prisons” in the company of the “general population” of the penal institutions.

    Either this, or declare a year of Jubilee and forgive all debts and restore the land and its improvements to the owners of the property.

    • pparke500 says:

      Speaking of a Ponzi scheme, when I check my online mortgage account, I see that my bank continues to credit mortgage payments to my account even though I have not made a payment since Dec 2009. Is this to keep the payments flowing to the trusts so the investors there don’t know how many non-performing loans there are in their portfolios? I have PMI, so I guess the Bank figures it can continue to pay up to the amount of the insurance and hide the default.

  9. cilantro says:

    looks like this stupid story is not getting much respect.

  10. John says:

    You must know who you owe and they must be able to prove the chain of transfers to show they are the right note holder! Plain and simple.

    In order to sell your home, you must give clear title to whoever you are selling it too.
    How can you get a title company to give you clear title if there is no recorded lien holder?
    Whe n you pay off a car or home, the right note holder must give you the original note (title) back with a satisfaction of paid off attached. Who will give you that if the owner is unknown?

    There are many liens that can be put on a home for debts owed and they must be paid same as the banks lien, especially if they were recorded first. I predict there will magically appear liens from unknown sources on homes being foreclosed on. Why not, if banks can lie about the no proof necessary debt, so will many others.

  11. Hell NO - No More Bailouts says:

    These bozos presume to know that the ‘money is owed to someone’ when even THAT is not truth. With all the miss-applied payments, improper fees and the insurance payoffs that have occurred, this is undue enrichment to the fraudsters, let alone the rub of salt into the wounded economy with a FURTHER BAILOUOT! Obtaining the insurance funds and not reducing the amount of the supposed default is undue enrichment to the pretender-lenders.

    The servicers have no incentive to get things RIGHT. The more fraud they pull off with the help of the courts, the more undue enrichment accrues to Wall Street.

    I agree with the comment from Michael that we should have this pair of reporters hand over all their funds to a random benefactor each month and then when they are evicted, their pay checks levied or their cars repossessed, defend the situation with their own ‘I owed but I paid somebody” logic.

    These two really do not ‘get it’ that the mess with the mortgages is so deep that even houses without a mortgage are being foreclosed on. Simply getting modifications will not cure the clouded titles. These two need a special full month of intense coaching from Professor Black before they are allowed anywhere near a keyboard to write an article about the current financial mess. With his guidance, perhaps they could learn how to properly research and evaluate material for articles they write.

    • Get ready to cringe everybody…

      They’re not reporters: they’re law professors. From the University of Minnesota law school, one of the best in the nation.

      And, of course, they’re still completely wrong. Ignoring that two law professors are publicly advocating ignoring mass perjury; the systematic gutting of the US judiciary, their rambling here are more on economics and public policy .. and they’re wrong about that too.

      Speaking of which, what’s up with Minnesota? It’s the only state to have written a law enabling and legitimizing MERS, it’s home to self-described “ultra-liberal” US Rep. Keith Ellison, who brought the notary fraud back to a vote to override the President’s veto .. the same “ultra-liberal” who went on a harangue that everybody in foreclosure are liar’s.

      Disclosure: Keith and I have a long history; we go back to when he was a law student (at the same school the two doorknobs who wrote this teach at) and I was an undergrad. Keith, a Farrakhan sympathizer at the time, wrote an article or two under the pen name “Keith Hakim.” I called the “oppressed” Keith, a doctor’s kid, a hypocrite back then, and it looks like he hasn’t changed one bit in these past couple decades.

      • pparke500 says:

        Was he a Muslim in law school? Or is that too just a political fraud?

      • He was a grandstanding, two-faced, spoiled kid trying to play the victim card, and he obviously still is.

        I first came across him when the student group he led, the “Africana Student Association” (or something like that) came out in favor of passing a policy prohibiting racist speech on campus. I was at a forum on it and brought up the only racist speakers anybody seemed to be bringing to campus was them — they’d just brought a series of black nationalists who were blaming Jews for all the world’s ills (Jews purposefully brought HIV, still referred to as AIDS back then, into the black community, Jews are wicked and evil, blah, blah).

