New DVDs By Michael Snyder
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 We are officially in the middle of the worst housing collapse in U.S. history – and unfortunately it is going to get even worse. Already, U.S. housing prices have fallen further during this economic downturn (26 percent), then they did during the Great Depression (25.9 percent). Approximately 11 percent of all homes in the United States are currently standing empty. In fact, there are many new housing developments across the U.S. that resemble little more than ghost towns because foreclosures have wiped them out. Mortgage delinquencies and foreclosures reached new highs in 2010, and it is being projected that banks and financial institutions will repossess at least a million more U.S. homes during 2011. Meanwhile, unemployment is absolutely rampant and wage levels are going down at a time when mortgage lending standards have been significantly tightened. That means that there are very few qualified buyers running around out there and that is going to continue to be the case for quite some time to come. When you add all of those factors up, it leads to one inescapable conclusion. The “housing Armageddon” that we have been experiencing since 2007 is going to get even worse in 2011.
Right now there is a gigantic mountain of unsold homes in the United States. It is estimated that banks and financial institutions will repossess at least a million more homes this year and this will make the supply of unsold properties even worse. At the same time, millions of American families have been scared out of the market by this recent crisis and millions of others cannot qualify for a home loan any longer. That means that the demand for unsold homes is at extremely low levels.
So what happens when supply is really high and demand is really low?
That’s right – prices go down.
Hopefully housing prices don’t have too much farther to go down. Ben Bernanke and the boys over at the Federal Reserve are doing their best to flood the system with new dollars in order to prop up asset values, but you just can’t create qualified home buyers out of thin air.
Many analysts are projecting that U.S. housing prices will decline another ten or twenty percent before they hit bottom. In fact, quite a few economists believe that the total price decline from the peak of the market in 2006 will end up being somewhere in the neighborhood of 40 percent.
But whether prices go down any further or not, the truth is that the housing crash that we have already witnessed is absolutely unprecedented.
The following are 12 facts which show that we are in the midst of the worst housing collapse in U.S. history….
#1 Approximately 11 percent of all homes in the United States are currently standing empty.
#2 The rate of home ownership in the United States has dropped like a rock. At this point it has fallen all the way back to 1998 levels.
#3 According to the S&P/Case-Shiller index, U.S. home prices fell 1.3 percent in October and another 1 percent in November. In fact, November represented the fourth monthly decline in a row for U.S. housing prices. Many economists are now openly using the term “double-dip” to describe what is happening to the housing market.
#4 The number of homes that were actually repossessed reached the 1 million mark for the first time ever during 2010.
#5 According to RealtyTrac, a total of 3 million homes were repossessed by mortgage lenders between January 2007 and August 2010. This represents a huge amount of additional inventory that somehow must be sold.
#6 72 percent of the major metropolitan areas in the United States had more foreclosures in 2010 than they did in 2009.
#7 According to the Mortgage Bankers Association, at least 8 million Americans are at least one month behind on their mortgage payments.
#8 It is estimated that there are about 5 million homeowners in the United States that are at least two months behind on their mortgages, and it is being projected that over a million American families will be booted out of their homes this year alone.
#9 Deutsche Bank is projecting that 48 percent of all U.S. mortgages could have negative equity by the end of 2011.
#10 Some formerly great industrial cities are rapidly turning into ghost towns. For example, in Dayton, Ohio today 18.9 percent of all houses are now standing empty. 21.5 percent of all houses in New Orleans, Louisiana are standing vacant.
#11 According to Zillow, U.S. home prices have already fallen further during this economic downturn (26 percent) than they did during the Great Depression (25.9 percent).
#12 There are very few signs that the employment situation in the United States is going to improve any time soon. 4.2 million Americans have been unemployed for one year or longer at this point. While there has been some nominal improvement in the government unemployment numbers recently, other organizations are reporting that things are getting even worse. According to Gallup, the unemployment rate actually rose to 9.6% at the end of December. This was a significant increase from 9.3% in mid-December and 8.8% at the end of November.
But even many Americans that do have jobs are finding out that it has become very, very hard to qualify for a home loan.
In an attempt to avoid the mistakes of the past, banks and financial institutions have become very stingy with home loans. While it was certainly wise for them to make some changes, the truth is that perhaps the pendulum has swung too far at this point. The U.S. housing industry will never fully recover if they can’t get their customers approved for mortgages.
Congress is talking about passing even more laws that will make it even more difficult to get home loans. Even though they give speeches about how they want to help the U.S. housing industry, the truth is that Republicans and Democrats are both backing proposals that would make home mortgages much more expensive and much more difficult to obtain as a Bloomberg article recently explained….
Government officials and lawmakers want to make the market less vulnerable to another credit crisis, and all the options lead the same general direction: Borrowers will need larger down payments than in the bubble years, have higher credit scores, and pay extra fees to cover risks and premiums for federal guarantees on government-backed mortgage bonds.
While all that may sound reasonable, the truth is that the U.S. middle class has become so cash poor that the vast majority of them cannot afford homes without the kind of mortgages that were available in the past.
Not that we should go back and repeat the mistakes of the past 20 years. It is just that nobody should expect the U.S. housing market to “bounce back” in an environment that has fundamentally changed.
The housing market is not like other financial markets. It is difficult to artificially pump it up with funny money. If the U.S. housing market is going to rebound, it is going to take lots of average American families getting qualified for loans and going out and buying houses. But they can’t do this if they do not have good jobs. Today, only 47 percent of working-age Americans have a full-time job at this point. Without a jobs recovery there never will be a housing recovery.
In fact, there are all kinds of warning signs that seem to indicate that the U.S. economy could get even worse in 2011. Many economists are now openly using the word “stagflation” for the first time since the 1970s. Back in the 70s we had both high unemployment and high inflation at the same time.
Well, we have already had very high unemployment, and thanks to the relentless money printing of the Federal Reserve, it looks like we are going to have high inflation as well.
Middle class American families are going to be spending even more of their resources just trying to survive, and this is going to make it more difficult for them to purchase homes.
In fact, in recent years average Americans have been getting significantly poorer. Over the past two years, U.S. consumers have withdrawn $311 billion more from savings and investment accounts than they have put into them. That is very troubling news.
Now the price of food is soaring and the price of oil is about to cross $100 a barrel again. So what is going to happen if we have another major financial crisis and we witness another huge spike in the unemployment rate?
The Federal Reserve is trying to smooth all of our problems over with a flood of paper money, but it isn’t going to work. Yes, increasing the money supply will produce some false highs on the stock market and some false economic growth statistics for a while, but the tremendous damage that will be done to the economy is just not worth it.
In any event, let us all hope that we see some really great real estate deals over the next couple of years, because in the times ahead land will be something very good to own. In fact, down the road it will be much better to own land than to have your money sitting in the bank where it will continuously decline in value.
