Thanks to You, There's More Hope ... But We're Not Done Yet
Friday, March 6, 2009 10:54 AM From: "Center for Responsible Lending" To: "e t"

CRL Action Alert

 ***  My Response Email Revised **

Sunday, March 8, 2009 1:57 PM From: "E T" Add sender to Contacts To: "kathleen.day@responsiblelending.org" kathleen.day@responsiblelending.org

Dear Kathy: Don't make your lousy means defeat your kindest ends, please.  Sooner or later, you'll find out that Sheila's "loan modification" is simply a fraud, if no intention of scam, just as our organization has accused bankers,  mortgage brokers, real brokers and appraisers of making subprime loan fraud now.   ET

Enclosed herewith some ideas of my 2 articles for your reference

Let's say, he is trying very hard to stop housing price falling as Don Quixote was so brave to stand up with an ideological mind "social responsibility," like his supporters Kathleen Day of the nonprofit Center For Responsible Lending. She said in a report Some denounce Obama's homeowner rescue as unfair: "This is the financial equivalent of what Hurricane Katrina did to New Orleans. Did they know they were living below sea level? Yes. Does that mean we shouldn't help them? That's ridiculous."

(NOTE: Yes, it is absurd! I mean, Kathleen's opinion is the most ridiculous words I have heard recently, even I am a news subscriber and supporter to her organization. Well, it is a value she chosen. May I ask: "Kathleen, will you jump into a trouble water to help someone drowning if you don't know how to swim, i.e., you have no sufficient competency and may lose your life, too? That's REALLY ridiculous if I ask you so doing, right? Sorry, I am an individualist and capitalist, too selfish and realistic to dare to push you into the river, in the name of social responsibility.) 

See we are so different! (2)

(NOTE: I have been farting too long. Otherwise, I will talk about Sheila Bair's "loan modification."

It is simply and basically a concept "short sale" used in 1990' by the private sector (banking practice) to meet the needs of a distressed housing market. Nothing really new or creative in this Sheila's idea infusion into our federal policy.

In the past, only a third party is able to do a "short sale," a home owner is NOT allowed acting alone to ask this "favor", without inviting a buyer/ investor involved. The only difference is Sheila officially(still not legally) opens the door for a home owner to negotiate with his banker.

To a consumer, the government plan is even worse, more greedy or much evil than the traditional model used in the private financial sector if we factor into Sheila's "modification" her intention to add a so-called "CAP tax" framework. In essence, she tries to import an "equity sharing" program into her "short sale" hybrid plan.

The "equity sharing" concept used in a hard money loan or venture capital investment in order to boost or generate more fat or extra returns for a greedy investor while he smells a situation where a sign of big hopeless or anxious desperation of his borrower is detected. However, it was hardly used or never seen in a "short sale" deal in the past financial housing practice. That's a sweet dream a banker had never thought reasonable, workable and possible, to even making a request under the nature market forces of a free market.

A banker who wants future "equity sharing" in addition to today's pure "loan relief" knows that a homeowner is in a distressed situation, but he also realistically knows that the third party concerned, i.e. the buyer or investor is NOT. No buyer or investor will accept an "equity sharing" term (or called it CAP tax in governent legal jargon) in a "short sale" under a normal condition. They will walk out the deal if a banker insists. Those buyers are not under duress or in a situation to be intimidated where our poor home owners go under the water of foreclosure (NOTE: I had been there and felt the unbearable pressure in 1989-90).

How dare a public servant Sheila as the Head of FDIC is asking the wonderful perk, a Obama-said stlye of "sacrifice," from a home owner?   To whom the sacrifice is supposed to be made?  Is it for increasing the benefits of banks or someone else, except aggregate of the owners concerned?

Because Sheila knows the fact that a home owner is desperate and the buyer is the identical hopeless owner/ victim at the same time under her idea.  She knows, dealing with someone who has no help to get from but herself, she is the only Savior a home owner can wishfully depend on, count on and put trust on. Is Sheila violating her fiduciary duty to those people who gave her the trust when she swore into her office? Or is she in a "conflict of interest" by presenting both banks and owners? Sure, she will claim she is just a intermediary as a broker working for both sellers and buyers, so as to get her 6% commission for her Uncle SAM brokerage without anyone's notice of tax hike. I have no answer on the possible questionable issue until a judge tells me.

In fact, Sheila is playing a rat trap to catch a home owner as a wolf to the little Red-hood: to give a home owner something with a sweat and kind smile in bold print; then, turn around to take something substantially much bigger back from him in fine prints. This scenario makes me wondering if Sheila used to be a saleswoman who professionally owns knowledge and knows how to sell an insurance without giving out a real pledge of warranty in her policy.

Is watching taxpayer's pocket just a responsibility for a British Parliament member or our American Congressman?  In England, no mandated representative is allowed (or is prohibited by her "Constitution") to initiate a legal action to increase tax.  Sure we America is so different.  Our Congress has the right, duty and shall introduce so many tax-increasing proposals at any moment under its own discretion.  Such as Pelosi House initiated and passed Dem's version of "domestice spending of $400 billion" bill immediately in a week after passing Obama's $800 billion stimulus into law.   Why they don't combine both spending into just one act with more consistent, organized and coordinated order?   So, what we can expect from our dear Congress and Administration?

On both sides of Atlantic Ocean, it is so supposed for either Federal public employees or the Cabinet in executive branch to propose new tax burden unto people?  So what is the big deal for Sheila if she is doing it with additional returns for her friendly bankers or GSIs who are too "bashful" or realistic to ask such goodies?

Is Sheila's concept so big a deal for her, Obama or the News media to brag about? Does it greatly change the way a banker handles his business if a homeowner used a straw man as an investor to do a short sale in the past?  Do we have no other way to achieve the same or better result?  To me, there is no really strategic breakthrough, but just unnecessary disturbance to the free market cause from all the government plans.

How about your two pennies?