The Lender-Wall Street Foreclosure Conspiracy

Well it looks like the massive fraud perpetrated by Wall Street and lenders who package, securitized and sold their loans is finally getting the attention of the main stream media. Only this time if they follow “the rule of law” they would bankrupt all the major money center banks on Wall Street. And of course “the rule of law” was the reason why the federal government refused to force lenders to write down loans to current market value if the homeowners promised to stay in their home and make payments for 3 or 5 years.

Karl Denninger Explaining Foreclosure-Gate

For years Wall Street and the major US banks have been making insane huge profits from the issuance and trade of Mortgage Backed Securities. And they have systematically heaped all this toxic debt to Fannie and Freddie, the Federal Reserve, Pension Funds, Insurance Companies, Municipalities, and other investors seeking low risk AAA securities. At stake will be the forced buy back of these securities. Of course this will never happen. But what will is hard to say what will happen.

So let’s look at why the government has been looking the other way for so long:

25% of the American economy revolves around the buying and selling of real estate. What will create jobs for our system are new home loans, refinances and home buying. For example, just off one new real estate transaction, hundreds of people will be stimulated and with a loan modification, not so much.

This is really simple  economics when you think about it.  The Government wants the foreclosures to roll on.  They are thinking of all the “economic stimulus” it provides.

1. Real estate agent gets paid on the buying side
2. Buying broker gets paid
3. Brokers employees get paid
4. Selling agent gets paid
5. Selling broker gets paid
6. Selling broker employees get paid
7. Old lender gets paid off
8. Old lender employees get paid
9. New lender get s new loan
10. New lender employees get paid
11. New lender sells to another new lender and is paid
12. Escrow officer gets paid
13. Escrow office gets paid
14. Loan gets sliced and diced on Wall Street into credit default swaps and mortgage backed securities
15. Slicer and dicers get paid
16. Wall Street salesman now sell this sliced and diced mortgage all over the world
17. Government gets paid off taxes and get money on every ounce of profit that is made in this never ending chain
18. New homeowner buys stuff at home depot
19. Home Depot now has to hire more employees to deal with the homeowner demand
20. I can go on and on

So what does a homeowner with a loan modification stimulate?

1. Apple Bees a couple times a month
2. Premium Red Baron Pizza every Saturday instead of $5 cardboard pizza Little Ceasers
3. Instead of Keystone budget beer, you stimulate yourself with a Corona and lime
4. Instead of Wall Mart wardrobe, you venture to Ross
5. Instead of the $1 old movies, you now go for the $3.99 new releases

To learn more about the foreclosure crisis and how you can use the loan modification process to help your family rebuild your finances visit our friends at foreclosure solvers or the foreclosure solvers loan modification video series.