Use your paper money wisely. It will never have more value than it does today.
So what do all of you think? Is the “housing Armageddon” almost over, or do housing prices still need to decline a bit more? Feel free to leave a comment with your opinion below….
 2010 was quite a year, wasn’t it? 2010 will be remembered for a lot of things, but for those living in the United States, one of the main things that last year will be remembered for is economic decline. The number of foreclosure filings set a new record, the number of home repossessions set a new record, the number of bankruptcies went up again, the number of Americans that became so discouraged that they simply quit looking for work reached a new all-time high and the number of Americans on food stamps kept setting a brand new record every single month. Meanwhile, U.S. government debt reached record highs, state government debt reached record highs and local government debt reached record highs. What a mess! In fact, even many of the “good” economic records that were set during 2010 were indications of underlying economic weakness. For example, the price of gold set an all-time record during 2010, but one of the primary reasons for the increase in the price of gold was that the U.S. dollar was rapidly losing value. Most Americans had been hoping that 2010 would be the beginning of better times, but unfortunately economic conditions just kept getting worse.
So will things improve in 2011? That would be nice, but at this point there are not a whole lot of reasons to be optimistic about the economy. The truth is that we are trapped in a period of long-term economic decline and we are now paying the price for decades of horrible decisions.
Amazingly, many of our politicians and many in the mainstream media have declared that “the recession is over” and that the U.S. economy is steadily improving now.
Well, if anyone tries to tell you that the economy got better in 2010, just show them the statistics below. That should shut them up for a while.
The following are 20 new economic records that were set during 2010….
#1 An all-time record of 2.87 million U.S. households received a foreclosure filing in 2010.
#2 The number of homes that were actually repossessed reached the 1 million mark for the first time ever during 2010.
#3 The price of gold moved above $1400 an ounce for the first time ever during 2010.
#4 According to the American Bankruptcy Institute, approximately 1.53 million consumer bankruptcy petitions were filed in 2010, which was up 9 percent from 1.41 million in 2009. This was the highest number of personal bankruptcies we have seen since the U.S. Congress substantially tightened U.S. bankruptcy law several years ago.
#5 At one point during 2010, the average time needed to find a job in the United States had risen to an all-time record of 35.2 weeks.
#6 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs, which is believed to be a new record low.
#7 The number of Americans working part-time jobs “for economic reasons” was the highest it has been in at least five decades during 2010.
#8 The number of American workers that are so discouraged that they have given up searching for work reached an all-time high near the end of 2010.
#9 Government spending continues to set new all-time records. In fact, at the moment the U.S. government is spending approximately 6.85 million dollars every single minute.
#10 The number of Americans on food stamps surpassed 43 million by the end of 2010. This was a new all-time record, and government officials fully expect the number of Americans enrolled in the program to continue to increase throughout 2011.
#11 The number of Americans on Medicaid surpassed 50 million for the first time ever in 2010.
#12 The U.S. Census Bureau originally announced that 43.6 million Americans are now living in poverty and according to them that was the highest number of Americans living in poverty that they had ever recorded in 51 years of record-keeping. But now the Census Bureau says that they miscalculated and that the real number of poor Americans is actually 47.8 million.
#13 According to the FDIC, 157 banks failed during 2010. That was the highest number of bank failures that the United States has experienced in any single year during the past decade.
#14 The Federal Reserve brought in a record $80.9 billion in profits during 2010. They returned $78.4 billion of that to the U.S. Treasury, but the real story is that thanks to the Federal Reserve’s continual debasement of our currency, the U.S. dollar was worth less in 2010 than it ever had been before.
#15 It is projected that the major financial firms on Wall Street will pay out an all-time record of $144 billion in compensation for 2010.
#16 Americans now owe more than $881 billion on student loans, which is a new all-time record.
#17 In July, sales of new homes in the United States declined to the lowest level ever recorded.
#18 According to Zillow, U.S. housing prices have now declined a whopping 26 percent since their peak in June 2006. Amazingly, this is even farther than house prices fell during the Great Depression. From 1928 to 1933, U.S. housing prices only fell 25.9 percent.
#19 State and local government debt reached at an all-time record of 22 percent of U.S. GDP during 2010.
#20 The U.S. national debt has surpassed the 14 trillion dollar mark for the first time ever and it is being projected that it will soar well past 15 trillion during 2011.
There are some people that have a hard time really grasping what statistics actually mean. For people like that, often pictures and charts are much more effective. Well, that is one reason I like to include pictures and graphs in many of my articles, and below I have posted my favorite chart from this past year. It shows the growth of the U.S. national debt from 1940 until today. I honestly don’t know how anyone can look at this chart and still be convinced that our nation is not headed for a complete financial meltdown….
 How soon will it be before people finally start using the term “depression” to describe what has happened to the U.S. housing market? It has been four and a half years since housing prices began to decline, and they are still falling. In fact, U.S. housing prices have now fallen further during this economic downturn than they did during the Great Depression of the 1930s. Just think about that. We are now in unprecedented territory, and most analysts believe that U.S. house prices will continue to decline in 2011. Mortgage rates have been moving up, mortgage delinquencies are on the rise again, U.S. mortgage lenders have really tightened lending standards and “foreclosuregate” continues to plague the entire mortgage industry. It would be really nice for the overall economy if house prices did go up in 2011, but right now it looks like that simply is not going to happen.
For many U.S. homeowners, all of this is absolutely sickening. Millions of homeowners are stuck in houses that they desperately want to sell, but they don’t want to take huge losses on their investments either.
Millions of other U.S. homeowners are stuck paying on mortgages that are for far, far more than their homes are now worth.
Could you imagine paying $400,000 for a home that is now only worth $200,000?
Unfortunately, U.S. house prices just continue to decline.
According to CoreLogic, U.S. house prices have fallen for four months in a row, and in November (the last month CoreLogic has released numbers for) housing prices actually fell 5.1% on a year-over-year basis.
Sadly, house prices have dropped so much at this point that we have entered truly historic territory.
According to Zillow, U.S. housing prices have declined a whopping 26 percent since their peak in June 2006. Amazingly, this is even farther than house prices fell during the Great Depression. From 1928 to 1933, U.S. housing prices only fell 25.9 percent. A brand new record has now been established.
So have we hit bottom yet?
Will house prices recover in 2011?
Unfortunately, every indication seems to point to even more declines in U.S. home prices. The following are five key factors that will continue to drive house prices down….
#1 Mortgage Rates Are Going Up
Over the past couple of months, mortgage rates in the United States have been moving up fairly steadily. That is going to make mortgages even more expensive for potential home buyers.
