A SOLUTION

We all know that things cannot remain as they are. There needs to be a solution. A solution should help those who were wronged and punish the wrong doers, but the situation is complicated. The financial inequity between the individual homebuyers and the corporate lenders is blaringly obvious. It is not like our leaders were not warned, time and time again. They choose to ignore the dangers because the money was coming in so fast. Brooksley Born tried to warn us what would happen without regulations.1 Eileen Foster, a former executive vice president in charge of fraud investigations at mortgage lender Countrywide Financial, told CBS 60 Minutes reporter Steve Kroft that mortgage fraud was a common occurrence at the firm.2 On that same report she stated that no governing authorities have subpoenaed her to testify regarding mortgage fraud. Additionally, Citigroup was also caught in securities fraud: According to the lawsuit, Citigroup falsely certified that many of its mortgage loans qualified for insurance under the FHA program of the Department of Housing and Urban Development (HUD). Among Hunts allegations was the claim that Citibank employees erased the records of approximately 1,000 loans that a Citibank quality-control team had designated as potentially fraudulent. In violation of HUD requirements, these defects that the quality control identified were not included in reports to the government.3 It seems even the Congressional Budget Office was complacent in covering up the degree of fraud and crisis in the housing and mortgage market.4 In Dr. Phams letter to Senator Grassley, she explained that while working at the CBO during the fall of 2010, she was told not to publish or incorporate any data about the U.S. housing and mortgage markets NOTHING
1

Brooksley Born, The Cassandra of the derivitives crisis. (http://www.washingtonpost.com/wp-

dyn/content/article/2009/05/25/AR2009052502108_pf.html) 2

Former Countrywide Whistleblower: Mortgage Fraud 'Systemic' (http://www.huffingtonpost.com/2011/12/05/countrywide-whistleblower-mortgage-fraud-systemic_n_1129637.html) 3 Citigroup Settles Mortgage Fraud Lawsuit for $151 Million, Whistleblower to Collect $31 Million (http://employmentlawgroupblog.com/2012/02/23/citigroup-settles-mortgage-fraud-lawsuit-for-151-million-whistleblowerto-collect-31-million/) 4

If It Is True It Is Treason by Martin Andelman (http://mandelman.ml-implode.com/2012/03/if-true-itstreason-cbo-director-douglas-elmendorf-and-the-impact-of-the-foreclosure-crisis/)

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about the foreclosure crisis NOTHING that might spoil the CBOs forecasts, of course, that term extremely loosely. In fact, Phams letter states that she was told in no uncertain terms by CBO leadership, or otherwise came to understand that

Statements could not be made that attributed the decline in property tax revenues to foreclosures and the decline in home prices.
Greenspan has even offered an apology for wrecking the world economy.5 HUD has issued the results of an investigation that states supervisors directed the banks mortgage misconduct.6 How much more evidence is needed to get relieve to the American Homebuyers who were victims of this massive fraud? Soall of this to say that the mortgage market is a mess and the evidence of wrongdoing and fraud is out therein abundance. It is not just going to iron itself out. It is not going to level off. On its current course our great nation will be turned back into a feudal society with the rich and corrupt landowners ruling the working class. Already our laws are being compromised in favor of the wealthy lenders. Our land is being sold off to foreign investors at an amazing rate. It is not a question that fraud and corruption has gotten us into this mess, the question is how can we rectify it and get our great country back on track? How can we prosecute the criminals involved? How can we bring justice to the homebuyers who have been defrauded? How can we separate those who were defrauded from those who were part of the corruption? How do we reward those who have worked hard to keep their mortgage current? Yet get justice to those who have become a victim of fraud? What about those, like us, who maintained a current mortgage for as long as they could, but lost ground while trying to get justice? For every day of inaction by our government and the regulators that govern us, another family gets fraudulently foreclosed upon and ends up on the streets or crowded into the home of a reluctant relative or living in a tent village. We are made to feel shamed and degraded while those who have caused this
5

Greenspan offers apology for wrecking world economy (http://www.nytimes.com/2008/10/24/business/economy/24panel..) 6 Article for Washington Post Supervisors directed banks mortgage misconduct (http://www.washingtonpost.com/business/economy/supervisors-directertgage-misconduct-hud-report-says/2012/03/13)

