Friday, April 27, 2012
Wednesday, April 25, 2012
Endgame: When Debt is Fraud, Debt Forgiveness is the Last and Only Remedy, by Zeus Yiamouyiannis, Ph.D., copyright 2011.
Today I present an important guest essay by long-time contributor Zeus Yiamouyiannis, who suggests that when debt is essentially fraudulent, then debt forgiveness is both the logical and the only remedy.
Endgame: When Debt is Fraud, Debt Forgiveness is the Last and Only Remedy, by Zeus Yiamouyiannis, Ph.D., copyright 2011.
Introduction
Finally serious economists are considering a position I have been maintaining and writing about since the 2008 financial meltdown. Whatever its name— erasure, repudiation, abolishment, cancellation, jubilee—debt forgiveness, will have to eventually emerge forefront in global efforts to solve an ongoing systemic financial crisis.
“On a grand scale the only way to erase counterfeit money and (counterfeit) assets of hundreds of trillions of dollars is to erase the debts associated with those fake assets. (Let me underscore again, these are not “toxic” assets, they are fake assets.)… Forgiveness in general, and forgiveness of debt in particular, stand as virtues if they free us up to acknowledge, address, and learn from our culpability, start anew, and create forward.” (The Big Squeeze, Part 3: The Quiet Rebellion: Civil Disobedience, Local Markets, and Debt Erasure (January 29, 2011)
Debt forgiveness, therefore, accomplishes two important things. It eliminates the increasing and outsized portion of productive enterprise to pay off unproductive obligations, and it clears the ground for new opportunities, new thinking, invention, and entrepreneurialism. This is why the ability to declare bankruptcy is so essential in the pursuit of both happiness and innovation.
Debt forgiveness, therefore, accomplishes two important things. It eliminates the increasing and outsized portion of productive enterprise to pay off unproductive obligations, and it clears the ground for new opportunities, new thinking, invention, and entrepreneurialism. This is why the ability to declare bankruptcy is so essential in the pursuit of both happiness and innovation.
Currently we are mired in a “new normal” and calls for “austerity” which are nothing more than the delusional efforts of a status quo to avoid the consequences of its own error and fraud and to profit evermore. So bedazzled by the false wealth created by debt multiplication and its concomitant fantasy of ever-higher returns, this status quo continues to be stupidly amazed that people are not spending and that the economy is not picking up. But how could it be otherwise?
Productive wealth has been trapped in a web of parasitic theft, counterfeiting, liability evasion, non-regulation, and prosecutorial non-accountability. All the fundamental attributes of a functioning exchange economy have been warped to reward creative criminals. I spoke extensively about this in my posts from 2008. (Imaginary Worth, Empire of Debt: How Modern Finance Created Its Own Downfall (October 15, 2008)
The unsustainable nature of debt
Two observations: 1) Fabricated/parasitic so-called “wealth” destroys value by diluting the value of productive wealth. 2) Debt/credit that cannot be paid back is never an asset and is always a hot-potato liability (needing to be foisted to a greater fool to garner “profit” and transaction fees):
“The models [modern debt are] based upon had no contact with reality. They assumed unlimited growth and ability to pay. When matched against the reality of people paying ten times their salary for mortgages that actually added more money owed to their principal (i.e. with negative amortization), required no money down, and set up “balloon payments,” large step-ups in payments after a few years) there is no possible way they could NOT default in a predictable span of time.” (Part II: How the Credit Default Swap Scam Works (October 13, 2008)
Systemically, all debt that charges a percentage (“usury”) originates in delusion. Debt grows exponentially indefinitely, growth (income and otherwise) cannot. This leads to a widening condition where the fruits of productive “growth” devoted to interest payments increase until those fruits are entirely consumed. (The Elephant In The Room: Debt Grows Exponentially, While Economies Only Grow In An S-Curve (Washington’s Blog)
Systemically, all debt that charges a percentage (“usury”) originates in delusion. Debt grows exponentially indefinitely, growth (income and otherwise) cannot. This leads to a widening condition where the fruits of productive “growth” devoted to interest payments increase until those fruits are entirely consumed. (The Elephant In The Room: Debt Grows Exponentially, While Economies Only Grow In An S-Curve (Washington’s Blog)
Once this happens, stores of wealth (hard assets) begin to be cannibalized to make up for the difference. You see this in Greece with its sale of public assets to private companies, and in middle-class America where people are liquidating retirement accounts to pay for their cost of living.
This problem is compounded by a private Federal Reserve that lends money into circulation at interest, and then allows the multiplication of this consumer debt-money liability through fractional reserve banking. The money in circulation today could pay only a small fraction of the total private and public debt. That fact alone is evidence of a kind of systemic fraud. “If you just work hard enough, save, and make sensible decisions, you can get out of debt” could only physically work for a bare fraction of the population, given the money-to-debt ratio. The rest would have to simply default to clear the boards.