#2 Mortgage Delinquencies Are Increasing Again
As we approached the end of 2010, the number of mortgages in the U.S. that are “seriously delinquent” started to creep up once again. That means that we are likely to see another bump in foreclosures at some point in 2011. There are already way, way too many homes on the market, so more foreclosures will only add even more supply to a market that already has way too many homes for sale.
#3 Mortgage Lenders Have Really Tightened Standards
Most large financial institutions have responded to the mistakes of the past decade by really, really tightening mortgage standards. It is now much harder to get a home loan in the United States. But if less people can qualify for a mortgage that means that less people will be out there buying homes.
#4 The Entire Mortgage Industry Continues To Be Mired In Legal Problems
Foreclosuregate is a huge story that simply refuses to go away. For example, just the other day the highest court in Massachusetts voided the seizure of two homes after the big banks involved failed to prove that they actually held the mortgages at the time they foreclosed. This case made headlines all over the nation, and precedents such as this will encourage even more homeowners to challenge their foreclosures in court. This is going to be really bad for the big mortgage lenders and it is going to really slow down the pace of mortgage lending.
#5 The Underlying Economy Continues To Be Very Poor
The American people cannot afford to buy good homes if they do not have good jobs. But today there are seven million fewer middle class jobs than there were about ten years ago. As 2007 began, there were just over 1 million Americans that had been unemployed for half a year or longer. Today, there are over 6 million Americans that have been unemployed for half a year or longer. Until there is a “jobs recovery” there simply is not going to be a “housing recovery”.
There are very few top economists that are actually optimistic about the U.S. housing market in 2011. In fact, there seems to be an emerging consensus among analysts that house prices in America are going to decline quite substantially this year….
*Mark Zandi of Moody’s Analytics says that U.S. house prices are “double dipping” and that we will likely see another 5 percent decline in housing prices during 2011.
*Economist Nouriel Roubini recently declared to CNBC that the “double-dip” for the U.S. housing market has already arrived….
“It’s pretty clear the housing market has already double dipped.”
*Standard & Poor’s analysts are projecting that U.S. home prices will fall another seven to ten percent during 2011.
*Zillow chief economist Stan Humphries expects home prices to continue to fall until at least mid-2011 and he is convinced that more hard times for the U.S. real estate market are still to come….
“Zillow believes that we’ll see bottom in national home values in Q2 or Q3 of 2011 (more likely the latter), that home values will fall another 5-7% nationally (in the Zillow Home Value Index) between now and then, and that we’ll experience a very long, protracted bottom before home value appreciation returns to historically normal rates.“
So it looks like the U.S. housing crash is going to continue for a while.
For those that make a living by building or selling homes, this has got to be very depressing news.
But for those that are seeking to buy a house or that are seeking to buy some land, there could potentially be some very good deals out there over the next year or two.
So what do you think is going to happen to house prices in 2011? Please feel free to leave a comment with your analysis….
 Most Americans have become so accustomed to the “new normal” of continual economic decline that they don’t even remember how good things were just a few short years ago. Back in 2007, unemployment was very low, good jobs were much easier to get, far fewer Americans were living in poverty or enrolled in welfare programs and government finances were in much better shape. Of course most of this prosperity was fueled by massive amounts of debt, but at least times were better. Unfortunately, things have really deteriorated over the last several years. Since 2007, unemployment has skyrocketed, foreclosures have set new all-time records, personal bankruptcies have soared and U.S. government debt has gotten completely and totally out of control. Poll after poll has shown that Americans are now far less optimistic about the future than they were in 2007. It is almost as if the past few years have literally sucked the hope out of millions upon millions of Americans.
Sadly, our economic situation is continually getting worse. Every month the United States loses more factories. Every month the United States loses more jobs. Every month the collective wealth of U.S. citizens continues to decline. Every month the federal government goes into even more debt. Every month state and local governments go into even more debt.
Unfortunately, things are going to get even worse in the years ahead. Right now we look back on 2005, 2006 and 2007 as “good times”, but in a few years we will look back on 2010 and 2011 as “good times”.
We are in the midst of a long-term economic decline, and the very bad economic choices that we have been making as a nation for decades are now starting to really catch up with us.
So as horrible as you may think that things are now, just keep in mind that things are going to continue to deteriorate in the years ahead.
But for the moment, let us remember how far we have fallen over the past few years. The following are 14 eye opening statistics which reveal just how dramatically the U.S. economy has collapsed since 2007….
#1 In November 2007, the official U.S. unemployment rate was just 4.7 percent. Today, the official U.S. unemployment rate is 9.4 percent.
#2 In November 2007, 18.8% of unemployed Americans had been out of work for 27 weeks or longer. Today that percentage is up to 41.9%.
#3 As 2007 began, there were just over 1 million Americans that had been unemployed for half a year or longer. Today, there are over 6 million Americans that have been unemployed for half a year or longer.
#4 Nearly 10 million Americans now receive unemployment insurance, which is almost four times as many as were receiving it back in 2007.
#5 More than half of the U.S. labor force (55 percent) has “suffered a spell of unemployment, a cut in pay, a reduction in hours or have become involuntary part-time workers” since the “recession” began in December 2007.
#6 According to one analysis, the United States has lost a total of approximately 10.5 million jobs since 2007.
#7 As 2007 began, only 26 million Americans were on food stamps. Today, an all-time record of 43.2 million Americans are enrolled in the food stamp program.
#8 In 2007, the U.S. government held a total of $725 billion in mortgage debt. As of the middle of 2010, the U.S. government held a total of $5.148 trillion in mortgage debt.
#9 In the year prior to the “official” beginning of the most recent recession in 2007, the IRS filed just 684,000 tax liens against U.S. taxpayers. During 2010, the IRS filed over a million tax liens against U.S. taxpayers.
#10 From the year 2000 through the year 2007, there were 27 bank failures in the United States. From 2008 through 2010, there were 314 bank failures in the United States.
#11 According to the U.S. Department of Housing and Urban Development, the number of U.S. families with children living in homeless shelters increased from 131,000 to 170,000 between 2007 and 2009.
#12 In 2007, one poll found that 43 percent of Americans were living “paycheck to paycheck”. Sadly, according to a survey released very close to the end of 2010, approximately 55 percent of all Americans are now living paycheck to paycheck.
#13 In 2007, the “official” federal budget deficit was just 161 billion dollars. In 2010, the “official” federal budget deficit was approximately 1.3 trillion dollars.
#14 As 2007 began, the U.S. national debt was just under 8.7 trillion dollars. Today, the U.S. national debt has just surpassed 14 trillion dollars and it continues to soar into the stratosphere.
So is there any hope that we can turn all of this around?
Unfortunately, the massive amount of debt that we have piled up as a society over the last several decades has made that impossible.
