The Re-Redistribution of Housing Wealth in America" Program. From Wall Street to Main Street.

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Based upon my current understanding of the mechanics of the now decade long, open-ended foreclosure crises, I'm convinced there is a solution hidden in plain sight. I call it The Re-Redistribution of Housing Wealth in America Program.

My understanding follows having worked in the mortgage foreclosure realm since the 1980s, which is about the same time as the now infamous Wall Street brainchild Mortgage Electronic Registration System (MERS) was conspired by the too big to fail financial Goliaths of the day. [Conspire - to plan together secretly to commit an illegal or wrongful act or accomplish a legal purpose through illegal action.]

I worked for the (then) second largest mortgage loan servicer which was based in St. Louis, the nation's mortgage loan servicing capitol. No coincidence MERS conspirators were operating in St. Louis, too. I knew some of them. I was hired to work as a non-performing asset manager in a newly created department called Loss Mitigation. Its mission was to protect mortgage investors' interests against potential losses. My team was assembled to work a particular mortgage investor's portfolio which consisted of about 7,500 "at-risk" loans. [Mortgage Investors included those entities who purchased the mortgage backed securities from Wall Street, and then hired a mortgage loan servicer (to whom you send your monthly payment) which, for a fee, would collect those payments, administer escrow accounts, assess late fees, cure delinquencies pursuant to mortgage investors' guidelines, and initiate foreclosure on behalf of the mortgage investor who owned the rights to enforce the terms of the mortgage note.]

Older than most of my co-workers, and given free reign to create a niche job description, I quickly assumed a variety of loan servicing and loss mitigation functions both traditional, and experimental - some of which remain in practice today. In addition to structuring loan workouts for delinquent borrowers, I emerged as Plaintiff's mortgage loan servicing expert in Federal Bankruptcy Courts and foreclosure proceedings in NY, NJ, and PA.

Protecting mortgage investors' interests included investigating mortgage loan origination fraud, appraisal fraud, insurance fraud, and predatory lending patterns and practices. Licensed in real estate, insurance, appraisal, and mortgage loan origination, I brought a decade of experience as an independent consultant working with homeowners who faced judicial mortgage and municipal tax lien foreclosure. For the security which accompanies a regular paycheck and instead of working for homeowners, I found myself working for their adversary.

Refusing a transfer to work on another at risk portfolio in another part of the country, I then left the corporate environment for the non-profit sector to concentrate on consumer advocacy. For the last 15 years or so I have been Executive Director for Society For Preservation of Continued Homeownership (SPOCH), a 501(c)(3) homeowner advocacy I co-founded in 1998 with my wife, a CPA, which has provided help to thousands of families in their fight to retain home ownership using unconventional tactics and strategies providing friction to slow or stop the foreclosure process. Recently, our daughter has been volunteering her time and legal counsel in particular matters including The Re-Redistribution of Housing Wealth in America Program which I've been advised to and have since Copyrighted.

I've written several books including one on Ethical Short Sales, and "Fighting Foreclosure - How to Cope with a Mortgage you can't Pay, Negotiate with your Bank, and Save your Home." So I have some history from which to draw upon in proposing The Re-Redistribution of Housing Wealth in America Program, a nationwide solution to the (predatory) mortgage foreclosure and vacant housing crises.

Taxpayers should brace themselves for Round 2 of

Privatized Profits but Socialized Losses !

We can and must stop another bailout before the corporate shills posing as our elected representatives agree to open taxpayers' checkbooks and give blank checks to their Wall Street paymasters. When Wall Street wants a bailout, Wall Street gets a bailout. Remember the $1.2 Trillion "Grand Heist" it pulled off just a few years ago? Brace yourself for another round of (borrowed) public money used to replace Wall Street's private losses. Even if Wall Street alleges to be helping Main Street, it's still a bailout. I'll use the word alleged a lot in this essay. [Alleged is some claim or something of which you should be wary and unconvinced.]

If you aren't at the table, you're most likely on the menu.

Claiming to have certain rights and then proving to have those rights is usually done in front of a judge and in a court of competent jurisdiction. Fortunately, when parties in dispute make claims truthful or false, there are laws by which those claims can be scrutinized. Once such body of laws by which allegations can be proven to be true or false is the US Uniform Commercial Code. It's pretty much the Rosetta Stone used to navigate complex commercial agreements and transactions including Negotiable Instruments.

I'm not a lawyer, but if mortgage notes are negotiable instruments it makes sense to me that the origination, sale, purchase and subsequent assignments or endorsements of mortgage notes (and their rights) would fall under the jurisdiction of Article 3 of the Uniform Commercial Code - Negotiable Instruments.