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disaster move on to their next gamble against the middle class (i.e. - as in PennyMac, formerly Countrywide)7, with bonuses and generous salaries. We read about the corruption everyday, because we live it everyday and we look for it. So what of the moral hazard of a nation who realizes that we have been left the victims of lawlessness? Recently, in an article featured on Mandelman Matters, law professor, Lauren E. Willis, offered an idea to help reboot our declining mortgage market. I have included it here.8 A solution is needed. We need to reboot the system to correct the damage that has been done and is continuing to be done to our nation. I have outlined our ordeal with the lenders to illustrate that it is not only those who have lost their jobs that have been damaged. The problem affects everyone and every aspect of our lives. It is not just losing our homes that contribute to the damage, but it is our ruined reputations and future earning that are affected. I have included numerous footnotes and articles to illustrate that these ideas are not only my own but a compilation of the general theories peppering our market today. I do not have a plethora of college degrees. Instead, I am like the child who looks up and states the obvious: Our empire is naked.

The solution:
All underwater mortgages should be written down to 80% of the current market value at an interest rate not to exceed 3.5%. No qualification requirements should be implemented for this. If they have purchased a home then the lender has already qualified them for the loan right or wrong and re-qualifying them for a lower payment is a waste of time, money and manpower. ALL underwater mortgages would be included. This would encourage economic growth and would not punish those who have worked so hard to meet their obligations. While this would drastically slow down future growth in the financial industry temporarily, since they are primarily responsible for the damage it would be their form of restitution. It would not demand direct cash out payments from the corporations that contributed to the fraud, but rather, a reduction of growth.
7

Timothy Geithner Making Countrywide execs rich again (http://firedoglake.com/2009/03/23/timothy-geithner-making-countrywide-executives-rich-again/) 8 Good for the Banks, Good for the Borrowers, by Lauren E. Willis (http://mandelman.mlimplode.com/2012/03/guest-post-good-for-the-banks-good-for-the-borrowers-by-law-professor-lauren-e-willis/)

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By lowering principle balances it would free up the middle class economic growth. Human nature being what it is, people would borrow again. Families would be free to relocate. Some will feel free to open up businesses, thus stimulating the economy. Those who could not afford their homes could sell with dignity and regroup. Some would still lose there home to foreclosure, but at least they would regain their hope in a system of justice. Again, qualification would not be necessary. If they have a home that is underwater, the principle would be reduced to 80%, either they will make the payments or they will not. Ingenuity will find a way for those who are struggling and if not, they can sell with dignity and move forward. This solution will not save everyone who is losing their homes. Some, who have lost their jobs, who have suffered illnesses, will not be able to recoup their losses, but at least they will have hope in our government and in our constitution, that the rule of law applies to all, rich and poor, once again. For those who have already lost their homes, fraudulently, a cash bailout could be applied. The 25 billion dollar settlement has already suggested this in one form. Negotiate would be needed to arrive at a fair settlement, perhaps in the form of a discount on a future home. In addition, their credit record should be expunged in reference to their mortgage loans, so they could be free to purchase another home following TRUE lending guidelines. I know it is a simplistic approach to a complex problem, but as in the story of the Emperors New Clothes, perhaps it is really simple after all. With all the intellectual minds in our private sector and our government, one would think that we could come up with a better solution for our current economic cataclysm than turning our government back into an oligarchy or a feudal society. The United States of America was founded on the idealistic premise that ALL men are created equal. We have had a long history of striving toward that end. We teach our children and their children about the beauty of our nation. We teach them how we escaped the tyranny of financial and economic oppression in England and created a new world that broke free from the prior oligarchys of the past and formed a more perfect union. What a sad end if we destroy the once greatest nation in the world with our own hands. Good faith has been replaced by greed and arrogance: It makes me ill how callously people talk about ripping their clients off.

