What does Liz say?

“We believe people should meet their contractual obligations when they have the ability to meet them, and that we should only honor what it suits us to honor at any given time. Contracts are for the chumps that sign them to honor, not for those of us who hold the notes,” says Robert Davis, the executive vice president of the banking group.

Fixed it for him.

Good piece, Masaccio. Well said, and researched.

Excellent post massacio, thanks.

This bit was exactly right:

This mess is just one of the reasons I am so angry at the Administration. Every step it has taken has favored capital over families, as if all the blame were on one side. It wasn’t.

(emphasis mine)

You see this is absolutely everything Obama does, corporations get the benefit of the doubt and all the largesse the treasury has to offer, the citizens have to suck it up and stop whining.

It is beyond insulting.

Oops “see this in” not “is”

You forget, though, that the mortgage backed securities are now a big part of our financial system, including “safe” investments like money market funds. It isn’t “capital vs families” it is families vs families. I assume that most of the readers have some money in the bank, and they might be a bit perturbed to watch their bank balances disappear in the same way that their 401(k) balances did. FDIC can only cover so much unless we bail it out as well, and we might not have the money for it — and FDIC only covers bank deposits. (There is a separate system for investments but I am wary of it for reasons that are too long to go into.)

The banksters have already taken their overlarge share of the money and run with it. The $15 million yachts have already been bought. We are left with the other peons fighting for the scraps. Perhaps the ideal solution would be for the banksters to be declared a criminal orginization and have their assets seized — although in reality such moves would be the death of our currency.

the loss has already occurred and is getting worse each day that goes by, we are just waiting to see who takes the loss

the remedy to the contract is foreclosure but the banksters have messed this up and they are now trying to cover it up

she should stop paying and force their hand

in the end you can bet the banksters (thru their friends in the WH and the Congress) will try to shift their losses to the taxpayers

Damn, there you go again, cutting to the core of the issue, saving me the time and effort to construct a long response.

Thanks masaccio.

The only thing NPR likes better than a bankster is a neocon warmonger.

Grace has the common problem of being a moral person dealing with immoral, evil, parasitic forces.

That map is wrong. It should say “SOLD“.

You see this in absolutely everything Obama does, corporations get the benefit of the doubt and all the largesse the treasury has to offer, the citizens have to suck it up and stop whining.

Just.Like.Shrub

Should also state: “Bank Owned (We Think) Property”

With fine print that says “We have the title here somewhere, honest. You can trust us”.

Yep. I’ve become quite a fan of Margaret’s expression MAWBB (Might As Well Be Bush).

BTW, thanks for fixing my typo in your quote ; )

Thanks. And I mean MAWBB from the heart. I’ve stopped seeing any difference.

Quite agree. And at this point, I dislike Obama even more than W. I never expected W to be anything more or less than what he was: a legacy, entitled drunken frat @sshole who made it only because of his wealthy family and CIA dad.

Obama? Never was that thrilled with him, either, but never thought he would be such a complete, abject sell-out failure.

It’s obvious that the Obama administration policy is to look the other way, while pretending it is not encouraging the banks to accelerate foreclosures. The administration must be shamed for this. Shout it from the roof tops: The Obama administration policy is to let the banks foreclose on as many families, as quickly as they can, in order to try to cover up the banks’ fraudulent actions at all stages of the housing bubble, starting with intentionally blowing the bubble, fraudulent inducement of loans extended to people the bankers knew couldn’t repay the loans. The Obama administration is helping the banks strip equity from the middle class, from our homes, from ouir 401(k) retirement plans, from our ability to feed ourselves, stripping us into poverty.

The Obama administration is driving the getaway car.

During Bush’s reign, I put a bumper sticker on my car, it simply said “Impeach”. When Obama was elected, I waited for him to give me a reason to take it off. I’ve given up on the waiting, now it works just as well for both ; )

The point is that renegotiation is the best outcome for everyone, including the pension funds and the endowments and the money market funds that own this trash. The current way forward, trying to shift the losses onto homeowner families, will result in much steeper losses and will take much longer to clear the market.