One outcome of the as-of-yet undecided homeowner equity wars between 1) Wall Street & Its Bamboozled, Angry and Litigious Investment Community, 2) Wall Street & its US Regulators, and 3) Wall Street & Main Street, is the number of abandoned houses which greatly outnumbers the ranks of our nation's homeless families. Sadly, those least responsible for current conditions shoulder most of the financial and emotional pain. Some homes were abandoned after their owners were formally evicted by court order and sheriff's deputies (many of whom are employed by private contractors including law firms hired specifically to handle loan delinquencies, collections, and repossessions). Some now empty homes were abandoned by families not evicted but simply threatened with foreclosure, terrorized by sadistic collection practices, and then "voluntarily" fled. Sometimes on the advice of their loan's servicer. Hundreds of thousands of empty homes remain mired in and suspended by a mortgage securitization scheme which has raised serious doubts about its legitimacy.

Doubts include who or what now claims ownership of these once valued residences, and doubts about the legal rights needed to enforce alleged mortgage notes used to evict their former caretakers. This is a serious, serious problem not only for Wall Street speculators, but for everyone else. We know when Wall Street wants a bailout, Wall Street gets a bailout. Been there. Done That. Still here. Here comes another bailout!

Watch out Social Security! Watch out Pension Funds!

Beware the slick suits' freshly painted white hats!

What's causing this? "Subprime," and "Borrowers' over-reach?" Those "greedy rotten awful" real estate brokers and mortgage brokers? Appraisers? Underwriters? That damn Fair Housing Act! Regulations?

There was a lot of criminal activity from the top, where the clusterfuck was born, through and past each department boasting: "Too big to fail! Too big to nail!" All the way down the pipeline sewer to the bottom where it seeped into the shoddy foundations of our homes.

Sure there were borrowers who inflated their income to qualify for a pie-in-the-sky loan. Or just slightly corrupt brokers who inflated honestly stated incomes in order to justify more and more larger loans to feed Wall Street's demand for huge volumes of mortgage loans. Or crooked appraisers.

I recall being asked to review dozens of loan applications and origination appraisals - the majority of which I found to be defective, and many fraudulent.

Many examples of old, ramshackle property described as NEW CONSTRUCTION helped to support a higher appraised value. Houses which sat on a few cinder blocks were described as having full, finished basements. Photographs of the properties were replaced with photos of other properties. And I've also reviewed loan origination files complete with whited out and then retyped names, addresses, and loan amounts.

Why falsify loan applications?

Wall Street was the driving force behind the subprime lending industry -- designing the loan products offered to consumers, establishing dynamic criteria under which it would buy the loans and pay generous commissions to the brokers who produced them. Wall Street demanded, facilitated and rewarded loan quantity. Loan quality didn't matter once the front end profit was extracted from the transaction. Wall Street made tens of hundreds of millions of dollars in bond and securities trade in Structured Investment Vehicles, Collateralized Backed Mortgage Securities, Collateralized Debt Obligations, and Asset Backed Securities. The ink on the papers wasn't dry before alleged loans were bundled, repackaged, rated AAA by bond rating agencies, and then sold to investors. The same investors who now are plenty pissed off.

Everybody at the top was making money hand over fist. Thousands of lower tier mortgage brokers were earning six figures. Especially outrageous compensation packages went to mortgage securities brokers and their employers.

This scheme was years in the planning stages. Relaxed subprime lending criteria coupled with seduced borrowers' overreach were crucial to the scheme's success. The scheme enabled borrowers to enter into greater debt by unlocking borrowers' equity. The scheme first created, then inflated artificial "equity" which, when monetized, could be wealth transferred from one group to another. Like from the poor and middle class to the rich.

This elaborate conspiracy was set into motion long ago by Republican and Democrat politicians who worked in lockstep which then kicked into high gear in the early 1990s with the creation of Mortgage Electronic Registration System (MERS) or whatever it calls itself today, by the now, "too big to fail" banks or whatever is left of them from the early days or what they call themselves now. (MERS' business model has been ruled "illegal" by a NY Federal Court.) Despite that elaborately deceitful scheme, mortgage notes are still negotiable instruments, and mortgage notes are still property. Private property.

At the center of these battles which have escalated from back rooms, to board rooms to court rooms, rests establishing the validity and enforceability of alleged rights to certain mortgage notes, especially those created between 2002 and 2009. Those who orchestrated and implemented the scheme are experiencing the legal consequences of creating bogus mortgage loan securities, unfunded trusts, and their disregard to complex pooling and servicing agreements. And their disregard to law.