Over the last 12 months I have seen five different managing directors refer to their own clients as muppets, sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, Gods work, Carl Levin, Vampire
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Squids? No humility? I mean, come on. Integrity? It is eroding. I dont know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the clients goals? Absolutely. Every day, in fact.9
Our nation is becoming divided by the elite that actually believe they are entitled to oppress those less fortunate. We are becoming divided by those who are not among the elite, who are striving to believe they are. We are divided by people who work behind desks and on their phones moving goods around the world believing that they are better than those who produce and transport the goods and commodities they are selling. We are being divided by CEOs and executives that believe they deserve million dollar bonuses while the masses are struggling to find jobs during the economic collapse these same executives orchestrated. I understand that the reverse can be true, also. However, the poor have always been with us yet never before have we seen the unrest that is moving across our nation today. We all have a family member who we have deemed as lazy or un-ambitious, that is not the same as what we are seeing all across our nation today. Good hard-working people who cannot find work. Seniors who are losing their benefits, children who are moving back home in their 30s and 40s, students who must give up their education to settle in to some low-paying job. As I am finishing my plea for a solution, today, on the news, came a report of a suicide in Greece. A 77 year-old man shot himself in Syntagma Square. He had lost all hope. He was not a lazy worker without ambition. He was not poor in the technical sense of the word. He had worked all of his life. He was educated. He was a retired pharmacist with a retirement he had paid into for 35 years. Following is an excerpt from his suicide note:
"The Tsolakoglou government has annihilated all traces for my survival, which was based on a very dignified pension that I alone paid for 35 years with no help from the state. And since my advanced age does not allow me a way of dynamically reacting (although if a fellow Greek were to grab a Kalashnikov, I would be right behind him), I see no other solution than this dignified end to my life, so I dont find myself fishing through garbage cans for my sustenance. I believe that young people with no future, will one day take up arms and hang the traitors of this country at Syntagma square, just like the Italians did to Mussolini in 1945."

We do not want this to be the legacy of the United States, also. I have
9

Why I am leaving Goldman Sachs by Greg Smith (http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html)

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always believed that we were better than this. Our family has tried to do things the right way and we cannot even get heard. I HAVE filed complaints. I have written to every branch of our government. On the following page I have listed the offices I have contacted. Each office has forwarded me to another office. Each office has acknowledged the fraud and wrong-doing and each office has either told me to file a formal complaint (which I have done) or they have forwarded me to another office. So far, very little, if anything has been done. To date, foreclosures are going forward, unabated. In the news today, Jamie Dimon, executive of JP Morgan told shareholders that his bank unintentionally contributed to the collapse of the housing market, yet in his apology he is still looking to blame the borrowers and doing nothing to rectify the damage done to the families affected by the damage.
How we are trying to properly and fairly deal with delinquencies, modifications and foreclosures First, some facts: Of 76 million owned homes in America, 24 million do not have a mortgage. Of the remaining 52 million homes with mortgages, approximately 4.7 million have a delinquent mortgage. And approximately half of those that are delinquent are on homes where the value of the home is worth less than the mortgage. Another 10+ million homeowners are current on their mortgages, but their houses are worth less than their mortgages. (We estimate that approximately 25% of these mortgages ultimately will go into default homeowners for the rest will continue to pay and, it is hoped, will recover the value of their homes.)10

As I read the shareholders report, I realize the enormity of the situation for these lenders. I understand, to a limited degree, the struggle in representing stockholders and investors. However, as Mr. Dimon so aptly quoted in his report: As Albert Einstein said, In theory, theory and practice are the same. In practice, they are not. What he did not address in his report is how the borrowers are lured into default by promising them a modification which gets dragged out until the borrower can no longer afford to recover. What he did not cover was that it was more lucrative for the banks for foreclose than to modify. What he did not address, and what so few acknowledge is the moral hazard that creates a psychological rebellion in an array of people who are being subliminally told that they are of no worth. The housing market will NOT recover as long as the people know that the laws will not protect them from the injustice that is abounding in the financial sector. Even now the OCCUPY movement is gearing up for protests in the spring. There is unrest in the country like never before. As a nation, we, the people, cannot continue to ignore this great disaster that has affected us all.
10