If you add up all forms of debt (government debt, business debt, individual debt), it comes to approximately 360 percent of GDP. It is the biggest debt bubble in the history of the world.
If the federal government and our state governments stop borrowing and spending so much money, our economy would collapse. But if they keep borrowing and spending so much money they will continually make the eventual economic collapse even worse.
We are in the terminal stages of the most horrific debt spiral the world has ever seen, and when the debt spiral gets stopped the house of cards is going to finally come down for good.
So enjoy these times while you still have them. Yes, today is not nearly as prosperous as 2007 was, but today is most definitely a whole lot better than 2015 or 2020 is going to be.
Sadly, we could have avoided this financial disaster completely if only we had listened more carefully to those that founded this nation. Once upon a time, Thomas Jefferson said the following….
I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.
 This October, millions of Americans are going to watch horror movies and read horror stories because they enjoy being frightened. Well, if you really want to be scared, you should just check out the real horror story unfolding right before our eyes – the U.S. economic meltdown. It seems like more bad news for the U.S. economy comes out almost every single day now. Unfortunately, things are about to get a whole lot worse. The mainstream media has been treating “Foreclosuregate” as if it is a minor nuisance, but the truth is that the lid is about to be publicly lifted on years and years of massive fraud in the U.S. mortgage industry, and this thing has the potential to cause economic chaos that is absolutely unprecedented. Over the past several days, expert after expert has been coming forward and warning that this crisis could completely and totally paralyze the mortgage industry in the United States. If that happens, it will be essentially like pulling the plug on the U.S. economic recovery.
Not that there was going to be a recovery anyway. The truth is that economic statistic after economic statistic has been pointing to incredible trouble for the U.S. economy.
For example, the U.S. government just announced that the U.S. trade deficit went up again in August. According to the U.S. Census Bureau, the U.S. trade deficit was $46.3 billion during August, which was up significantly from $42.6 billion in July.
So how much coverage did this get in the mainstream media?
Well, just about none.
We have gotten so used to horrific trade deficits that it isn’t even news anymore.
But these trade deficits are absolutely killing our economy.
How long do you think that the U.S. economy can keep shelling out 40 or 50 billion more dollars than we take in every single month?
If you look at the countries around the world that have become very wealthy, almost all of them have gotten that way by trading with the United States.
Meanwhile, many of our once great manufacturing cities are turning into open sewers.
Every single politician in the United States should be talking about the trade deficit.
But hardly any of them are.
Is it because Americans have all become so dumbed-down that we don’t understand these things anymore, or is it because we are so distracted by the various forms of entertainment that we are addicted to that we just don’t care?
But the trade deficit is not the only economic statistic that is getting worse.
According to the Department of Labor, for the week ending October 9th the advance figure for seasonally adjusted initial jobless claims was 462,000, which represented an increase of 13,000 from the previous week.
We have an unemployment epidemic going on in this country, but what did the mainstream media do in response to this news?
They yawned. Instead, many of the “financial experts” were busy talking about how wonderful it is that the Stock Market is going up, up, up.
Well, as one reader recently reminded me, if you want to evaluate an economy by how much the stock market is going up, then the economy of Zimbabwe has had an absolutely wonderful decade!
The truth is that the stock market is not a good barometer for what is actually going on.
What is really happening is that the U.S. economic system is literally coming apart at the seams.
Yet another piece of really bad economic news that just came out is that the number of home repossessions by banks set a new all-time record during the month of September. The record total of 102,134 bank repossessions was the first time ever that bank repossessions climbed over the 100,000 mark for a single month.
The good news is that bank repossessions are about to come to a screeching halt.
The bad news is that it is because the U.S. mortgage industry is about to become completely and totally paralyzed by this foreclosure fraud crisis.
The following are three basic points to remember about this foreclosure mess….
A) Massive Fraud Was Committed At Every Stage By The Mortgage Industry
In a previous article entitled “Foreclosure Fraud: 6 Things You Need To Know About The Crisis That Could Potentially Rip The U.S. Economy To Shreds“, I attempted to describe just how widespread the fraud in the mortgage industry has been….
The truth is that there was fraud going on in every segment of the mortgage industry over the past decade. Predatory lending institutions were aggressively signing consumers up for mortgages that they knew they could never repay. Many consumers were also committing fraud because a lot of them also knew that they could never possibly repay the mortgages. These bad mortgages were fraudulently bundled up and securitized, and these securitized financial instruments were fraudulently marketed as solid investments. Those who certified that these junk securities were “AAA rated” also committed fraud. Then these securities were traded at lightning speed all over the globe and a ton of mortgage paperwork became “lost” or “missing”.
Finally, when it came time to foreclose on these bad mortgages, a whole lot more fraud was committed. Thousands upon thousands of foreclosure documents were “robo-signed”, but the truth is that investigators are starting to discover a lot of things about these mortgages that are a lot worse than that.
B) Nobody Really Knows Who Owns Or Who Has The Right To Foreclose On Millions Upon Millions Of Mortgages
The legal rights to millions of U.S. mortgages has been scrambled so badly that it might actually be impossible to fully sort this mess out. In particular, MERS (Mortgage Electronic Registration Systems) has created a paperwork nightmare that may never be able to be completely remediated.
On a previous article, a reader named William left a comment that did a great job of describing the very serious problem that we are now facing because of MERS….
MERS – potentially the most serious problem because it affects who really owns the loans. Securitization mandates that loans be transferred into REMIC trusts within a strict timeframe. Late transfers are not allowed. In spite of the supposed “ease” of transfer through MERS, it now appears that perhaps 60% of US loans were never properly transferred. Absent remedial legislation, it is impossible to do so now. And the former owners may be out of business or bankrupt. So how do we get these loans to the trust beneficiaries who were supposed to own them? This is no simple paperwork correction. The train has left the station, with no more to follow.
C) Unprecedented Chaos Is Going To Erupt As Faith In The Mortgage System Completely Dies
So what is going to happen as a result of all of this fraud and confusion in the mortgage industry? Well, basically everybody is going to sue everybody. It is going to be absolute mayhem.
Charles Hugh Smith recently put it this way….
Real estate attorneys can rejoice: everyone will get sued, in every court in the land. Banks will get sued, title insurance companies will get sued, realtors will get sued, foreclosure mills will get sued, MERS will get sued, and so on. The attorneys general of the states will all sue the banks and mortgage mills, claiming billions in damages.
Meanwhile, virtually nobody will want to buy any house that has been foreclosed on in the past ten years or so until this mess is sorted out (which could take years and years).
Meanwhile, title insurance companies are going to avoid foreclosures like the plague.
Meanwhile, all of the investors that have been propping up the housing market by buying foreclosures are going to be fleeing the market in droves.