This is why debt forgiveness makes not only moral but rational, mathematical sense. Finances require balancing to be coherent. There must be some way to redress systemic imbalance. One has to be able to “zero the scales” to get an accurate weight of value and to re-establish healthy value creation.
Voices in the debate
Some analysts are beginning to see the forest through the trees in terms of debt forgiveness. Steve Keen, Australian economist and current deflationist, and Michael Hudson, American economic contrarian and prescient essayist, are both using clear-sighted reality-based financial analysis to debunk accounting games that obscure the untenable debt situation and to call for debt forgiveness.
How can selling sovereign assets and imposing austerity on Greek citizens (taking money out of their hands through higher taxes and lower benefits) do anything other than hollow out value and contract the Greek economy in the face of a deep global recession? Michael Hudson: It can’t. Greece’s debt needs to be written off.
“It seems unreasonable and unrealistic to expect that large sectors of the New European population can be made subject to salary garnishment throughout their lives, reducing them to a lifetime of debt peonage… (T)he only way to resolve it is to negotiate a debt write-off…” (The Coming European Debt Wars: EU Countries sinking into Depression (Michael Hudson, Global Research, April 9, 2010)
(“[We’ll Have] a Never-Ending Depression Unless We Repudiate the Debt, Which Never Should Have Been Extended In The First Place” (Washington’s Blog)
Why isn’t “quantitative easing” and flooding the U.S. economy with debt-money working to prime borrowing and lending? Steve Keen: Because the money is going into deleveraging in a time of overextension:
(“[We’ll Have] a Never-Ending Depression Unless We Repudiate the Debt, Which Never Should Have Been Extended In The First Place” (Washington’s Blog)
Why isn’t “quantitative easing” and flooding the U.S. economy with debt-money working to prime borrowing and lending? Steve Keen: Because the money is going into deleveraging in a time of overextension:
“Bernanke is throwing (a) trillion dollars into the system. Rather than that leading to ten trillion dollars of additional credit money, creating the inflation people are expecting, that trillion dollars is all that goes in, and people deleveraging actually reduce their level of spending by more than a trillion dollars by trying to pay their debt down, and it cancels out what the government is trying to do… We need a 21st century jubilee.” (On the Edge with . . . Steve Keen (Max Keiser, video)
Other well-known commentators are not seeing the debt forest at all. In their contentious debates over deflation and inflation, neither Rick Ackerman nor Gonzalo Lira seem to be aware of the overwhelmingly fraudulent nature of present global debt– including the 600 to 1,000 trillion dollars of fabricated notional wealth represented by the derivatives markets, fraudclosure, and a host of other sources.
Other well-known commentators are not seeing the debt forest at all. In their contentious debates over deflation and inflation, neither Rick Ackerman nor Gonzalo Lira seem to be aware of the overwhelmingly fraudulent nature of present global debt– including the 600 to 1,000 trillion dollars of fabricated notional wealth represented by the derivatives markets, fraudclosure, and a host of other sources.
Rick Ackerman: “’Ultimately, every penny of every debt must be paid — if not by the borrower, then by the lender.’ Inflationists and deflationists implicitly agree on this point… and we differ only on the question of who, borrower or lender, will take the hit.” (Let’s Think This Through Together….)
I posted a pithy response in the comment section:
“Both Rick and Gonzalo left out the obvious third way–debt forgiveness. No… debt does not have to be paid by someone; it can be absolved, especially debt created upon fraudulent and/or counterfeit-ridden practice… (D)erivatives are not real wealth, and neither was the ostensible climb in the values of housing resting in large part on those phony-wealth derivatives.
The only “real wealth” here revolves around ability to produce real and needed goods (to allow us to survive), and the ability to create something that increases one’s quality of life (to promote our thriving). Precious little of the present global economy involves either one of these. Yeah, if we use FASB standards and Goldman Sachs accounting, we can pretend our worthless junk is all really simply very rare, “unique condition” collectibles worth trillions of dollars.
I’ve got a better idea. Take our financial junk out of the global attic in boxes, put them out on the front lawn, and see if anyone wants to pay a few bucks for the various items, give away the leftovers to anyone interested passing on the sidewalk, and recycle, donate, or dispose of the rest. It’s a moving sale, and if our economy is going to get moving, maybe we ought to have one.” (Zeus Yiamouyiannis April 6, 2011 at 4:11 pm)
How it might play out
The only “real wealth” here revolves around ability to produce real and needed goods (to allow us to survive), and the ability to create something that increases one’s quality of life (to promote our thriving). Precious little of the present global economy involves either one of these. Yeah, if we use FASB standards and Goldman Sachs accounting, we can pretend our worthless junk is all really simply very rare, “unique condition” collectibles worth trillions of dollars.
