03/05/09 Baltimore, Maryland Fed up with the homeowner bailout?
You can actually do something about it. And I don’t mean write your congressman or buy a bumper sticker.
You can stop paying your own mortgage, free of fear that you’ll be kicked out of your home, provided you play it right.
And that’s not me making the suggestion. In fact, it was all over the place just last fall.
You say you missed it? You find the suggestion morally offensive? Just hang with me a bit.
In October Peter Schiff wrote an op-ed for the San Diego Union-Tribune titled, simply enough, “Stop Paying Your Mortgage.”
After supposedly bailing out the fat cats on Wall Street, no politician wants to be accused of evicting struggling families. Once you understand this, all of your anxiety should melt away. Why pay your mortgage if foreclosure is off the table, and if you know that lower payments, and possibly a reduced loan amount, would result? A tarnished a credit rating is a small price to pay for such a benefit…
If your mortgage does become the property of Uncle Sam, the growingly popular impulse to “just walk away” should be replaced by “just stay and stop paying.” No one will throw you out. After a few months, or years, of living payment free, you will get a call from a motivated government agent eager to adjust your loan into something affordable.
One could argue Schiff was being tongue-in-cheek. But Karl Denninger, writing the same month, was dead serious, offering an explicit and audacious justification for stiffing your mortgage holder: If the mortgage holder was benefiting from TARP money, you’re essentially reclaiming some of your own tax dollars.
Since our government continues to pursue the idea that everyone from the imprudent speculator and even the fraudulent buyer who overstated his income, along with the bankers who literally stole billions, can and will be allowed to rip off the public treasury, creating tax burdens forever for ourselves and our children in a futile attempt to prop up home prices along with screwing future buyers by keeping homes unaffordable, I am forced to advocate that you, The Prudent American, do back to the bankers and your neighbor what the bankers and your neighbor did…
I know, its a radical step. And one more time, you need to consult with both a CPA and attorney before taking any such step – spend the couple hundred bucks to get both in the same room and go over exactly what this entails and what sort of impact it may have on you.
But it would appear to me, at this time, that this is the only way you can recover at least some of the tax burden that you have been thus far and will be in the future assessed for our government’s idiocy and pernicious theft of taxpayer dollars.
By the following month, November, the suggestion had gone mainstream. “Should you keep paying your mortgage?” asked Kathleen Pender, the San Francisco Chronicle’s personal finance columnist. “If you have significant equity in your home, absolutely. If you don’t, it’s getting harder to answer that question, especially when our government keeps giving people who owe more than their homes are worth so many reasons not to pay.”
Pender went on to quote Schiff and to outline precise, practical steps a homeowner could take.
Now again, all of this was last October and November. So here’s my question: Now that the Obama administration has rolled out a $275-billion “homeowner rescue” plan, why aren’t we hearing more about this?
What Schiff and Pender and Denninger laid out is a concrete plan of action in which you can reclaim what’s rightfully yours.
But we don’t hear any of that now. All we hear instead is what might be called “resentment rhetoric.” A long, dragged-out whine, and a misdirected one at that — targeting not the banksters, but solely the irresponsible homeowners.
Typical of this is the Tennessee Republican Party, which has begun selling bumper stickers saying “Honk if you’re paying my mortgage.” 4000 have been sold in five days, at $5 each, or three for $12.
This is the source of my frustration with Rick Santelli’s infamous “rant.” It really doesn’t matter whether he nailed it last fall on the insolvency of the banks. In popping off about the homeowner bailout, without taking the banksters to task at the same moment, he took his eye off the ball. Especially because the plan doesn’t even help the people it claims to help — because it won’t enable them to build equity in their homes. Indeed, they’ll likely end up further in hock to their lenders.
Imagine if someone could harness the frustration of these underwater “homeowners” (glorified renters, really) with the frustration of the people who’ve managed to keep up with their payments… and directed all that outrage toward the banks and the Federal Reserve that created the whole mess.