Meanwhile, the financial world is going to be trying to figure out which U.S. lending institutions are still solvent. The value of most mortgage-based assets is now totally up in the air.
Meanwhile, millions more homeowners across the United States will be emboldened to quit making payments on their mortgages as they realize that those holding their mortgages may not have the legal right to foreclose on them.
And that is where the true horror of this entire situation may lie. What is going to happen if millions upon millions of Americans holding underwater mortgages look at this situation and decide that they really don’t have to be afraid of the threat of foreclosure any longer?
If a massive wave of homeowners suddenly decides to simply quit paying their mortgages, it would basically wipe out nearly the entire mortgage industry.
That would likely mean more government bailouts, more government control, much higher mortgage rates and eventually a serious crash in housing prices.
This crisis is incredibly complicated and it has a ton of moving parts, so it is extremely difficult to describe accurately. But the reality is that this mess has the potential to hurt the U.S. real estate market much more than “subprime mortgages” ever did.
Hopefully this crisis will not be “the straw that broke the camel’s back” for the U.S. economy, but with each passing day this thing looks even more horrifying.
One way or another, real estate law in the United State is going to be changed forever as a result of this crisis. It is going to be extremely interesting to see how all of this plays out.
 The foreclosure fraud crisis seems to escalate with each passing now. It is being reported that all 50 U.S. states have launched a joint investigation into alleged fraud in the mortgage industry. This is a huge story that is not going to go away any time soon. The truth is that it would be hard to understate the amount of fraud that has gone on in the U.S. mortgage industry, and we are watching events unfold that could potentially rip the U.S. economy to shreds. Many are now referring to this crisis as “Foreclosure-Gate“, and already it is shaping up to be the worst thing that has ever happened to the U.S. mortgage industry. At this point, it seems inevitable that some financial institutions will go under as a result of this mess. In fact, by the end of this thing we might see a whole bunch of lending institutions crash and burn. This crisis is very hard to describe because it is just so darn complicated, but it is worth it to try to dig into this thing and understand what is going on because it has the potential to absolutely decimate the entire U.S. mortgage industry.
The truth is that there was fraud going on in every segment of the mortgage industry over the past decade. Predatory lending institutions were aggressively signing consumers up for mortgages that they knew they could never repay. Many consumers were also committing fraud because a lot of them also knew that they could never possibly repay the mortgages. These bad mortgages were fraudulently bundled up and securitized, and these securitized financial instruments were fraudulently marketed as solid investments. Those who certified that these junk securities were “AAA rated” also committed fraud. Then these securities were traded at lightning speed all over the globe and a ton of mortgage paperwork became “lost” or “missing”.
Then, when it came time to foreclose on these bad mortgages, a whole bunch more fraud started being committed. The reality is that the “robo-signing” scandal is just the tip of the iceberg. The following are six things that you should know about how deep this foreclosure fraud crisis really goes….
#1 According to the Associated Press, financial institutions were hiring just about whoever they could find, including hair stylists and Wal-Mart employees, as “foreclosure experts” to help them rush through the massive backlog of foreclosures that were rapidly piling up.
Apparently many of these “foreclosure experts” barely even knew what a “mortgage” was according to the AP….
In depositions released Tuesday, many of those workers testified that they barely knew what a mortgage was. Some couldn’t define the word “affidavit.” Others didn’t know what a complaint was, or even what was meant by personal property. Most troubling, several said they knew they were lying when they signed the foreclosure affidavits and that they agreed with the defense lawyers’ accusations about document fraud.
#2 There is soon going to be a colossal legal scramble to figure out who actually owns millions of U.S. mortgages.
In his recent article entitled “Invasion Of The Robot Home Snatchers“, Robert Scheer described the complete and total mess that the U.S. mortgage industry has created….
How do you foreclose on a home when you can’t figure out who owns it because the original mortgage is part of a derivatives package that has been sliced and diced so many ways that its legal ownership is often unrecognizable? You cannot get much help from those who signed off on the process because they turn out to be robot signers acting on automatic pilot. Fully 65 million homes in question are tied to a computerized program, the national Mortgage Electronic Registration Systems (MERS), that is often identified in foreclosure proceedings as the owner of record.
Meanwhile, more organizations are stepping forward to help homeowners fight foreclosures. National People’s Action, PICO National Network, Industrial Areas Foundation, Alliance of Californians for Community Empowerment and the Northwest Federation of Community Organizations have all partnered with the SEIU to launch the “Where’s The Note” campaign which is going to encourage homeowners to demand to see the note before submitting to a foreclosure. Campaigns such as this are going to make foreclosures much more costly for banks.
#3 Legal battles over foreclosure documents could soon spawn thousands upon thousands of lawsuits across the United States.
Adam Levitin, a Georgetown University Law professor who specializes in mortgage finance and financial regulatory issues was recently quoted in an article on CNBC as saying the following about the situation we are currently in….
The mortgage is still owed, but there’s going to be a problem figuring out who actually holds the mortgage, and they would be the ones bringing the foreclosure. You have a trust that has been getting payments from borrowers for years that it has no right to receive. So you might see borrowers suing the trusts saying give me my money back, you’re stealing my money. You’re going to then have trusts that don’t have any assets that have been issuing securities that say they’re backed by a whole bunch of assets, and you’re going to have investors suing the trustees for failing to inspect the collateral files, which the trustees say they’re going to do, and you’re going to have trustees suing the securitization sponsors for violating their representations and warrantees about what they were transferring.
#4 The problems with foreclosure paperwork may be more widespread than anyone would have dared to imagine.
Attorney Richard Kessler recently conducted a study in which he found “serious errors” in approximately 75 percent of the court filings related to home repossessions that he examined. Now he says that the foreclosure crisis could haunt the U.S. mortgage industry for the next ten years….
“Defective documentation has created millions of blighted titles that will plague the nation for the next decade.”
#5 If some banks discover that they are missing the paperwork for large numbers of mortgages (as is currently being alleged), those banks could be forced to significantly revalue those assets (as in “close to zero”) on their balance sheets.
John Carney of CNBC recently described it this way….
The most damaging thing that could happen to banks would be the discovery that they simply cannot prove they hold a mortgage on a house. In that case, the loan would probably have to be written down to near zero. Even for current loans, the regulatory reserve requirements would double as the loan would no longer be a functional mortgage but an ordinary consumer loan. Depending on the size of the “no docs” portion of the loan portfolio, this might be a minor blip or require a bank to raise new capital to fill the hole in the balance sheet.
#6 Renowned investor Jim Sinclair is actually warning that the collapse of securitized mortgage debt could be the “final shot” that will wipe out many financial institutions across the United States.
The recent warning that Sinclair posted on his blog is more than a little sobering….