I’ve got a better idea. Take our financial junk out of the global attic in boxes, put them out on the front lawn, and see if anyone wants to pay a few bucks for the various items, give away the leftovers to anyone interested passing on the sidewalk, and recycle, donate, or dispose of the rest. It’s a moving sale, and if our economy is going to get moving, maybe we ought to have one.” (Zeus Yiamouyiannis April 6, 2011 at 4:11 pm)
How it might play out
This subtle debt extortion creates a system of never-ending debt-slavery for a vast majority of the population. When this “manageable” slavery is aggravated by a desire to use hardship to extort ever greater assets from the overburdened at ever cheaper prices (what Naomi Klein calls “disaster capitalism”), by open and unapologetic widespread fraud, and by the unjust offloading of risk and liability to taxpayers who had nothing to do with poor decisions of private banks, then the systemic abuse is revealed in the daily lives of citizens.
Debt creates scarcity, which stimulates fear, which drives manic competition, which favors opportunism, collusion, and concentrations of power, which translates to abuse, which results in a collapse of legitimacy for the economic system. Overreach causes a breaking point, and we are getting close to it. Will the response be warfare, taxpayer revolt, political upheaval, mass default, debt forgiveness, something other, some combination? I have predicted pockets of violence would be mixed with some softer combination of taxpayer revolt, mass default, political upheaval, and debt forgiveness, along with a return to community exchange to meet basic needs. (The Big Squeeze, Part 3: The Quiet Rebellion: Civil Disobedience, Local Markets, and Debt Erasure (January 29, 2011)
This possibility of epic reprisal may very well compel banks to come to the table around debt forgiveness to avoid violent backlash and criminal prosecution, even over preserving their gravy train companies. The bitter irony of these companies and their galloping greed is that they ended up victimizing each other by selling junk to each other and extracting all the real value in salary and bonuses. Their assets rest on notional values, that when unmasked would drive each into immediate insolvency. They have simply been scam artists, producing little value and extracting mountains of money.
What might this look like? Looking at present trends and using the very useful framework of Kubler-Ross’s stages of grief, it might go something like this…
Average debtor:
1) Denial: Liquidate savings to pay for over-priced house and cost of living.
2) Anger and fear: Exhaust resources, experience want, compounded by austerity measures.
3) Bargaining: Attempt to negotiate with bank through HAMP and other mechanisms to lower payments. Banks don ‘t bite and even have incentives to foreclose.
4) Depression: Lose/default on the house and move in with family or cheap rental.
5) Find out life is better without being a debt slave and spend more time with community and the ones you love.
2) Anger and fear: Exhaust resources, experience want, compounded by austerity measures.
3) Bargaining: Attempt to negotiate with bank through HAMP and other mechanisms to lower payments. Banks don ‘t bite and even have incentives to foreclose.
4) Depression: Lose/default on the house and move in with family or cheap rental.
5) Find out life is better without being a debt slave and spend more time with community and the ones you love.
Bankers:
1) Denial: Collect 144 billion in bonuses after financial collapse and laugh as not a single trading day loss arises for zombie TBTF banks completely subsidized by governments.
2) Anger: Express false righteousness, indignation, and hubris over even modest/toothless demands/regulations attempted to be placed on them by governments. Exhibit sadistic zeal at being able to simply claim you own and liquidate properties they have no clear title to.
3) Bargaining: Experience dawning awareness that may have just cooked your own gooses as strategic defaults skyrocket, populist demands to prosecute fraudclosure gain traction, and quantitative easing ad infinitum dwindles and fails to keep stock prices artificially aloft. Improvise panicked attempts to “be reasonable” and actually negotiate, once the asset and money flow well runs dry.
4) Depression: Contemplate and realize possible bankruptcy by big banks. Retreat to the Hamptons to hire criminal defense lawyers, contemplate empty life, and shoulder the abuse of media and contempt of a global citizenry.
5) Acceptance: Trying to regain “good guy” status and avoid criminal prosecution by agreeing to be part of debt forgiveness.
2) Anger: Express false righteousness, indignation, and hubris over even modest/toothless demands/regulations attempted to be placed on them by governments. Exhibit sadistic zeal at being able to simply claim you own and liquidate properties they have no clear title to.
3) Bargaining: Experience dawning awareness that may have just cooked your own gooses as strategic defaults skyrocket, populist demands to prosecute fraudclosure gain traction, and quantitative easing ad infinitum dwindles and fails to keep stock prices artificially aloft. Improvise panicked attempts to “be reasonable” and actually negotiate, once the asset and money flow well runs dry.
4) Depression: Contemplate and realize possible bankruptcy by big banks. Retreat to the Hamptons to hire criminal defense lawyers, contemplate empty life, and shoulder the abuse of media and contempt of a global citizenry.
