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Adding Up The Fed, Foreclosures and Fraud: What It Means To You

18 October 2010 One Comment

Foreclosure FraudThe foreclosure  fraud mess is spreading and depending on what you’ve read, you may or may not understand any of it.  The bottom line is that the process banks used over the years to move mortgages around, securitize them, and sell them to investors, it was done in a shady manner.  Real estate documents were meant to have a real paper trail with inked signatures.  In many cases (millions), the process was overlooked and mortgages were transferred or securitized in an incorrect manner.  This means that in tons of cases, nobody is sure who legally owns the mortgage.

Why does that matter?

Because if someone isn’t making payments, a bank will try and foreclose on them.  If the bank doesn’t own the mortgage, they can’t enforce a foreclosure.

So, what does this mean?

Many people are going around saying you should demand your note and written proof of ownership from your mortgage company (and maybe you should), but this isn’t going to lead to you getting a free house like some are claiming.  Nobody is going to get a free house.

Do you really think the people who make up the rules and laws of this country are going to let the little guy beat the big guy?  Of course not.  That’s not how it works.  Not now, not ever.

So, get rid of the idea that somehow nobody owns your mortgage and you can stop making your payments.  Might something happen politically where people get out of their mortgage?  Maybe.  Anything is possible in our circus-like system where the less responsible you are, the more you are rewarded.  But, I wouldn’t strategize based on this happening.  Pay your mortgage.  Why stress out over the eventual result of your strategic default anyways?  Not worth it in my opinion.

Now, there are some large scale ramifications for the economy in my opinion.

This foreclosure scandal is just one more nail in the coffin of the financial system.  The biggest result will be a continued loss of confidence in the system and in the economy.  This will make consumers retrench even more, and it will make people bail out of the traditional financial system (stocks, bonds, savings accounts) even more and turn to alternative assets like gold & silver.

The more confidence lost, the more bullish it is for gold & silver.

The Fed has been fighting the financial system collapse now for several years by pouring money into the abyss.  Of course the Fed has prevented a complete collapse by buying worthless assets that nobody else would buy from the banks.  Meanwhile, more and more assets via the foreclosure crisis are becoming worthless by the day.  Got another few trillion, Ben?

If anything, this new mess should just show you that the entire financial system is a complete circus.  It’s corrupt, it’s incompetent, and it’s insolvent.  The Federal Reserve is betting the house that they will be able to somehow recreate economic growth via inflation and that the inflation won’t get bad enough to where people grab a pitchfork and storm the halls of leadership.  A dangerous bet as inflation will slaughter what’s left of the common folks’ financial lives.

How will you make out if horrific inflation materializes?  How will you make out if the financial system collapses?

Important questions to consider.

One Comment »

  • TaJ said:

    One of the effects of the foreclosure title issues that are coming to the fore is an erosion of confidence in who actually owns what. If you can make up documents out of thin air that give you ownership over real property, and have them be enforceable, then really how are we different from the third world?

    Remember that the freeze-up of the money markets that sparked the financial panic was due in part to financial organizations no longer being able to trust each other.

    Even the pernicious destruction of asset forfeiture laws at least acknowledge that there are rights that they're over-riding. The document fraud being committed by the banks doesn't even bother to go that far – they own whatever they say they own, and that's that.

    So there's a case to be made that this is bullish for physical gold, but maybe not so much for GLD…