Prevent the mortgage holder from auctioning any property at LESS THAN THE AMOUNT OF THE MORTGAGE LOAN. A SCENARIO: You come to my bank to get a mortgage for a home you intend to purchase for the appraised value of $500,000. My bank initially approves you for a standard 80% loan in the prime market for $400,000.00. All looks ok so far. You proceed and enter into a contract with a closing date. My bank then deliberately holds up the process with various delays, and then turns you down for some created reason. But wait; my bank then finds a way out, in the "sub prime" market with a "no doc" (no documents required) loan, but for far less than the 80% down, say at 60%. We now loan $300,000.00, or $200,000.00 less than the appraised value of the property. Now, if my bank gets the chance to foreclose against you, we get your property valued at $500,000.00 for $300,000.00. Not Bad! When my bank initiates a foreclosure against the property it is done by filing a lis pendens (issue pending) with a summons and complaint which notifies the whole world publicly that the title and ownership in the property is in serious jeopardy and is being foreclosed upon. This is known in the real estate market as the "kiss of death" and no serious buyer will get involved with extra attorney's fees and no real assurance that the title will be cleared in a reasonable period of time. You will also find that brokers, or owners in the area will broadcast this information to all prospective buyers to make the properties they represent look more attractive. The fact is, that it is in the financial interest of the mortgage holder to kill any sale so that it will eventually go to foreclosure where they can purchase your mortgaged property for probably under far less than $100,000.00. Perhaps for several thousands to maybe $50,000.00. Not Bad! Not Bad! My bank can almost make real money from the foreclosure transaction. Therefore, my bank has no real interest in keeping you in your home, regardless of what we say to you. And don't believe them when they say "we don't want your property". We still get to keep all the closing costs you paid us, along with any interest you have paid us so far. How can we lose.
ANY WONDER WHY WE GAVE YOU THAT GREAT MORTGAGE IN THE FIRST PLACE, EVEN THOUGH WE KNEW YOU WOULD PROBABLY DEFAULT ON THE PAYMENTS? Remember all our TV, radio and mail ads offering "0% closing points, 1 or 2% payments, and no documents" deals?
The best part was by us convincing the media and public that
"We were the ones that got ripped off."
We are the professionals, WE know what we are doing, and we have
had years to fully understand the market. But as our scenario
above shows, it was all a clever plan, and nicely carried out.
So well that the Congress, the Senate, and both Presidents are
bailing us out for our "mistakes".
Normally, at least in the past, a lender would require you to
put up at least 20% of the mortgage with your own money.
However, within the past few years they would
steer
you into a "no doc" loan in the
"subprime market" to avoid state and
federal lending laws. It is against state laws to lend money on
a mortgage where the borrower can't pay it back.
They will give you a loan, as the public has clearly
seen, because they get to keep the high closing costs, AND can and then
often sell your obligation to others to collect, so that someone else
ends up with your equity. Not Bad! Except for the borrower.
As has been commonly reported and known, good and bad mortgages have
been bundled and sold as "securities" throughout the world. Why?
Because someone else has a claim on your TITLE!
And you don't know where your original signed note and mortgage
are!
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