Maybe it is time to question the role of the "investor" in the mortgage foreclosure debacle of 2008-2010. We keep hearing that the "investor" must approve any changes to the mortgage.
Wait a minute, did the homeowner originally agree that their mortgage note could be resold over and over without the homeowner's written approval each and every time the note was resold?
Would it even be legal to put a "resell the note" clause in a homeowners mortgage contract without the homeowners written approval each and every time the note was actually resold?
Does it even make sense that an investor who did not even exist when the homeowner originally signed the mortgage agreement could then swoop in at a later date and actually hold that homeowner, hostage, over mortgage refinance opportunities?
Does it make any sense that the late to the game investor can nix any interest rate reduction the government might be willing to provide to the homeowner via taxpayer funded programs like HAMP ?
If you agree to buy a car and then afterwards a video camera is installed inside the car without your knowledge, and the video footage is then sold by the car dealership for a profit, shouldn't your permission be required before the video camera was installed in the car?
If you had been consulted about the video camera being put in the car first, and told that money could be made but that your agreement was necessary, would you not expect a "cut" of the camera profits?
What has happened in the home ownership situation is backwards to what should have happened. All homeowners should have been able to negotiate a BENEFIT, PRIOR to the reselling of their mortgage note to an "investor". Instead, the selling of the note to an after the fact investor is now being used as a billy club to stymie homeowners even when taxpayer back mortgage help is available.
Let us not confuse the investor that invests in the CONSTRUCTION of a new home before it is built versus the investor who invests in a mortgage note after the fact, as they are not the same thing.
An investor in new home construction puts up money up front to purchase land and build the home. When the home is then built and THE BANK approves a loan from their own money supply to a qualified homeowner to purchase that home, then the ORIGINAL investor is PAID OFF.
Example: Investor acquires a parcel of land that will accommodate 5 homes. Investor gets permission from the city to build on the parcel of land. Investor gets bids for constructing 5 homes. The bids are competitively priced because building five homes next to each other results in a discount purchases for the builder. Not only that, the builder can actually keep inventory in the empty lots while building the first few buildings. Whereas one home might cost 200,000 dollars to build, 5 homes might be built for 600,000. The investor has a 400,000 dollar margin once the homes are built and the bank and realtors find buyers for the homes.
(Ironically, it used to be that by the time the homes were finished and sold, the prices of the home had already risen so the investor is probably selling those 5 homes for a minimum of 250,000 each, meaning the margin of profit could rise to 650,000. Enough of a profit to build another four or five homes and actually own them outright!)
The homes are then sold and the investor walks away with their profit. ALL THAT is LEFT in regards to the mortgage is the HOME BUYER, and the BANK that provided the loan.
Unless the home buyer agrees in writing later on to "securitize" the loan, than all is well. However, if the bank unilaterally decides to securitize the loan at a later date, without the homeowner's approval or knowledge, those new investors CANNOT TAKE PRECEDENCE over the homeowner's right to pursue a more competitive loan refinance, under ANY CIRCUMSTANCE.
My contention is that no securitization can go on without the homeowners approval because this is in fact a RE-SECURITIZATION. The homeowner was already approved for a loan, there is no need to re-securitize the loan. Ironically, the act of resecuritizing the loan appears to actually hasten foreclosure activity. It sounds fraudulent to me to call reselling the note resecuritization if it actually does the opposite and actually causes the homeowner to have LESS refinancing options at a later date.
Now that the homeowner has a mortgage loan agreement with the bank, anything that happens after that point, without the acknowledged written approval of the homeowner, in my opinion should be void.
Any HAMP loan or refinance loan that now is being refused because of the invisible, after the fact "investor", in my opinion is nothing more than a straw man's argument being perpetuated by our own government, and the banksters who do their bidding.
Yes I have empathy for those investors who came after the fact, but those investors should not have been investing in these type of securitization schemes to begin with, specifically because the homeowners written approval was not included.
