Frank Louis
What is the media thinking anyway?
By Frank Louis
June 3, 2010

I just read the naïve online article from US News and World Report: "3 Retirement Worst Case Scenarios to Avoid" by Mark J. Patterson, Wednesday, June 2, 2010.

After reading it, I had to send a letter to the editor. I thought I would share it here because I am sure they will never print it. Here it is:

    To the Editor:

    I just read the naïve online article from US News and World Report: "3 Retirement Worst Case Scenarios to Avoid" by Mark J. Patterson, Wednesday, June 2, 2010.

    As someone who has worked hard all my life, saved, served in the military (in combat!) etc, etc... I am amazed that Mr. Patterson completely missed the actual "worst case scenario" occurring today. Being robbed of everything you worked for all of your life due to a real estate ponzi scheme. Being left totally in debt due to real estate you bought during an era when the banks did not fully disclose the veracity of why real estate prices were where they were. If you bought in 2004-05 you have been set up; suckered.

    Inflated! You bought at fake, inflated "values," confirmed by appraisers, realtors, mortgage brokers... you know; the "professionals" in that field. "Values" that were a result of the less than scrupulous creation of real estate based equities, CDOs, etc. that needed mortgages to exist. Selling those, not property was the focus. Ethics, what is that? You know exactly what I am talking about and, I am sure, so does Mr. Patterson.

    However, the media all ignore this fact. They talk about how "Americans overbought." They ponder why foreclosures are at all time highs, and now even talk about "debtors' prison" and seem amazed that people are walking away from their mortgages. Give me a break. I figure that about 60 million people are currently upside down (in the hole financially) and there is no way out for them. If there is, someone please tell me about it.

    This is quite a voting-bloc, don't you agree? So, you tell me; what is there to do? ... Since you obviously can't or won't tell me, I'll tell you: "Short keeps" and "cash for keeps."

    Yes, that is right, you have never heard of these. Know why? No realtor or mortgage banker will make another sales commission from this solution. And this is the solution! You know, the folks who created the problem in the first place by selling and writing mortgages (often to straw buyers) just to make CDOs and their commissions? You know, those people making big commissions on 30 year "deals" that would fail and getting paid up front. And, get this; if the "deals" did fall through, they still got paid. What a scam! Keep them out of the picture along with real estate attorneys. Until the banks lower the balances on these loans to what the houses are actually worth, foreclosures will continue to increase, people will lose their life savings, and that is the 4th "Retirement Worst Case Scenario," one your publication will never cover or admit to.

    What are "short keeps" and "cash for keeps?"

    Definition: The "short keep:" The mortgagee (loan holder) allows the mortgagor keep the property for true value; what the mortgagee will realize from it in a short sale or foreclosure. After all, that is all that it is worth. Regardless if it is owner occupied or investment provided the mortgagor did not use no doc, no money down to buy the property. "Short Keep" is the opposite of "short sale."

    Definition: "Cash for Keeps:" Mortgagee pays the mortgagor cash to keep this white elephant rather than pay them to leave it. "Cash for keeps" is the opposite of "cash for keys."

    Implement these solutions and the housing crisis will stop the next day. Continue on the current path and you will have a nation of poverty. It is your choice to report the reality. Do it.

    Frank Louis

Now that you have read this letter, I would like to know if you agree with me or not. If you don't, let me know where I am wrong. I don't think you can...unless you are in some aspect of the real estate business. But then, I would have to think that you were/are part of the crisis and your opinion would be slanted, biased, at best incorrect. You would not be able to think about these solutions because you would not make any more money reselling the properties you sold in the first place. You would say, "no, these people owe the amount of the mortgage and they should be held accountable." If the ponzi scheme had not happened, the largest melt down since the Depression, I would agree. But it did, and I don't. So, our nation's lifelong hard working citizens are ruined financially for life simply because they bought some real estate in 2005? And we leave them no choice but bankruptcy in their retirement years? I do not think so. They can still vote.

You see, people who worked hard their entire life, did not accumulate credit card debt, made down payments on their real estate were robbed. They were set up. This is wealth redistribution at its worst. It violates our 5th Amendment rights. I wrote about this before. If you can't see this I think you are blind. Think about these repercussions: People's (almighty) credit scores are destroyed. If one is over 50, forget it, they will probably die broke or in bankruptcy and with huge liens against their estate. Their family will be left with nothing. When one property is foreclosed, the rest of the values drop as well. Everyone's worth is gone. More and more people are upside down, underwater as they say. The spiral continues.

If someone qualified for the mortgage in the first place with a down payment, then they should qualify for a balance and interest reduction with no game playing on the side of the lenders. Don't mess around with "applications" and the process. Do you know just how few "modifications" are being approved? Do you know that a "permanent modification" is only for 5 years? Resetting the time bomb? What is permanent about 5 years? If they qualified before they are already qualified now for the lower payment! Get to the bottom line, write down the loan balance- it is fictitious anyway.

Sorry mortgagees get over it, reduce the loan balances to current values, before they go any lower (...and they will). Do not criminalize those whose only "crime" was to buy property during the years you falsely inflated the values due to your fraudulent practices and end the housing crisis now. It will also end the economic crisis... well maybe not fix Greece. Otherwise, we will have at least 100million Americans with no credit, no job, no savings, nothing, maybe more. Great place to be. But they can still vote!

But we all know the banks will not do this. They are fools. Someone I know was just foreclosed on. The bank auctioned the property for less than $60,000. This person had paid over $260,000 in 2005 and put over $70,000 (hard earned cash) down. Little did they know no one else in the area put anything down, no one else cared- obviously. My friend offered the bank an option: "I'll keep the property if you lower my mortgage to $90,000. The bank would have made $30,000 more and they would not have paid the tens of thousands in legal fees, commissions to realtors etc. My friend could have certainly made the $900 a month payment. But the concern is not for the hard working American who put their life savings down on the property. The concern is for bookkeeping, keeping debt on the books as an outstanding asset. It is all a joke and we who are being robbed are the butt of it. Now what?

We on the Frank Louis Show regularly look to Biblical direction, as did this nation's Founders. Perhaps something relevant to this message could be gleaned by reading I Corinthians I: 20 Which says "God made foolish the wisdom of this world." I can imagine the Founders reading this scripture and taking it to heart, maybe even considering this message if a similar crisis was occurring to the nation they were forming- maybe even implementing the 'short keep" as a way to stop this crisis. Nehemiah 4: 14 instructs us to fight for our houses; something we need to be doing now. We do vote, don't we?

The "short keep" would have resulted in the bank writing down the mortgage for $90,000 and not losing the money. If they did not want to write it down then write it off and let my friend buy it again for the new amount. Why screw him? They could have even stipulated that, should the values come back before my friend sold the property the balance would increase proportionately. How is that for a solution? They could have also offered him "cash for keeps" and given him up to $10,000 to fix the place up and still been ahead.

Last week it occurred to me; maybe 666 is a minimum credit score. Oh well, just a thought.

© Frank Louis


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Frank Louis

Frank Louis is a print and on-air commentator who offers opinions and solutions on and for the economy, social issues, and the future of this nation. In the Old Testament, Nehemiah 4: 14 instructs us to fight for our houses; something we need to be doing now. Our future generations depend on it!... (more)


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