While Jamie Dimon Gently Weeps (http://www.huffingtonpost.com/rj-eskow/while-jamie-dimon-

gently_b_1406831.html)

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For all I have learned about our country, its grass roots and its people, I cannot believe that we plan to allow this kind of injustice to continue. Roosevelt held a moratorium on foreclosures for five years. Today, there needs to be a halt to the foreclosures while a real resolution is developed, a resolution that will reboot our economy and get our nation back on track. Minimally, in the wake of this massive fraud, our nation should at the very least stop all non-judicial foreclosures and make the lenders prove their cases. We need to restore the good faith in our government and its people. There is more money in circulation in the world today than ever before on our planet. There is no reason for this kind of social oppression. There is no reason for the fraud that is being inflicted upon the people other than simple basic greed. We have laws that are being winked at or outright ignored in favor of corporate powers. History has taught us time and time again how this will end. I still have a mustard seed of hope that the United States of America is better than that. I still have hope that our rich history in compassion and leadership has not died with us. It is time to rise up for the very rights we have espoused in our constitution. It is time to hold those accountable for their flagrant acts of fraud and to right the wrongs that they have perpetrated. It is time to close the loopholes by creating regulation that will prevent this in the future. If we do not, then all the prophetic voices of the doomsday prophets, religions, soothsayers will come to fruition on our watch, even though we have been warned.

OUTLINE OF SEARCH TO HELP

A: Countrywide and B of A: Page 7 of 9

1)

Office of the President (referred me to):_ A) Department of Justice (referred me to): a) F.B.I. Federal (referred me to): b) F.B.I. Local Los Angeles (referred me to): i) F.D.I.C. (does not regulate Countrywide or CitiMortgage) (referred me to): ii) California Department of Consumer Affairs (referred me to): iii) Department of Corporations: Dept. of Corp. sends my complaint on to Countrywide (B of A) to ask them if they have done anything wrong..(huh?) Governor of California (at that time Arnold Schwarzenegger He actually referred me to the Department of Corporations and gave me a number to call the governors office if they did not follow-up. A) California Department of Corporations did not even open the correspondence to review it, but merely forwarded it to the B of A (Countrywide) executive office.

2)

3)

State Attorney General (cannot help individuals) advised us to get a lawyer, however, she has done a crack down on legal fraud making it very difficult to find a lawyer willing to run the risk(referred me to): A) Department of Corporations (referred us to): a) Bank of America (Countrywide) (referred us to): i) our own lawyer. (our lawyer has since bailed on us after charging us $35,000 and we had to engage another attorney) B of A hasunlimited legal funds.

4)

Senator and Legislators sent us form letter response

B: PENNYMAC 1) FDIC does not regulate PennyMac (referred us to): A) OCC does not regulate PennyMac (referred us to): B) SEC does not regulate PennyMac (referred us to): C) State Attorney General her office said they would look into it but does not help individual cases (referred us to): a) private attorney (via online search)

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b) Department of Corporations Department of Corporations is the only agency to whom PennyMac is apparently answerable. They will forward our complaint onto PennyMacallowing PennyMac to determine if they have done anything wrong. (These are the same executives that ran Countrywide aground and who, between them, have over 100 open lawsuits naming them in mortgage fraudincluding the FDIC, FHA and the SEC) 2) Attorney General of New York Eric T. Schneiderman (appointed to a special task force by the President of the United States). His office referred me to: A) Comptroller of the Currency Customer Assistance Group They do not have jurisdiction over PennyMac (referred us to): B) FTC FTC has no jurisdiction over PennyMac (referred us to): a) California Better Business Bureau They referred us to: b) The Attorney Generals Office they referred us to: i) Department of Corporations The Department of Corporations told us we had to KNOW which laws had been violated in order for them to investigate. C) Consumer Financial Protection Agency after waiting 15 minutes on death hold they recommended contacting our Attorney General. Afterward, they took our report and recommended sending in a detailed complaint and my recommendation for a fair resolution. ***We have since filed a formal complaint with the Department of Corporations that has forwarded our complaint onto PennyMac. PennyMac will be allowed to determine their own wrong-doing, I assume.wonder what they will find?

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