There are at least three very separate, but connected high stake battles with connected outcomes. Again, I'm not a lawyer, but I think a party's sworn testimony used in one proceeding, should be consistent with that party's sworn testimony at another proceeding. Don't you?

Wall Street's financial charlatans are under attack by the investors it bamboozled. The US Regulatory Agencies are under attack for general failure to regulate their Wall Street friends' untoward, reckless and perhaps illegal business practices. And then there is the foreclosure process itself which pits an alleged borrower against an alleged lender. Millions of alleged borrowers but only a handful or two of alleged Lenders.

As these boardroom and courtroom battles play out, millions of distressed home owners' lives have been ripped apart: upset, stressed, their health and well being threatened, marriages dissolved and families splintered. Betcha there was some violence, too.

Neighborhoods and communities are at risk of neglect, or worse, blight.

These now neglected houses are thought to be part of a growing inventory of "phantom" foreclosures which are neither occupied legally or maintained, whose past, present and future remains suspended in a limbo-like nightmare for all concerned. In that legal limbo, the elephant in the room asks: "Who owns these homes?" And, "Did these new "alleged" owners acquire the properties legally?" And, "What a minute! Lets get the former owners back on the phone."

We know many of the new owners (banks, mortgage or holding companies, LLCs) relied upon the legal system to compel anxious/frightened homeowners to leave their homes voluntarily, or face eviction proceedings. If we, like many judges across the USA, are asked to swallow the "bank is always right" and "must be right" argument must we also be asked to assume the foreclosure proceedings were all done according to the letter of the law simply because the bank's lawyer says, "You can trust us." Nothing could be further from the truth.

What if the "evidence" needed to establish the (alleged) lenders' demand for repayment, was faked? Counterfeited. Never existed. Cooked up and then presented as lawful "evidence" of 1) the proof of debt, and 2) proof of the rights required by law to collect that debt. That just isn't right! Or legal. If we pretty much can agree our economic and political systems are rigged by Wall Street interests, how can we - who barely keep roofs over our heads - mount a successful challenge against an enormous foe to stop all mortgage foreclosures and then move to recover our homes and lost equity? And how are we to do that if its rigged against us from the start? How? I propose the Re-Redistribution of Housing Wealth In America Program.

Call it whatever you want. It's what we need. And, like the latent magic asleep within Dorothy's ruby slippers, we have had the apparatus to challenge the financial charlatans and then take back much of the wealth which had been stolen from millions of homeowners across the USA. We need dust off that apparatus, decide democratically in whose hands we place its power, and then let our advocates use the power to restore housing wealth to its rightful owners and their communities.

Using existing law, we can legally and peacefully share in that redistributed wealth, collectively, with all who can muster the political will to organize and take action to recover what has been stolen. We'll have law on our side. But for how long? I'm sure there is a lot of pressure from Wall Street to get those damn laws changed retroactive to 1990.

LOST EQUITY? NOT LOST, BUT STOLEN.

WE CAN, AND MUST TAKE IT BACK!

The Re-Redistribution of Housing Wealth in America Program asserts mortgage notes are negotiable instruments, and considered property. Privately owned property. Mortgage Notes are financial agreements between specific Borrowers, and specific Lenders for the terms and conditions for repayment of a loan secured by a mortgage lien against a specific property. Some states use mortgage and notes while others use Deeds of Trust. Some states have judicial foreclosure proceedings, some use non-judicial power of sale. I think one state still has a "Knock. Knock. Get out!" policy on its books.

Every time a person or persons finances the purchase of a home, or refinances the debt, a new loan is made and a new mortgage note is created. While most mortgage notes created between 2002 and 2009 were created, traded, and serviced within the law, there are millions which are not and now considered toxic. I don't know how many millions. Nobody does. The toxic notes can and must be identified and then like a cancerous tumor in an otherwise healthy body, excised. Extinguished. This "cure" will require our political will, and judicial enforcement. We can put our political will to use right away by democratically forming and then empowering groups whose initial and sole purpose is to wage a very fair and legal warfare against foreclosure based on Wall Street's shaky claims. Claims supported by shaky, if not fraudulent evidence. We can use current Law to condemn toxic mortgage notes house by house, neighborhood by neighborhood, city by city, and state by state.

The Public's Right to Condemn Private Property

If and when privately owned properties are standing "in the way of progress" and needed by a community for a legitimate public purpose, such as expanding a park, building a school, establishing a right of way for a utility, or to protect that community from blight - that community can authorize the use of the power of Eminent Domain to lawfully and peacefully take the private property from its lawful owner. Mortgage notes are private property and subject to eminent domain. A publicly established "Re-Redistribution of Housing Wealth in America Program" would review all mortgage foreclosures and then identify which alleged mortgage notes to condemn. The alleged mortgage notes' owners of record are then notified that their properties have been condemned and they are entitled to just compensation.