        I asked the PC school administrator if the policy, which I vehemently disagreed with (speech, even obnoxious speech, needs to be fought with words, not laws) and, after thinking about it, it was game on. Like the foreclosure fiasco things quickly became muddled with some black students deciding speech rules might not be such a good idea and some Jewish one’s thinking they might be OK. If you Google it there’s lots of info; it was well known back then and became a campaign issue I stayed out of (I didn’t know if a couple decades and a couple kids made Keith grow up .. guess not). Keith said he couldn’t remember any of it, which kinda’ tough to believe considering it the first national s*@tstorm either of us found ourselves in.

        So, here we are, 25 or so years later, and except for some gray hairs and fancier offices not much seems to have changed. Keith’s still the “poor victim” doctor’s kid, sitting in Congress now, defending the morally indefensible, and I’m doing my best to show the world that him and his supporters are still full of crap.

  12. John R. says:

    Obviously the author of this story has not done their homework. We already have rules… we call them Laws! We all get up in the morning believing we live in a just and equal Nation because of those Laws. the Laws are plain and simple. They’re made that way on purpose! And that purpose is that because in our past histories, this type of event has occurred too many times and hurt too many people. As Ex federal regulator William Black stated “this is control fraud”. Fraud, in this Country is illegal and it’s illegal for a reason. It acts as an acid against those it’s used against and also against the system that it was used within. 3 million people didn’t get together and decide to create this mess we’re all in, only a few. The supposed “Best and the Brightest of Wall Street”. If now, our Government decides to give these thieves more money, after we KNOW what they’ve done, then it’s time for all of us to buy a gun cause we no longer live in a Country that’s ruled by the word of Law, we live in Anarchy. And I would like to take this moment to remind every Police Officer, every Sheriff every member of the Armed Services including the National Guard, you took an oath to uphold the Constitution of the United States of America. If there’s “righteous” riots in the streets, then your duty lies with the righteous and not with the money managers.

  13. Michael says:

    I think these two should step up to the plate and be the first to show with actions, not words, that they mean business.

    Start to pay all their bills to their favorite charity, or maybe spend it at a casino, or just send it to random addresses in the form of cash. When asked they can say “I owed money .. but I paid somebody” as their car is being repossessed.

    As for the fraud bailout fantastic idea! I especially like how banks would be forced — well, sort of forced — to modify loans. Since that was a provision in the first bailout I’m sure it’d work a lot better a second time.

    Of course, we could also just let the banks fail under the weight of their fraud then give people an option to buy their notes out from the underlying pool at whatever the paper is trading for plus a small administrative fee. Assuming it goes back to TARP level trading prices, or lower, that’d be a few cents on the dollar. Have a $500K mortgage? Buy it, legitimately, for $20-30K. Can’t afford that? Finance it .. there should be plenty of equity. Housing would finally find a bottom, consumer liquidity would restore the economy. Big banks would be wiped out but that’s OK; they’re not lending their money anyway; wouldn’t affect too many people.

    They had their chance and blew it. The invisible hand has build a gallows and prepared a noose for the banks. It’s past time we step back and let it do what it does best, what it’ll do eventually anyway, and what’s best for everybody.

    • pparke500 says:

      Not only is it shocking that law professors would be protecting this large scale attack on the rule of law and proposing that we give our trust to another set of courts to correct the problem when the courts we have now are part of the problem (so why should we trust courts, any courts?), but their solution does not include any claw back of illegal profits by the banksters. Why not? This is the fourth year in the row for record profits at the banks. Why do they need help now…………?

      • Fraud upon Americans says:

        The biggest problem with the missing paperwork is that the banks actually find out their paperwork is lacking when a homeowner applies for a modification which the banks were given billions of dollars to create. Since the banks don’t actually have the note/mortgage anymore because they sliced and diced them and sold them to different investors, they refuse the modification for no reason other than that they have no note/mortgage to modify. The modifications would keep people who can pay the mortgages in their homes and get the recovery in motion. Instead, the banks start bullying the homeowners and delaying the process because they can’t produce the mortgage for modification. In their bullying process, the banks get some homeowners to panic. Otherwise, the bank rolls the dice and goes to court and hopes the homeowners and their lawyers and the judges don’t realize the banks have no paperwork or no standing. Why don’t the banks want us to see the paperwork on all these mortgages? Because the documents represent a death sentence for them that’s why. Lost note you say BANKSTERS?? Yeah RIGHT…Look out because the BIGONE is coming soon.. Great SCAM you had planned eh banksters?? NOT SO FAST!!! Because it’s game over soon and you know it..

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