There’s loads of Sacramento Kings basketball players currently trying to short-sell their now way overpriced mansions and penthouses. Some citizens have complained that the wealthy should continue to pay for their houses, even though the mortgages are upside down. I keep waiting, though, for the conservatives and libertarians to really rip into these wealthy athletes for, uh, dropping the ball (as it were), in the same way that they excoriated and trashed less wealthy people who had to walk away because they simply could no longer afford to pay their mortgages.

I won’t hold my breath, though. The Kings athletes are wealthy, so I’m sure there’s a different rule for them, than for the rest of the serfs.

It’s pretty scary esp because it’s very hard to know what to do. And you know that it’s not going to be super wealthy that will “take it” when everything collapses. No, it’ll be serfs who’ll be told to bend over as usual.

I’ve become quite a fan of Margaret’s expression MAWBB (Might As Well Be Bush).

Me, too. Let’s try to get that one out wide to the rest of the web. Who knows, maybe it’ll catch on with the public.

Bravo, masaccio!

I think you are right to focus on the emotion part of this equation.
For decades (centuries) the idea of owning a house has become more than a financial transaction. It is a home. With all the emotional energy that the word home brings to the table. Safe as houses?
Safely at home.

The housing industry didn’t just sell houses. They sold homes. Piece of mind. Security. Then an investment. If you remove the investment you might be okay, but that doesn’t remove the emotional “home” part of the story.

When we compare how home owners react vs. how capital owners react to this crisis we need to think about what emotional attachment is included when losing one thing (“a home”) vs. another other (“liquid capital”).

In order to make the equation compatible we would have to dig into which parts of losing capital would have the emotional force of “losing your home” I think for Capital it have to would be something like “going to jail” or “losing ALL your money” or “your company is destroyed, your capital is lost, you lose your job, you lose your personal savings and your spouse looks down on you.”

When reporters have this discussions with the two groups they rarely go after the emotional side of the story from the bankers view. Do they have emotions? What would it take for them to talk about their emotions? If jail sentences, jobs and personal income is off the table we will only hear technical comments not emotional comments.

If reporters did it might point out to the readers why people are still doing financially irrational things like staying in a home that his massively underwater and consuming the rest of their savings to do it.

Don’t walk away. Save the money you would otherwise spend on the mortage and force them to evict you.

Great piece, masaccio. Just one thing I’d like to add. I know a fella who was under water, having purchased a new home from a builder for $210K and three years later the home was worth apx $150K. After mulling his situation over for months, he finally decided that, if he had to give up his dream of home ownership because he could rent a similar property for about $600/mo less, and his investment turned out to be dust in the wind, he might as well at least live where he prefers, and that is San Diego. He came to AZ because he would never be able to afford to buy in CA, and he has family in AZ. So he contacted his bank, told them he was at the end of his rope, he’s going to go bankrupt and he’s moving out of state. The bank seemed to sympathize and, more importantly, offered him $2,000 if he would leave the property in swept clean condition and submit to an inspection on the date he moves out. The inspection went well and he walked away with a check for $2,000 in hand. Go figure.

Here is a question for everyone in this thread.

“When you hear the word ‘cramdown’ what feeling or emotion does that word bring up?

“Before you understood what ‘cramdown’ was, did you think it was a good thing for people or for banks?”

“What word /words would you use instead of ‘cramdown’?

We always say that the right is better at words and phrases. Here is a word that I think has, for me, a negative connotations. “Stop trying to cram your views down my throat!” “We crammed food into the duck to maek foie gras”

So, if we were the right and we wanted to explain the concept of “cramdown” what would we call it.
“mortgage relief”?

what would we call a bill that offered cramdown? “Homeowner protection”?
“The HomeOwner personal property control Act”?

I say Obummer should take a haircut; Foreclose on the Obamavilla at the Casa Blanca buck stop, 1600 Pennsylvania Avenue, D.C., NLT 2012!

1. She should get a really good lawyer.

2. PRODUCE THE NOTE!

The conversation seems to revolve around the two obvious parties to the deal, the bank and the home buyer. But what about the third party, the one that sold the house? Every house sold, notably in the last ten years, is now “underwater”. But the sellers of those houses have or had the money. What about them?

What about them? Once they had sold and gotten their money, they are out of the picture and most likely moved on and purchased a more expensive home leaving them underwater as well.

Thanks masaccio!