5) Acceptance: Trying to regain “good guy” status and avoid criminal prosecution by agreeing to be part of debt forgiveness.
Once defaults happen in increasing numbers and certain asset prices plunge (i.e. real estate), what will initially look like a bonanza for capitalist parasites could easily get out of hand, with people either unable or unwilling to buy inventory even at greatly reduced prices. Profits would tank at banks, liabilities would skyrocket even with most of it transferred to government guarantee. Because no one plays the game anymore, banks could go under as well, as people rise to vote out bank-friendly politicians and simply refuse to pay. This unraveling could easily force exposure of the notional value of derivatives in banks as worthless, meaning they are as bankrupt as the people they exploited. At this point, there will be a common desire and need to simply “forgive” the debts and try to find some way to distribute these empty homes.
Conclusion
Debt forgiveness simply calls out either the inherent systemic inability to make good on debts or the recognition that debt was produced through fraudulent means. In the present situation, both conditions obtain. There has likely been no point in world history where debt forgiveness has been so comprehensively merited. The only speculation from my point (barring world-wide global feudalism and eternal debt slavery) is whether we will initiate such forgiveness or be forced into it.
Thank you, Zeus, for this prescient and insightful analysis of debt and debt renunciation.The Kondratieff Cycle can only turn to Spring after debt renunciation completes the Winter cycle. Let’s stop pretending we’re still in Summer, and that the Fed’s puny “quantitative easing” and monetary cargo-cult machinations can reverse the seasons.
HAS THE TRUE DEMOCRACY PARTY BEEN “BLACKLISTED” ?
OMG! HOW COOL IS THAT!!!
*******MEDIA BLACKLIST*******
Posts Tagged ‘media blackout’
-IMF urges authorities to consider debt forgiveness to restore growth
Monday, April 16th, 2012
The IMF said the lessons showed that “policies can help avert self-reinforcing cycles of household defaults, further house price declines, and additional contractions in output” and made a case “for government involvement to lower the cost of restructuring debt, facilitate the writing down of household debt, and help prevent foreclosures”.
***Source: wordpress.com***
Monday, April 16th, 2012
The IMF said the lessons showed that “policies can help avert self-reinforcing cycles of household defaults, further house price declines, and additional contractions in output” and made a case “for government involvement to lower the cost of restructuring debt, facilitate the writing down of household debt, and help prevent foreclosures”.
***Source: wordpress.com***
-ICELAND FORGIVES ENTIRE POPULATION OF MORTGAGE DEBT!: And So Can We! “TDP Calls For Nation
[...] The government of Iceland has forgiven the mortgage debt for much of its population. This nation chose a very different way of stopping the crisis from the rest of European countries. It decided to hear the requests of the population and to put politicians and bankers on the bench of the accused three years after their financial excesses would sank one of the most prosperous economies in 2008.Source: truedemocracyparty.net [...]
***Source: truedemocracyparty.net***
[...] The government of Iceland has forgiven the mortgage debt for much of its population. This nation chose a very different way of stopping the crisis from the rest of European countries. It decided to hear the requests of the population and to put politicians and bankers on the bench of the accused three years after their financial excesses would sank one of the most prosperous economies in 2008.Source: truedemocracyparty.net [...]
***Source: truedemocracyparty.net***
-Mortgage Debt Forgiveness by Howard Knight
Since the housing bust of 2007, many homes in various parts of the country are upside down on their loans. This happens when owners owe more debt than what the house can be sold for. This forces owners to stay and try to recover their paper loss over time or sell it at a loss and pay the remaining mortgage balance to the bank. Some people have restructured their mortgage loans which forgives part of their debt. And others have turned in their keys to the bank and walked out of their mortgage crisis.
***Source: deafnetwork.com***
Since the housing bust of 2007, many homes in various parts of the country are upside down on their loans. This happens when owners owe more debt than what the house can be sold for. This forces owners to stay and try to recover their paper loss over time or sell it at a loss and pay the remaining mortgage balance to the bank. Some people have restructured their mortgage loans which forgives part of their debt. And others have turned in their keys to the bank and walked out of their mortgage crisis.
***Source: deafnetwork.com***
-The Tax Consequences of Debt Forgiveness
Let’ s say the Smiths, like so many American homeowners, find themselves unable to afford their mortgage. They reach out to their lender and after jumping through numerous hoops, filling out countless forms and getting a buyer on the hook, the bank agrees to release its lien and approve their short sale. The Smiths owed $500,000 on their mortgage but the bank agreed to accept a sale price of $400,000 and forgive the remaining $100,000 balance. Great news right? Yes and no. Of course, it’s positive that the Smiths were able to avoid foreclosure and move on with their lives, but thanks to the 1099-C and the IRS, they have a surprise waiting when tax time comes around. Their taxable income just increased $100,000 (the amount forgiven by the bank). Even though the Smiths never pocketed this money, despite the fact that the loan proceeds were used entirely to finance the purchase of their home, the tax man will count the forgiven debt as income and send a bill.
