Introduction from Catherine Austin Fitts:

I wanted our readers to have this case study that embodies a robust selection of the criminal and civil violations visited upon homebuyers and homeowners in America by an intentional partnership of financial institutions and government policies and agencies.

It is difficult for many borrowers to discern the simple premeditated intent as a result of the legal and financial complexity involved. It is essential to follow the economics to understand how many ways financial institutions can profit from the failure of a borrower and how many times one family can be economically harmed by not anticipating the predatory practices at work. The result? One family can lose more than 100% of the appraised value of their home – by pump and dump market price swings, deficiency judgements, fees, investment losses and the extraordinary loss of time, morale, health and productivity, not to mention funding taxpayer bailouts.

At the heart of the matter what is happening is quite simple – and depends entirely on the liberal use of governmental mortgage credit, deposit insurance and bailouts to make failure profitable in a manner that market economics would never permit.

Now the question looms: Will government agencies and central banks sell or transfer defaulted loans and foreclosed land and properties to institutional investors at prices well below those that would have kept homeowners from losing their homes in the first place?

By Carolyn Betts, Esq,

The following fact scenarios are hypothetical only, but they are based upon real fact situations known to the author in her role as foreclosure defense counsel Most of this representation involved the largest mortgage lenders in the US: Bank of America, JPMorgan Chase, CitiMortgage, Wells Fargo, GMAC (now Ally) and HSBC. The names in the hypothetical scenarios were selected only because of their real relationships, affiliates and predecessors — e.g., Bank of America acquired Countrywide and has a property insurance affiliate through which “force places” insurance on properties in foreclosure and a field servicing affiliate, BAC Field Services, that identifies empty homes in foreclosure for “protective” services.

The facts as set out in the hypothetical did not necessarily describe specific actions of the named entities in the scenario. The numbers used for home purchase prices, interest rates and loan terms, mortgage and hazard insurance and other costs and homeowner incomes are reasonable approximations for homes purchased by middle class professionals in a medium-sized Midwestern city during the build-up to the mortgage crisis. Unfortunately, the medical and job lay-off situations of the hypothetical families also are based on experiences of clients, friends and relatives of the author.

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