I am asking for your attention again because of the depth of the fraud and now the size of the securitized mortgage debt OTC derivative pile of garbage that is in the trillions. This entire mountain of weapons of mass financial and social destruction is now in question. I have been telling you this for more than 2 years since the manufacturers and distributors of this crap were called by the NY Fed due to the loss of control over the paperwork.
I had dinner with my former partner, then lead director of and CEO of Bear Stearns. I could not contain myself so I asked him why he did so much business in OTC derivatives which were certain to bankrupt them. The answer I got was it was more than 50% of their profit. The right answer should have been it was more than 80% of their earnings.
Securitized mortgage debt is going to be the final shot that kills all kinds of financial entities in the Western world. The biggest holder of this putrid junk is pension funds.
Meanwhile, the stock market continues to go up, up, up as if everything is right in the world and as if a juicy new bull market is now upon us.
Well, let’s all join hands and sing happy songs around the campfire.
Perhaps if we all close our eyes and wish real hard all of this foreclosure fraud will just go away.
Then again, maybe not.
 American families better get ready to tighten their belts again. There is every indication that we are all going to really start feeling the squeeze in the months ahead. The price of gas is starting to spike again. The price of food is moving north. Health insurance premium increases are being announced coast to coast and a whole slate of tax increases is scheduled to go into effect in 2011. Meanwhile, household incomes are down substantially all over the nation and the U.S. government is indicating that there will not be an increase in Social Security benefits for the upcoming year once again. So if the cost of most of the basic things in our monthly budgets is going up and our incomes are going down what does that mean? It means that average American families are about to be squeezed like nothing we have seen in decades.
The reality is that it is getting really hard to make it out there. Not only do most households have both parents working, but in many cases both parents are getting second or even third jobs. Things have gotten so bad that millions of Americans have felt forced to turn to the government for assistance just to survive.
It can be really disheartening to come to the end of the month and realize that despite your best efforts you have less money than you did at the beginning of the month. But that is where millions upon millions of American families now find themselves.
The economic despair in the air is almost palpable. Already hordes of Americans are truly and honestly hurting and things are only going to get worse.
The following are ten reasons why ordinary hard-working Americans are about to really start feeling the squeeze….
#1 Gas prices are going up again. AAA says that the average price of a gallon of regular gasoline in the United States was $2.80 on Sunday. That is 32.6 cents higher than it was during the same time period in 2009. As oil and gas prices continue to go up, that is also going to have a significant impact on utility bills for American families this winter.
#2 The price of food is poised to rise substantially. Bloomberg is reporting that the the cost of meat in the United States is going nowhere but up. But meat is not the only thing that you will soon be paying much more for at the supermarket. Wheat, corn, soybeans and almost every other major agricultural commodity is absolutely soaring this fall. As this continues, it is inevitable that ordinary Americans will see much higher food prices at their local grocery stores.
On a previous article, a reader named Erica left a comment in which see detailed the stunning food inflation that she is seeing where she lives….
Food inflation is real, and it is here. Just yesterday I compared my receipt from a grocery run to prices I have from the same exact store from September 15, 2009. Bacon? Up 52% to $13.69 from $8.99 for 4 lbs. Butter? Up 73% to $9.99 from $5.79 for 4 lbs. Pure vanilla extract up 14% to $6.79 from $5.95. Chopped dried onions up a mere 2% but minced garlic (wet) was up 32%.
#3 It looks like those receiving Social Security are not going to be seeing cost-of-living increases again. The Associated Press is reporting that the U.S. government is expected to announce some time this week that the tens of millions of Americans that receive Social Security will go through yet another year without an increase in their monthly benefit payments. You see, Social Security cost-of-living adjustments are tied to the official government inflation numbers, and according to the U.S. government there is basically very little inflation right now. Of course we all know that is a lie, but it is what it is.
#4 The cost of health care continues to soar into the stratosphere. Americans already pay more for health care than anyone else in the world, and yet costs continue to spiral out of control. The cost of health care increased a staggering 9.6% for all U.S. households from 2007 to 2009. Now, health insurance companies from coast to coast are announcing that they must raise health insurance premiums substantially due to the new health care law that Barack Obama and the Democrats have pushed through. So in 2011 it looks like the average American family is going to have to carve out an even bigger chunk of the budget for health care.
#5 American families could desperately use a recovery in the housing industry, but that is simply not going to happen. Foreclosure-Gate is getting worse by the day, and it threatens to bring the U.S. real estate industry to a complete and total standstill. If it is ultimately proven that the paperwork for millions of mortgages in the United States is seriously deficient, it could push hordes of mortgage lenders into bankruptcy and render mountains of mortgage-backed securities nearly worthless. Regardless, it is now going to be much more difficult to get a mortgage, much more difficult to buy a home and much more difficult to sell a home. We could very well be looking at the next stage of the housing crash. Ordinary Americans could end up losing trillions more in home equity.
#6 More Americans than ever find themselves unable to pay their bills, and an increasing number of frustrated creditors are actually resorting to wage garnishment. Yes, you read the correctly. Creditors are starting to ruthlessly go after the weekly paychecks of debtors.
The following is an excerpt from a recent New York Times article that discussed the rise of wage garnishment as a weapon against debtors….
After winning, creditors can secure a court order to seize part of the debtor’s paycheck or the funds in a bank account, a procedure called garnishment. No national statistics are kept, but the pay seizures are rising fast in some areas — up 121 percent in the Phoenix area since 2005, and 55 percent in the Atlanta area since 2004. In Cleveland, garnishments jumped 30 percent between 2008 and 2009 alone.
So if you are getting behind on your debt, you better watch out – your creditors may soon decide to garnish your wages.
#7 Americans now owe more on student loans than they do on credit cards. As hard as that is to believe, that is actually true. Americans now owe more than $849 billion on student loans, which is a new all-time record.
Student loan payments can be absolutely crippling to a household budget. This is especially true for young Americans that have just gotten out of school. Sadly, student loan debt is nearly impossible to get rid of. Once you are committed, it will follow you around for the rest of your life.
#8 Even as expenses rise, incomes are down from coast to coast. Median household income in the U.S. declined from $51,726 in 2008 to $50,221 in 2009. There are very few areas that have not been affected. In fact, of the 52 largest metro areas in the United States, only the city of San Antonio did not see a decline in median household income during 2009.
#9 If all of this was not bad enough, now there are rumblings that the U.S. Federal Reserve is actually thinking that we need more inflation. A number of top Federal Reserve officials have come out recently and have publicly supported the notion that the Fed needs to purposely create more inflation in order to stimulate the economy. Of course what they don’t tell the American people is that inflation is a hidden tax on every single dollar in our wallets and in our bank accounts. More inflation would be really bad news for ordinary Americans, because they are already having a tough time getting their dollars to stretch far enough.