***Source: yourcpapartners.com***
Let’ s say the Smiths, like so many American homeowners, find themselves unable to afford their mortgage. They reach out to their lender and after jumping through numerous hoops, filling out countless forms and getting a buyer on the hook, the bank agrees to release its lien and approve their short sale. The Smiths owed $500,000 on their mortgage but the bank agreed to accept a sale price of $400,000 and forgive the remaining $100,000 balance. Great news right? Yes and no. Of course, it’s positive that the Smiths were able to avoid foreclosure and move on with their lives, but thanks to the 1099-C and the IRS, they have a surprise waiting when tax time comes around. Their taxable income just increased $100,000 (the amount forgiven by the bank). Even though the Smiths never pocketed this money, despite the fact that the loan proceeds were used entirely to finance the purchase of their home, the tax man will count the forgiven debt as income and send a bill.
***Source: yourcpapartners.com***
-Mortgage Forgiveness Debt Relief Act of 2007 to Expire Soon
Once an escrow has been opened there are several phases of the title company’s involvement in the transaction. The first step is the issuance of the PR which is submitted to the buyer for review and approval. Many buyers have no idea what to look for in a Preliminary Report and will look to their real estate agent for guidance. The items set forth in the PR can be divided into: (1) normal items such as taxes, encumbrances which the seller is going to pay off, CC&R’s if applicable, and public utility easements; and (2) “red flag” items such as abstracts of judgment, tax liens, child support orders, private easements, and covenants regarding public improvements. As to all questionable items, copies of the underlying documents should be ordered from the title company. Real estate agents should not hold themselves out as authorities on complex title issues and should refer the client to the title officer to answer questions regarding the PR and should urge the client to consult a private attorney if any questions have not been answered to their satisfaction. The next step in the process is to “clean up” the title if necessary. This involves getting appropriate assurances that any liens, judgments or other monetary encumbrances will be removed prior to the close of escrow. Sometimes the seller is “upside down” and the monetary encumbrances exceed the seller’s equity in the property. It is imperative that a seller who knows that there is insufficient equity include a short pay contingency in the RPA-CA by incorporating a Short Sale Addendum (“SSA”). This provision is designed for sellers who are “upside down” in the property to the extent that the proceeds of the sale will be inadequate to pay off existing encumbrances. This clause makes the close of escrow contingent upon the lien holders agreeing to reduce their pay off requirements enough to allow the seller to close without bringing money into escrow and without reducing the costs of sale including real estate commissions. Thus this clause protects brokers as well as the seller. Without a “short pay” contingency a seller who cannot persuade his lenders to reduce there demands will be in breach of the RPA-CA by virtue of his inability to deliver clear title free and clear of all monetary encumbrances. As long as the property is being sold for fair market value the lender will usually agree to the short pay since the alternative is to foreclose and perhaps end up with the property on their books which is very disadvantageous from a banking standpoint. Sellers finding themselves in this position need to consult with a tax professional since, among other things, the forgiveness of any debt by a lender may be deemed to be taxable income. They may qualify for relief from any tax consequences under the Debt Relief Act of 2007 or the insolvency provisions of Section 108 of the Internal Revenue Code, however these provisions may apply to any given situation and it is imperative that they get professional advice from a qualified tax expert and under no circumstance should a real estate agent give such advice.
***Source: masterpiecerealtyassociates.com***
Once an escrow has been opened there are several phases of the title company’s involvement in the transaction. The first step is the issuance of the PR which is submitted to the buyer for review and approval. Many buyers have no idea what to look for in a Preliminary Report and will look to their real estate agent for guidance. The items set forth in the PR can be divided into: (1) normal items such as taxes, encumbrances which the seller is going to pay off, CC&R’s if applicable, and public utility easements; and (2) “red flag” items such as abstracts of judgment, tax liens, child support orders, private easements, and covenants regarding public improvements. As to all questionable items, copies of the underlying documents should be ordered from the title company. Real estate agents should not hold themselves out as authorities on complex title issues and should refer the client to the title officer to answer questions regarding the PR and should urge the client to consult a private attorney if any questions have not been answered to their satisfaction. The next step in the process is to “clean up” the title if necessary. This involves getting appropriate assurances that any liens, judgments or other monetary encumbrances will be removed prior to the close of escrow. Sometimes the seller is “upside down” and the monetary encumbrances exceed the seller’s equity in the property. It is imperative that a seller who knows that there is insufficient equity include a short pay contingency in the RPA-CA by incorporating a Short Sale Addendum (“SSA”). This provision is designed for sellers who are “upside down” in the property to the extent that the proceeds of the sale will be inadequate to pay off existing encumbrances. This clause makes the close of escrow contingent upon the lien holders agreeing to reduce their pay off requirements enough to allow the seller to close without bringing money into escrow and without reducing the costs of sale including real estate commissions. Thus this clause protects brokers as well as the seller. Without a “short pay” contingency a seller who cannot persuade his lenders to reduce there demands will be in breach of the RPA-CA by virtue of his inability to deliver clear title free and clear of all monetary encumbrances. As long as the property is being sold for fair market value the lender will usually agree to the short pay since the alternative is to foreclose and perhaps end up with the property on their books which is very disadvantageous from a banking standpoint. Sellers finding themselves in this position need to consult with a tax professional since, among other things, the forgiveness of any debt by a lender may be deemed to be taxable income. They may qualify for relief from any tax consequences under the Debt Relief Act of 2007 or the insolvency provisions of Section 108 of the Internal Revenue Code, however these provisions may apply to any given situation and it is imperative that they get professional advice from a qualified tax expert and under no circumstance should a real estate agent give such advice.