Just compensation is whatever the parties agree it shall be. It might be an amount representing a portion of the current value of the "mortgaged" home. Maybe more. Maybe less. Maybe nothing. Somewhere between maybe more, maybe less, and maybe NOTHING, are the potential savings realized which would be shared and distributed according to the Community's own brand of "The Re-Redistribution of Housing Wealth In America Program." Everyone signed up for the program would benefit from an equal distribution of mortgage debt reduction resulting from negotiated discounts and outright debt cancellation.

[Just Compensation Clause: Clause in the Fifth Amendment to the United States Constitution that provides "nor shall private property be taken for public use, without just compensation"]

Wall Street's Achilles Heel - Eminent Domain

How do we get from owing far more than properties are now worth to the 'no payment' option of debt cancellation? Forensic investigation. Specially trained forensic investigators would carefully document the history of the mortgage note(s) from origination to the present day. Specifically searching to discover any interruption or "gaps" in the chain of ownership of the rights needed to enforce the terms of the mortgage note. The program investigators would demand the "alleged" owners produce for each mortgage loan's transaction and assignment / endorsement history. [Discovery, in the law of the United States, is the pre-trial phase in a lawsuit in which each party, through the law of civil procedure, can obtain evidence from the opposing party by means of discovery devices including requests for answers to interrogatories, requests for production of documents, requests for admissions and depositions. Discovery can be obtained from non-parties using subpoenas. When discovery requests are objected to, the requesting party may seek the assistance of the court by filing a motion to compel discovery.]

Each mortgage note assignment or endorsement is preceded by a discussion and an agreement of some type between the buyer and seller of an alleged mortgage note, or bundle of alleged mortgage notes. For each assignment or endorsement the program administrator would review the underlying agreement for terms and conditions between the parties. Only then can it be determined which rights (if any) were being offered for sale, and which rights were actually transferred from one party to another party.

You can't sell what you don't have

Let's pretend you walked onto a used car lot and saw a parked car which you wanted to buy. The dealer, himself having just accepted the car on a trade, accepted your offer and handed you its keys and what he claimed was the car's title or certificate of ownership commonly called a pink slip. You don't question the validity of the title because it was indeed, pink and looked OK. You register the car at DMV and think all is well. Then, a few days later a policeman knocks on your door and advises you are in possession of stolen property - the car now parked in your driveway. "But I paid for it and here is my proof of ownership," you state in protest. "Yeah, well, the car was stolen and you have a fake pink slip." The car had been financed by its real owner and was about to be repossessed by the bank for lack of payment when it was stolen. It turns out the dealership didn't own the car and didn't have the right to sell it to you. The crook who stole the car and faked the pink slip is long gone.

Millions of mortgage notes may have been faked. The claims of their "alleged" owners are worthless. The perpetrators of the scheme are long gone and beyond the arm of the law. Too big to fail. Too big to nail. Maybe, but why pay them again?

The Public will only pay for valid claims for compensation

The program should NOT be left in the hands of private, for profit interests. The "Re-Redistribution of Housing Wealth in America Program" requires multiple specially created and empowered Public Authorities, tightly managed by and for the Public, ideally under the direction of a State Public Bank. These specially created and empowered community or regional authorities would challenge the validity of mortgage noteholders' claims, respond to lawful claims for compensation, as well as identify and rule on unlawful claims predicated on alleged noteholders' misrepresentation, and fraud.

These local authorities can condemn mortgage notes but, before paying out a dime in "just compensation" to the alleged property owners for title to the condemned mortgage notes, the Public Authority demands that "alleged" noteholders provide "proofs" of entitlement to collect "just compensation" as required by law as embodied in the US Uniform Commercial Code as adapted by each State.

When an alleged owner of condemned property seeks lawful compensation the Public Authority says, "We'll happily pay for valid claims, but we just can't take your word that you own the condemned property. Please show us your receipt for the rights you need to receive payment for the condemned property. Show us proof you are who and what you claim to be. "If you can't show us proof, or point to the last person or entity which had the rights you now claim... then hit the road!" we tell the gangster bankers' lawyers.

