The broken mortgage promise (or why GM workers had to take pay & benefit cuts)

[Hannah Bell]

BANKS WERE processing mortgages at record rates before the crash. Organizing, selling and transferring the pre-crash glut of mortgages required advanced banking technology. MERS, or Mortgage Electronic Registration Systems, is an electronic mortgage processing system developed in the late 1990s. In large number, the hard copies of signed mortgages were scanned into the MERS database.

MERS enabled the efficient selling and transfer of mortgages, which was a priority for major lending institutions before the 2008 crash. The banks knew they were holding ticking time bombs. The goal was to sell bundled loans and get them off the books before they exploded.

Banks often bought insurance, or credit default swaps, as a hedge against the loans they knew were toxic. They even bought insurance on mortgages they didn't own. When this happens, it's no longer a hedge; it's insider gambling. These firms had to file exemptions to state gaming laws to make the transactions legal.

For the lender, the most important document signed at a mortgage closing is the note. A mortgage is only valid if the mortgagee can prove property ownership with the note. In the process of scanning, selling and funneling these documents through the hands of up to eight different lending institutions, large numbers of notes were lost. When a bank can't find a note, it can't foreclose on the home--at least that is what judges in California, Massachusetts, Florida and Ohio said when they dismissed foreclosure cases because the bank couldn't provide a hard copy of the note.

In spite of the popular belief, THE STATE HAS DISCOURAGED BANKS FROM REFINANCING HOMES. The government has insured defaults up to 90 percent of the original loan amount. IN OTHER WORDS, IF A BORROWER DEFAULTS ON A MORTGAGE, THE STATE WILL PAY NEARLY THE ENTIRE LOAN BACK FOR THE BORROWER; however, the borrower doesn't get to keep the home. So NOT ONLY DOES A BANK GET ITS MONEY BACK, IT CAN ALSO RESELL THE FORECLOSED HOME FOR A PROFIT. THERE IS LITTLE TO NO INCENTIVE FOR BANKS TO REFINANCE homes right now...

http://socialistworker.org/2010/10/13/the-broken-mortgage-promise


The mortgage crisis is the reason for the GM bankruptcy & continuing attacks on auto workers.

Contrary to popular (media-fueled) belief, GM's losses weren't on its cars, but on its finance division -- GMAC -- specifically MORTGAGES, NOT AUTO LOANS, in the 2007-2008 crisis.

Labor price of a car = 10%, & less now.

[JDPriestly]

1. I haven't noticed that GM's cars are less expensive.

What is GM doing with the money, the profit that it makes on the sales of its overpriced cars?

[Hannah Bell]

2. which was nearly 2 billion in the first 6 months of this year. 2 billion in profit.

205,000 employees world-wide, 2 billion in profit.

http://www.gm.com/corporate/about/company.jsp

[xchrom]

3. Recommend