***Source: masterpiecerealtyassociates.com***
-Nonprofit grassroots movement seeks student loan debt forgiveness
“Forgiving student loan debt would have an immediate stimulating effect on the economy,” Applebaum said. “Responsible people who did nothing other than pursue a higher education would have hundreds, if not thousands of extra dollars per month to spend, fueling the economy now. Those extra dollars being pumped into the economy would have a multiplying effect, unlike many of the provisions of the new stimulus package. As a result, tax revenues would go up, the credit markets will unfreeze and jobs will be created.”
***Source: unews.com***
“Forgiving student loan debt would have an immediate stimulating effect on the economy,” Applebaum said. “Responsible people who did nothing other than pursue a higher education would have hundreds, if not thousands of extra dollars per month to spend, fueling the economy now. Those extra dollars being pumped into the economy would have a multiplying effect, unlike many of the provisions of the new stimulus package. As a result, tax revenues would go up, the credit markets will unfreeze and jobs will be created.”
***Source: unews.com***
-Mortgage Debt Forgiveness
We have to do something to stop the foreclosures from continuing. The more the foreclosures, the lower the housing prices will be and the longer this mess continues. It is a moral dilemma. Lessening the principle amount on mortgages that are far higher than what the home is now worth will help stabilize the housing market and keep foreclosures at bay. This whole economic mess was started because of the governmental regulations that were shoved down everyone’s throat, that all American’s deserve a home of their own whether they could pay for it or not. These toxic loans were the impetus that threw our economy into a tailspin. No matter how the government tries to put all the blame on Wall Street, the major blame is on the liberal democrats of the early 90′s and their socialistic goals. But, putting the blame game aside, we are all in this mess and something has to be done. I would like to hear about what the other methods to take care of this problem are. Or maybe, we will all have to bite the bullet and give “Principle Forgiveness” to every homeowner whose home is underwater and modify their loans. Of course, then the banks will be clamoring for more bailouts. You would think with all these so-called “economic and financial experts” they would be able to come up with some way to get us back on track. One way I am sure will work is to never elect an OBAMA like President again. We elected someone who knew NOTHING about finances, running a country, foreign affairs, the importance of using our own natural energy resources, about being a President to ALL Americans, how to be a real leader and take responsibility for the Country and his decisions, instead of continually blaming someone else, how to get Americans to work again, and basically to be the Leader of the Free World. His only qualifications were to get and retain people on the reliance of the government and poking at the great wound of our Country by rekindling a race war. It is time to get someone who knows how to put people to work, who knows about finances and who has had a real job and been quite successful at it. We need a new Senate that can actually pass a budget – and we wonder why the government is so far in debt?! This November, ask yourself, “Are you really better off than 4 years ago? Is our Country better off than it was 4 years ago?”