Situations in which the alleged property owner (loan servicer/lender) can't prove it has all the rights needed to enforce the mortgage note, and the true holder of the rights to the mortgage note cannot come forward or does not now exist, or may have never existed or the debt may have been satisfied by a third party (insurer), the mortgage note must be invalid and cannot be used to foreclose a mortgage and steal another home from its lawful owner. Once a mortgage note has been determined invalid, program homeowners would then ask the court to "quiet title" which legally removes the orphan mortgage lien from title" leaving the premises free and clear.

[Quiet title action: A lawsuit to establish a party's title to real property against anyone and everyone, and thus "quiet" any challenges or claims to the title. Such a suit usually arises when there is some question about clear title, there exists some recorded problem including an invalid mortgage lien.]

Too good to be true? It can and does and will happen!

The value of valid mortgage notes subject to eminent domain proceedings would be discounted to reflect current market conditions and borrowers' ability to repay. Lawful condemned property owners would receive compensation from a public fund created specifically to "refinance" a community's collective mortgage debt. The collective debt would include the total debt from discounted mortgage notes, and would be offset by mortgage notes which have been cancelled.

The total discounted mortgage debt would be expressed by a percentage of the original debt, and that percentage applied equally to all program participants when determining the new mortgage debt. Each program participant would receive a new mortgage loan (insured by HUD) based upon the collective savings.

That's the short version. The "good" Eminent Domain. However, we all know Eminent Domain can be abused. Yes, this unique power in the wrong hands will be nothing short of another back door bailout enabling Wall Street to reimburse disgruntled clients a portion of their soured investment in worthless mortgage notes. Wall Street wants to pay off their angry clients using public money. Borrowed public money. Again. Why?

As you read this, Wall Street and its political shills are trying to abuse Eminent Domain to orchestrate another back door, public bailout in favor of Wall Street's private interests. How? By tricking us into using Wall Street money to fund public programs using eminent domain. But the Wall Street scheme won't question the validity of mortgage notes. It will simply open our public checkbook and pay those who profess to have valid claims" but who in reality are Wall Street's unhappy, bamboozled investors who may be holding hundreds of million of dollars in worthless paper.

We need to choose our business partners carefully. In a rush to use Eminent Domain, it's important NOT to use Wall Street money or its "partners" for investment capital to purchase these properties" because this can amount to another back door bailout in which the governmental entity is unwittingly acknowledging and then paying for what may be an illegitimate debt".

We can't hand over OUR power to yet another charlatan smiling from under a freshly painted Wall Street White Hat while saying, "We want to Help You." But meaning, "We want to help ourselves to oodles of free public money before "Ya'll want to see proof and legal stuff... Which we ain't got no more. Maybe we never did have it. And we are left holding the bag of worthless mortgage notes which we hope you'll pay us for without asking too many questions. Questions we know the answer to, but cannot possibly admit to due to our pleadings and testimony in other courts.... "

The validity of the "alleged" owners' claim can only be determined after examining those "backroom deals" which resulted in an assignment or endorsement of the mortgage note under scrutiny.

If and when the "alleged" owner cannot provide those proofs, the mortgage note is judged to be unenforceable and since the true owner of the mortgage note cannot be identified, may have already been paid by a third party (insurer) and/or may not exist, the mortgage note could be no more than a worthless piece of paper.

The Power of Eminent Domain, used wisely, could result in a widespread redistribution of housing wealth (equity) which had been created, inflated and then stolen from us in broad daylight. We can get it back. And we can all share in that re-redistribution.

From Wall Street's mortgage securitization scam, perhaps as many as 75% of the alleged mortgage notes held by specific entities including Trusts, could be unenforceable as mortgage notes. In fact, more and more attempted mortgage foreclosures have resulted in the determination that the "alleged" Lender had no contractual relationship with the property owners and could not provide lawful proofs of their claim, and had no rights to their payments made before the "alleged" lender sought repayment of a debt which now or ever had existed.

With the threat of genocide resulting from global warming and climate change, this may seem like small potatoes in the scheme of things. But this particular attack on the system's vulnerability augments challenges on other fronts: Injurious trade agreements, war and militarism, human rights, growing inequality, corruption, corporate polluters of our food and water, our for profit sick-care health insurance scam, and state and corporate sponsored violent crackdown on lawful assembly and protest, etc.

The Re-Redistribution of Housing Wealth in America Program can be another public arrow aimed at Wall Street's Achilles Heel.

David Petrovich, Executive Director

Society For Preservation of Continued Homeownership

The Re-Redistribution of Housing Wealth in America Program SPOCH 2015

Authors Website: http://www.njspoch.org

Authors Bio:

Executive Director: Society For Preservation of Continued Homeownership (SPOCH), a 501c3 tax exempt, charitable and educational consumer advocacy.