Instead they’re divided along red state-blue state lines — resentful right-wingers fed up with “deadbeat” homeowners who only followed the advice of esteemed leaders like Alan Greenspan and can’t understand why they’ve become an object of such vitriol. Just look at the comments thread in the Wall Street Journal blogpost about the bumper stickers to see what I mean.
If I were more conspiracy-minded, I’d think it was all a bankster plot. Divide and conquer.
It’s a sorry state of affairs in this country when they don’t even have to resort to such efforts.
On another matter: The Fed just told Bloomberg to go jump in the lake. Bloomberg sued the Fed under the Freedom of Information Act to find out just what sort of toxic “assets” it was taking onto its books, and from whom. The Fed’s rationale is fascinating — that the New York Fed, where most of the relevant documents sit, is not subject to FOIA requirements. Is that because it’s not really a government entity? The mind reels.
The Treasury can’t make that argument. It’s under court order to comply with a similar FOIA filing by Fox Business. The deadline is March 23. We shall see.
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Dave, it’s not that I do or don’t disagree with your critique of Rick Santelli, it’s just that it smacks terribly of nitpicking. Your critique of Santelli also seems to take a lot out of context, namely, presenting Santelli’s remarks as if he were sitting in the peace and quiet of his study calmly composing his thoughts instead of firing off during a live broadcast from the floor of the exchange. I mean… Christ man, how about we start with a little bit of solidarity for a change. Give the Santelli thing a rest already.
Dave, what the hell are you talking about?
People – even the ones who buy that bumper sticker – are protesting THE GOVERMENT’S BAILOUT of non-paying mortgagees with taxpayer funding.
You’re against that too, right???
Santelli’s rant WAS NOT a rant against those not paying their mortgages. It was a rant against the government CONFISCATING OUR WEALTH TO BAIL OUT those irresponsible mortgagees.
See the difference?
Aren’t you also against that???
Blue state / red State? I don’t see that at all in this except that Dems are the only ones who might believe Obama has a clue at this point – or even good intentions possibly.
Seriously, move on…
P.S.
I want MORE of this kind of popular sentiment. I hope people are ready to grab the pitchfork and the torches at this point.
Do not try to stifle it. That’s the Government’s job apparently. Let THEM be the ones going after Limbaugh, Santinelli, Cramer et al…
Dave,
It’s more bitter bandaids to braintumours — why not use a form of activism, that goes right to the heart of the exponential function fiat currency, lying lawyers, banksters hearts!! Take em on legally — and there is PRECEDENT FOR IT!
Dead-Mans-Hand:
Is it Possible All Mortgage Contracts Are Void and Foreclosures are Invalid?
I first stumbled across the very curious case of Jerome Daly through an article by Ellen Brown, author of the book Web of Debt. It concerns a foreclosure case in Minnesota in 1968 that has yet to be overturned, and the issues go straight to the heart of the sleight of hand that the banking system is built upon. The case also presents an optimistic view of how individuals can take back the power to create money from the private banks.
Jerome Daly was a homeowner living in Minnesota who stopped paying his mortgage. The lender, First National Bank of Montgomery, of course, sued the man for foreclosure. Daly presented his argument before a jury as to why he did not owe the bank anything.
Essentially, he argued that the bank had not provided any consideration for Daly’s promise to pay back the loan. Consideration is one of the requirements for a valid contract, and without it, a contract is void. Daly was arguing that the mortgage contract was void and did not need to be repaid because the bank had not actually given him any money. The lender had created the money out of thin air in response to the promise to repay the loan.
This credit, argued Daly, was not real money that counted as consideration and therefore did not need to be paid back. Without valid consideration, the mortgage contract was null and void and nothing was owed to the bank. Astoundingly enough, the jury agreed with him and declared that the mortgage was not a valid contract.
The judge and a representative testifying on behalf of the bank also agreed with Daly’s argument, in effect. The bank’s president, Mr. Morgan, admitted that the money did not exist until Daly was given the mortgage, and the money was created out of thin air.