***Source: firedream.com***
We have to do something to stop the foreclosures from continuing. The more the foreclosures, the lower the housing prices will be and the longer this mess continues. It is a moral dilemma. Lessening the principle amount on mortgages that are far higher than what the home is now worth will help stabilize the housing market and keep foreclosures at bay. This whole economic mess was started because of the governmental regulations that were shoved down everyone’s throat, that all American’s deserve a home of their own whether they could pay for it or not. These toxic loans were the impetus that threw our economy into a tailspin. No matter how the government tries to put all the blame on Wall Street, the major blame is on the liberal democrats of the early 90′s and their socialistic goals. But, putting the blame game aside, we are all in this mess and something has to be done. I would like to hear about what the other methods to take care of this problem are. Or maybe, we will all have to bite the bullet and give “Principle Forgiveness” to every homeowner whose home is underwater and modify their loans. Of course, then the banks will be clamoring for more bailouts. You would think with all these so-called “economic and financial experts” they would be able to come up with some way to get us back on track. One way I am sure will work is to never elect an OBAMA like President again. We elected someone who knew NOTHING about finances, running a country, foreign affairs, the importance of using our own natural energy resources, about being a President to ALL Americans, how to be a real leader and take responsibility for the Country and his decisions, instead of continually blaming someone else, how to get Americans to work again, and basically to be the Leader of the Free World. His only qualifications were to get and retain people on the reliance of the government and poking at the great wound of our Country by rekindling a race war. It is time to get someone who knows how to put people to work, who knows about finances and who has had a real job and been quite successful at it. We need a new Senate that can actually pass a budget – and we wonder why the government is so far in debt?! This November, ask yourself, “Are you really better off than 4 years ago? Is our Country better off than it was 4 years ago?”
***Source: firedream.com***
-Debt Forgiveness and Mortgages
There are a significant number of options for people who are dealing with credit card debt and require alternative options beyond standard payment plans because of a drastic change in their financial strength and many consumers have been impacted severely as well by issues of high mortgage payments, underwater mortgages and exorbitant interest rates. For the most part people who have sought debt relief have had a few options but one of the biggest issues for many people as the economy has struggled to recover is a persistent problem regarding a mortgage.
***Source: philadelphiadailyphoto.com***
There are a significant number of options for people who are dealing with credit card debt and require alternative options beyond standard payment plans because of a drastic change in their financial strength and many consumers have been impacted severely as well by issues of high mortgage payments, underwater mortgages and exorbitant interest rates. For the most part people who have sought debt relief have had a few options but one of the biggest issues for many people as the economy has struggled to recover is a persistent problem regarding a mortgage.
***Source: philadelphiadailyphoto.com***
-DeMarco Warns of the Dangers of Large
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***Source: heritage.org***
Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone’s intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.
***Source: heritage.org***
-Tax Tips: 10 Tips for Mortgage Debt Forgiveness
10. Examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.
***Source: patch.com***
10. Examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.
***Source: patch.com***
Reposted from http://truedemocracyparty.net/2012/04/iceland-forces-debt-forgiveness-total-us-media-blackout-when-debt-is-fraud-debt-forgiveness-is-the-last-and-only-remedy/ click to view the entire article.
Wednesday, April 4, 2012
New foreclosure wave to hit 'everyday' borrowers
New foreclosure wave to hit 'everyday' borrowers
By Nick Carey 
Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end.
House sales are picking up across most of the country, the plunge in prices is slowing and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low.
But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.
"We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010," said Mark Seifert, executive director of Empowering & Strengthening Ohio's People (ESOP), a counseling group with 10 offices in Ohio.
"Last year was an anomaly, and not in a good way," he said.
In 2011, the "robo-signing" scandal, in which foreclosure documents were signed without properly reviewing individual cases, prompted banks to hold back on new foreclosures pending a settlement.
Five major banks eventually struck that settlement with 49 U.S. states in February. Signs are growing the pace of foreclosures is picking up again, something housing experts predict will again weigh on home prices before any sustained recovery can occur.
More conclusive national data is not yet available. But watchdog group, 4closurefraud.org which helped uncover the "robo-signing" scandal, says it has turned up evidence of a large rise in new foreclosures between March 1 and 24 by three big banks in Palm Beach County in Florida, one of the states hit hardest by the housing crash
Although foreclosure starts were 50 percent or more lower than for the same period in 2010, those begun by Deutsche Bank were up 47 percent from 2011. Those of Wells Fargo's rose 68 percent and Bank of America's, including BAC Home Loans Servicing, jumped nearly seven-fold -- 251 starts versus 37 in the same period in 2011. Bank of America said it does not comment on data provided by other sources. Wells Fargo and Deutsche Bank did not comment.
Housing experts say localized warning signs of a new wave of foreclosure are likely to be replicated across much of the United States.
Online foreclosure marketplace RealtyTrac estimated that while foreclosures dropped slightly nationwide in February from January and from February 2011, they rose in 21 states and jumped sharply in cities like Tampa (64 percent), Chicago (43 percent) and Miami (53 percent).
RealtyTrac CEO Brandon Moore said the "numbers point to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed."
One big difference to the early years of the housing crisis, which was dominated by Americans saddled with the most toxic subprime products — with high interest rates where banks asked for no money down or no proof of income — is that today it's mostly Americans with ordinary mortgages whose ability to meet payment have been hit by the hard economic times.
"The subprime stuff is long gone," said Michael Redman, founder of 4closurefraud.org. "Now the folks being affected are hardworking, everyday Americans struggling because of the economy."