#10 Apparently the U.S. government (and many state and local governments) think that this is a great time to stick it to the American people by hitting them with a slew of new taxes. There are so many tax increases scheduled to go into effect in 2011 that it is hard to keep track of them all. In fact, there are many (myself included) that are calling 2011 “the year of the tax increase“. But the Americans that are going to get it the worst of all are those that are going to get hit with the Alternative Minimum Tax. One out of every six American households is going to be hit with a tax increase averaging $3,900 (thanks to the AMT) and most of them don’t even know that it is coming.
So did you think that 2010 was bad?
Well, you haven’t seen anything yet.
2010 was a Sunday picnic compared to what is coming.
Get ready to get squeezed.
Get ready for higher food prices, higher gas prices, higher health insurance premiums and higher taxes.
Get ready to try to do a lot more with a lot less.
Inflation is already here, but it is going to get a whole lot worse. Meanwhile, the U.S. government (along with state and local governments) is going to continue to have a voracious appetite for more revenue.
Average Americans are going to be squeezed until they have nothing left to give. Then they are going to be squeezed just a little bit more.
Are you ready?
 If you work in the mortgage industry or for a title insurer, you might not want to make any plans for the next six months. Foreclosure-Gate is about to explode. It is being alleged that many prominent mortgage lenders have been using materially flawed paperwork to evict homeowners. Apparently officials at quite a few of these firms have been signing thousands upon thousands of foreclosure documents without even looking at them. In addition, it is being alleged that much of the documentation for these mortgages that are being foreclosed upon is either “improper” or is actually “missing”. As lawyers start to smell blood in the water, lawsuits challenging these foreclosures have already started springing up from coast to coast. In fact, some are already calling Foreclosure-Gate the biggest fraud in the history of the capital markets. JPMorgan Chase, Ally Bank’s GMAC Mortgage and PNC Financial have all suspended foreclosures in the 23 U.S. states where foreclosures must be approved by a judge. Bank of America has actually suspended foreclosures in all 50 states. Now, law enforcement authorities from coast to coast are calling for investigations into this controversy and it could be years before this thing gets unraveled.
This thing just seems to escalate with each passing day. It is being reported that the attorneys general of up to 40 U.S. states will be working together on a joint investigation into this foreclosure crisis. Lawmakers in both houses of the U.S. Congress, including Nancy Pelosi and Christopher Dodd, have called for an investigation to begin on the national level. U.S. Attorney General Eric Holder said last week that he is looking into the issue. Things are certainly getting very serious out there. Never before has there ever been such a national focus on foreclosure paperwork.
But apparently there are good reasons for such scrutiny….
*One GMAC Mortgage official admitted during a December 2009 deposition that his team of 13 people signed approximately 10,000 foreclosure documents a month without reading them.
*One Bank of America employee confessed during a Massachusetts bankruptcy case that she signed up to 8,000 foreclosure documents a month and typically did not look them over “because of the volume”.
But the “robo-signing” aspect of Foreclosure-Gate is just the tip of the iceberg. Apparently there is a whole lot more going on than just a bunch of bad signatures.
Peter J. Henning, a professor at Wayne State University Law School in Detroit, was recently quoted by MSNBC as saying the following about Foreclosure-Gate….
“You’ve got so many potential avenues of liability. You don’t even know the parameters of this yet.”
The sad truth is that potentially millions of foreclosures across the United States could potentially be invalid because the securitization process has muddied the chain of ownership. In fact, an increasing number of judges from coast to coast have been ruling that the “owners” of the mortgage have no right to foreclose on a property because they lack clear title.
At the core of this title controversy is MERS – Mortgage Electronic Registration Systems. MERS is based in Reston, Virginia and it was created by the mortgage industry to enable that big financial firms to securitize and swap mortgages at high speed. MERS allowed these big financial firms to largely avoid the hassle of filling out more forms and submitting new filing fees every time that a mortgage was traded.
But now MERS is facing some very serious legal challenges. A recent article in Businessweek described the situation this way….
A lawsuit filed on September 28th in federal court in Louisville on behalf of all Kentucky homeowners claims that MERS was part of a conspiracy to create false promissory notes, affidavits, and mortgage assignments to be used in mortgage foreclosures. Similar class actions have been filed on behalf of homeowners in Florida and New York. Karmela Lejarde, a MERS spokeswoman, declined to comment on any pending litigation.
The reality is that as millions of U.S. mortgages have been bunched together and traded around the globe at lightning speed, it has become increasingly unclear who actually has title to them and who actually has the right to foreclose on these properties.
Title insurers have backed the titles of millions of these foreclosed properties and now potentially find themselves in a heap of trouble. Some of the biggest title insurers have already begun circling the wagons in an attempt at damage control. For example, one of the biggest title insurance companies in the United States, Old Republic National Title Insurance, has already declared that it will no longer write new policies for homes that have been foreclosed on by JPMorgan Chase and GMAC Mortgage.
So what happens if nearly all title insurers start avoiding foreclosed properties?
Won’t that make it much more difficult for the banks to sell the massive backlog of foreclosed properties that they have accumulated?
In addition, Americans that have purchased foreclosed homes may now be facing some serious problems themselves. Millions of Americans may now “own” homes that they do not have clear title for. When it comes times to sell those homes, many Americans may find themselves unable to do so.
Needless to say, this is a complete and total mess.
Already, U.S. banks have a record number of foreclosed properties that they need to clear out, and now all of this scrutiny on foreclosure paperwork and all of these lawsuits are going to grind the process of getting these homes sold off to a standstill.
In fact, the true legacy of Foreclosure-Gate may be the massive amount of bank failures that it causes.
It would be difficult to understate how much of a nightmare Foreclosure-Gate is going to be for U.S. mortgage lenders. Having to go back through the paperwork of millions of old mortgages is going to be a complete and total disaster. If banks end up being unable to foreclose on a large number of bad mortgages, it could potentially be enough to put many banks out of commission for good. Not only that, but the legal fees that many of these banks will accumulate defending lawsuits related to Foreclosure-Gate will be astronomical.
The U.S. mortgage industry was already on the verge of death, and Foreclosure-Gate may just be the straw that broke the camel’s back.
The reality is that U.S. banks are drowning in foreclosures and this current crisis is just going to make things a lot worse. Back in 2005, there were approximately 100,000 home repossessions in the United States. In 2009, there were approximately 1 million home repossessions in the U.S. and RealtyTrac is now projecting that there will be an all-time record of 1.2 million home repossessions in the United States this year.
For the U.S. mortgage industry, Foreclosure-Gate must feel like someone has dropped a bomb on them after they have already been beaten up and doused with gasoline.