The judge wrote a supporting decision in the case agreeing with Daly, writing “The money and credit first came into existence when they created it. Mr. Morgan [the bank's president] admitted that no United States Law or Statute existed which gave him the right to do this.” Thus, the lending of the money to Daly in the form of a mortgage did not constitute valid consideration. The bank did not even have the authority to create money out of thin air according to any known law or statute.
Full Story
Of course the Fed isn’t a part of the government and the FOIA doesn’t apply.
Lewis v. United States, 680 F.2d 1239 (1982)
John L. Lewis, Plaintiff/Appellant,
v.
United States of America, Defendant/Appellee.
“The Court of Appeals, Poole, Circuit Judge, held that federal reserve banks are not federal instrumentalities for purposes of the Act, but are independent, privately owned and locally controlled corporations.”
yes Nick, that is so. Time to abolish the frikkin’ fed…with pitchforks and torches? FrankenFed? Won’t happen with anything short of national disintegration though. Reminds me of Carlin’s rant about “They OWN you” and “The Club”…
God,
I just decided to stop paying mine today. It is 2:30 AM on the 16, the day after the due date and I feel so worried about that.
The truth is that up until yesterday I wanted to pay, and I have not consulted with a lawyer and a CPA just yet. But I have now lost my job and I can’t affort to run out of cash, with a little one to feed.
Still, it sound immoral, illicit and flat out wrong, and my decision making has not been the most brilliant recently, to say the least. I need someone to tell me that it is ok, although I know I won’t believe him. I wasn’t brought up to chicken away from my obligations and duties…And God, that is just the way it feels right now…
Val, what can possibly be immoral about stiffing someone who’s screwed you and countless others for millenia? In fact, you’re not even stiffing these people at all, they are stiffing you. The fact is, when you signed the Promissory Note, that made YOU the Creditor and the Bank the Debtor. The money didn’t EXIST until you signed your Promissory note. Then the Bank CHANGED the money. Remember when Jesus drove the moneychangers from the Temple? Same thing here. Then, the Bank puts an agreement in front of you making you the Tenant for 30 years or whatever, forcing you to pay the principal and interest which is supposed to be paid back to YOU. Then these bastards charge you ungodly interest on top of it. I sent a Demand to my Bank and Car lenders yesterday. They are required by Law to answer my questions. They really can’t answer my questions because it will prove how much they are ripping me off. If they don’t answer in 30 days, I win by default. Go on the OFFENSE with these rats. DO NOT sit around til they make the move, move on them first and do it FAST.
It is an ominous sign that things are so obscenely perverse that Wall street rewards Goldman stockholders and employees for the profits it gained at the expense of those being evicted from their homes, and then cheers again for the “smart bets” they placed on commodities.
Was it just financial cronyism or something far more sinister when Hank Paulson, the former CEO of Goldman, got appointed as treasurer, and then bailed out AIG, while making sure that Goldman got paid off for the bets they placed on the imminent collapse of the sub prime loans they had pioneered, packaged and then sold off to unsuspecting investors..?.
Are Larry Summers & Tim Geithner still possibly only looking out for Goldman and other hedge funds , as they continue to try and convince us to stay the course, instead of demanding a moratorium of foreclosures and requiring that banks modify the loans?
How else do you explain that 9 months after the bailout, this trickle down plan that Paulson came up with is actually hurting those who need it the most, particularly as monthly mortgage payments keep re-setting ever higher?
We have reached the point, where we must wonder if it I by design, that the average borrower on Main street, cannot get through to his lender to discuss modifying his loan, and in the interim 1/2 a million more households per month, are losing their jobs and their homes?
Have Obama and much of the Democratic congress betrayed their core voter support, by pandering to the interests of Goldman and the rest of the financial community?
Where this any other country, the press would be reporting on this economical political chicanery, instead of applauding Goldman’s profits, and a well informed citizenry would be demanding that its government stop the payouts to Goldman and other hedge funds, while declaring a moratorium on all foreclosures, until the banks modify the loans..