'Hard to catch up' Until December 2010, Daniel Burns, 52, had spent his working life in the trucking industry as a long-haul driver and manager. When daily loads at the small family business where he worked tailed off, he lost his job.
Unable to cover his mortgage, Burns received a grant from a government fund using money repaid from the 2008 bank bailout. That grant is due to expire in early 2013 and Burns is holding out on hopeful comments from his former employer that he might get his job back if the economy recovers.
"If things don't pick up, I will be out on the street," he said, staring from his living room window at two abandoned houses over the road in the middle-class Cleveland suburb of Garfield Heights, the noise of traffic from a nearby Interstate highway filling the street.
Underscoring the uncertainty of his situation, Burns' cell phone rings and a pre-recorded message announces that his unemployment benefits are due to be cut off in April
A bit further up the shore of Lake Erie, Cristal Fell, who works night shifts entering data for a trucking company in Toledo, has fallen behind on her mortgage a second time because her ex-husband lost his job and her overtime was cut.
"Once you get behind it's so hard to catch up," she said.
Fell, a mother of four, hopes the economy will gather enough speed to help her avoid any risk of losing her home. Her ex-husband has found a new job and she is getting more overtime, so she hopes she can catch up on her mortgage by the fall.
Burns and Fell are the new face of the U.S. housing crisis: Middle class, suburban or rural with a conventional 30-year fixed mortgage at a reasonable interest rate, but unemployed or underemployed. Although the national unemployment rate has fallen to 8.3 percent from its peak of 10 percent in October 2009, nearly 13 million Americans remain jobless, meaning many are struggling to keep up with their mortgage payments.
Real estate company Zillow Inc says more than one in four American homeowners were "under water" or owed more than their homes were worth in the fourth quarter of 2011. The crisis has wiped out some $7 trillion in U.S. household wealth.
"We're seeing more people coming through who have good loans with reasonable interest rates," said Ed Jacob, executive director of non-profit lender Neighborhood Housing Services of Chicago Inc, which provides foreclosure counseling. "But in many households only one person works now instead of two, or they had their hours cut."
"The answer to the housing crisis now is job creation."
Early signs of uptick? Zillow expects the resurgence in foreclosures this year, combined with excess inventory of unsold, bank-owned homes will contribute to a 3.7 percent national decline in prices before the market hits bottom in 2013 and stays there until 2016.
"The hangover from this crisis will far outlast the party of the boom years," said Zillow chief economist Stan Humphries.
Getting through the remaining foreclosures and dealing with the resulting flood of homes on the market in the wake of the bank settlement is a necessary part of the healing process for the U.S. housing market, he added.
According to leading broker dealer Amherst Securities, some 9.5 million homes are still at risk of default and in February it said it expected to see the uptick in foreclosures start to hit in March and April.
There is other evidence that many of the foreclosures that did not happen in 2011 will happen this year.
A January report by the Neighborhood Economic Development Advocacy Project in New York found that in the first half of 2011 the number of 90-day pre-foreclosure notices in New York City outnumbered court foreclosure actions by a ratio of 14 to one, indicating that while proceedings were initiated against many homeowners, they were left incomplete.
"Now the banks have a settlement, foreclosure numbers for 2012 are going to be high," said NEDAP co-director Josh Zinner.
A recent survey by the California Reinvestment Coalition, an umbrella group of nearly 300 non-profit groups in the state, of member agencies found 75 percent of respondents expected increased demand for their foreclosure prevention services in 2012 but more than a third had to scale back services because of funding cuts.
"Funding is a major concern given what our members expect for this year," said associate director Kevin Stein.
All this has non-profits intensifying calls for the Federal Housing Finance Agency to drop its opposition to allowing the government-backed mortgage giants Fannie Mae and Freddie Mac it regulates to reduce principal for underwater homeowners.
Principal reduction involves reducing the amount borrowers owe in order to make a loan modification affordable for struggling homeowners. Republicans and the FHFA oppose principal reduction because of the risk of "moral hazard" — that homeowners who do not need help will seek to abuse largesse and have their mortgages reduced too.
ESOP in Ohio engages in "hits" on Chase branches — they say Chase is the least accommodating major bank when it comes to working with struggling homeowners — where they try to hand letters to bank mangers calling on chief executive Jamie Dimon to lobby FHFA head Edward DeMarco for principal reductions.
A Chase spokeswoman said the bank has made "extensive efforts" to work with homeowners, helping 775,000 borrowers stay in their homes since early 2009, avoiding foreclosure "more than twice as often as we have had to foreclose." Housing groups like ESOP maintain, as they have throughout the housing crisis, that unless the FHFA embraces widespread principal reduction, many more under water borrowers face losing their homes.
"Until banks engage in meaningful principal reduction as a matter of course," ESOP's Seifert said after a recent protest at a Chase branch in Cleveland, "this crisis will not end."
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