"The procedure invoked by the mortgage meltdown scheme defrauded investors and borrowers in identical fashion as part of a single scheme (false ratings and insurance) in asset backed derivative securities, who were the source of funding for the fraudulent loans on residential real property (false appraisals, undisclosed parties, undisclosed fees, abandonment of underwriting standards etc.). The borrower and the investor were co-victims of a Ponzi scheme. The middlemen needed money from the investor and a signature from the borrower. Everything else was smoke and mirrors." Neil Garfield, former investment banker and trial attorney.
The Wall Street model to use Eminent Domain to modify particular mortgage loans is contingent upon public/private partnership. A purportedly cash-strapped local government partners with a (deep-pocketed) financial manager (mistake #1). It then uses public power of Eminent Domain to target certain mortgage notes and then threaten the alleged mortgage lenders who purport to hold 100% control over the mortgage notes. In theory, the use of Eminent Domain would force the lawful owner of the mortgage note to accept "fair market" compensation as part of the eminent-domain process.
But the Wall Street model stops well short of economic justice. It anticipates the use of completed Eminent Domain proceedings only as a last resort.
Also, the Wall Street model targets only certain mortgage notes - some of which may not even be in delinquency, default, foreclosure or underwater. What makes them special? They happen to be part of an investment portfolio that 1) may be worthless to its owner, and 2) needs a bailout. The loans or their alleged borrowers may not need relief, but the portfolios and their investors sure do.
New Lamps for Old.
Instead, the Wall Street model proposes to select and then purchase from the alleged note-holders (their former, current or future clients?) possibly worthless mortgage notes for whatever the market (or an ill-informed and duped public) will bear. To be promised 60% of an allegedly mortgaged home's fair-market value under the premise that "something is better than nothing" is just the start. More importantly, the use of Eminent Domain facilitates the replacement of those toxic and possibly worthless mortgage notes allegedly owned by disgruntled investors with brand new government-insured loans. Under the guise of providing homeowner relief, the charlatans - or sorcerers - want to substitute their clients' possibly worthless investments with government-insured mortgage notes. Pretty slick. Like depositing billions of counterfeit dollars into the bank and then immediately withdrawing billions in freshly-minted US cash. New Lamps for Old?
New Notes for Old. Another backdoor bailout for the finance capitalists under our very noses in broad daylight.
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