Attorney Richard Kessler, who recently conducted a study that found serious errors in approximately three-fourths of court filings related to home repossessions, says that Foreclosure-Gate could haunt the U.S. mortgage industry for the next ten years….
“Defective documentation has created millions of blighted titles that will plague the nation for the next decade.”
While it may be easy to beat up U.S. mortgage lenders and say that they deserve all this, let us not forget that this is going to impact a whole lot of other people too.
It is going to become much harder to get a mortgage. It is going to become much harder to buy a home. It is going to become much harder to sell a home. The U.S. housing industry is likely to suffer a significant downturn due to all of this. There is even a good chance that the entire U.S. economy could be dragged down for an extended period of time.
So no, Foreclosure-Gate is not good news for anyone.
Well, except maybe for lawyers.
But for virtually everyone else this is really bad news. Any hope that the U.S. housing industry would experience a quick recovery is completely and totally gone.
 On Friday, headlines across the United States declared that “unemployment remains unchanged at 9.6%”. Many analysts rejoiced and heralded this announcement as a sign that we have hit bottom and that things will be turning around soon. But is that the truth? A closer look at the unemployment numbers reveals some disturbing facts. For example, according to the Bureau of Labor Statistics, a broader measure of unemployment that includes workers that have stopped looking for work rose sharply to 17.1%. But that is not the only troubling sign from this past week. Agricultural commodities continue to skyrocket, which means that food price increases are on the way. The foreclosure “robo-signing” crisis continues to escalate, and that threatens to throw the entire mortgage industry into a state of absolute turmoil. Meanwhile, the U.S. national debt continues to grow and wealth continues to leave the United States at a dizzying rate.
So is there reason for optimism?
No, not really.
Even if the unemployment numbers had improved slightly, the longer-term trends for unemployment are extremely troubling as you will see from the statistics and the chart below.
At the same time when so many Americans are out of work or can barely get by on what they are currently making, there is every indication that prices are about to go up. Wheat, corn and soybeans all jumped in price on Friday, and it is inevitable that at some point these price increases will be passed on to consumers. And if that wasn’t bad enough, now some Federal Reserve officials are actually talking about purposely generating more inflation in order to “stimulate” the U.S. economy.
Meanwhile, this “robo-signing” foreclosure crisis threatens to escalate totally out of control. Will we soon see thousands of court cases popping up from coast to coast challenging the legitimacy of foreclosure paperwork? Will title insurers start totally backing off from foreclosed properties? Banks were already completely overwhelmed trying to process the massive backlog of foreclosures. Is this going to make the situation a whole lot worse?
The truth is that more bad news for the U.S. economy comes out almost daily now. The following are 10 things that you need to know about the latest econ0mic numbers….
1 – Gallup’s measure of unemployment, which is not adjusted for “seasonal factors”, showed a sharp increase in September. According to Gallup, unemployment has increased from 8.9% in July to 9.3% in August and to 10.1% in September.
2 – The seasonally-adjusted Alternate Unemployment Rate compiled by Shadow Government Statistics shows that the real unemployment rate in the United States is worse than it has been ever since the economic downturn began. The Alternate Unemployment Rate calculated by SGS reflects estimated “long-term discouraged workers”, which the U.S. government stopped keeping track of back in 1994….
3 – The number of Americans working part-time jobs “for economic reasons” is now the highest it has been in at least five decades.
4 – 15.8% of Americans between the ages of 18 and 29 were unemployed during the month of September.
5 – Agricultural commodities continued to move higher on Friday. Wheat, corn and soybeans all saw their prices soar. Unfortunately for American consumers, this is part of a broader trend of rising agricultural commodity prices. As this continues, it is inevitable that we will all be seeing much higher food prices at our local grocery stores.
6 – It is being reported that PNC Financial Services Group has suspended the sale of foreclosed homes for the next thirty days. This is the fourth major lender to take dramatic action recently. Will nearly all U.S. mortgage lenders eventually be caught up in this crisis before it is over?
7 – Bank of America announced on Friday that it is now going to suspend sales of foreclosed homes in all 50 U.S. states as it continues to evaluate internal foreclosure procedures. This “foreclosure crisis” threatens to decimate the entire U.S. real estate industry. What has happened is that millions of U.S. mortgages were sold and resold around the globe at lightning speed and the chain of ownership for many of these mortgages become muddied. In addition, it is starting to emerge that many of these lenders used fraudulent loan documents during foreclosure proceedings and company officials often used “robo-signers” to sign important foreclosure documents. So now mortgage lenders, title insurers and those buying or selling foreclosed homes will be facing years of gridlock and chaos as foreclosure-related lawsuits multiply exponentially. All of this is going to have a dramatic effect on the U.S. real estate market. In fact, it is being reported that U.S. home sales are already starting to be affected by this crisis.
8 – The U.S. National debt just keep growing. If you took the national debt and divided it up among all Americans, each American (including children) would owe approximately $42,000. So, for an average family of four, their share of the national debt would be $168,000.
9 – Interest payments on the U.S. national debt increased 13% in the fiscal year that ended September 30th. If interest payments continue to increase that rapidly each year they will bankrupt the U.S. government very quickly.
10 – It appears that some weird games are being played with the national debt numbers. Back on September 29th, the U.S. national debt was 13.466 trillion dollars. On September 30th, the U.S. national debt soared to 13.561 trillion dollars. Then on October 1st, the beginning of the new fiscal year for the federal government, the U.S. national debt jumped up to 13.610 trillion dollars. So how in the world does the U.S. national debt jump by a whopping 144 billion dollars in just two days? Somebody has some explaining to do for this kind of accounting.
The United States was once the wealthiest nation by far on the entire planet.
But now we are in such a rapid decline that it is hard for most Americans to even comprehend it.
We are like that one couple that almost every neighborhood seems to have that has two shiny new cars in their driveway, that dresses in designer clothes and that seems to have plenty of money to take vacations and yet is in debt up to their eyeballs.
The truth is that the United States keeps getting poorer every single month. The term “trade deficit” is not very sexy, but it is critically important to understand if you want to comprehend what is happening to the U.S. economy. Every month tens of billions of dollars more wealth goes out of the United States than comes into it. We are continually getting poorer.
To cover up our declining national wealth, we have gone into staggering amounts of debt. We have maintained our lavish standard of living by piling up staggering amounts of debt on the national, corporate and consumer levels.
The sad reality is that the U.S. government is not the wealthiest government in the world any longer. Rather, it is the government that is the most in debt. The U.S. national debt is the biggest debt that the world has ever seen, and it grows larger every single day.
We can’t keep up this charade forever. At some point it is going to stop.
When this house of cards does come tumbling down, do you think that the American people are going to be pleased to learn that our leaders have squandered our once great wealth and have destroyed the greatest economic machine that the world has ever known?
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