Bailout This!

Bailout This!
I advise my personal finance sclients who have mortgages that they cannot pay, especially if they owe more than the house is worth, to stop paying their mortgages!

Sounds kind of radical, you say.

But when you understand what the financial system has done to these homeowners you may understand.

It is simply a matter of self defense, financial self defense.

The Wall St syndicates; banks, investment houses, bond insurers, bond rating agencies etc. conspired in true racketeering style, to produce fraudulent financial instruments and then foisted them onto unsophisticated borrowers.

Uncomfortable with the word, fraud? Fraud is a "deception made for personal gain," according to the dictionary.

Rating bonds backed by sub prime mortgages as investment grade, AAA, in order to collect fees, are a prime example.

Issuing insurance; credit default swaps, with no assets to back them up, in order to collect fees, is another example.

Knowingly falsifying data on mortgage applications, in order to collect fees is yet another example.

Without these key fraudulent practices by the mortgage and financial industry, the entire sub prime debacle could never have happened.

Now that the mortgage mess has "inextricably" blown up in the faces of the banks, essentially putting them out of business; they are demanding that home owners whom they have defrauded, continue to honor their commitment to pay their toxic mortgages and to now to bail them out with trillions of taxpayer dollars.

As one Wall St Bigwig said, "The banks are too big to fail and the homeowner is too small to bail."

So the battle lines are drawn. The banks on one side, want to drain your very life blood in order to keep you paying their mortgages, all the while robbing your children and grand children by blackmailing us and getting Trillions of our dollars to repay their losses so they can stay afloat.

These massive loans and cash infusions will produce huge deficits that will be passed onto future generations.

Unfortunately, there is no bailout for the home owner, only half-hearted measures like loan modifications that do not solve the borrower's problems.

Look at the widely touted Hope for Homeowners rescue plan. It was projected to save 400,000 homeowners from foreclosure. Only 312 loans were modified. And we now know that over half of all borrowers who have had their mortgages modified have become delinquent again in less than 6 months.

Modifications are not the answer. Slashing the balance of the outstanding loans to 80% of the current market value of the property, like they did in the First Great Depression is a far more effective remedy as it sets up a payment level that the borrower can afford.

Therefore, in the absence of any willingness on the part of banks or government to bail them out, borrowers are left to defend themselves against the unscrupulous banks. It is really a case of financial self defense. You know where the banks are coming from, it is up to you to fight them.

It is enough that most of these troubled borrowers, especially the 15 million or so who are "Underwater," who owe more than their house is worth, will lose their homes one way or the other.

That is their punishment for taking out a loan without having the advice of a financial professional or being represented at closing by their own lawyer; not the mortgage broker's or real estate broker's lawyer, at the closing.

But it should not mean that they have to ravish their life savings, retirement accounts or their children's inheritance to placate the bloodthirsty banks.

As an experienced real estate investor, former bank loan officer and Personal Financial Coach providing assisting troubled home owners, I have many people in this situation.

My advice to them is to stop paying their mortgage, do not give the banks one more cent of their hard earned money.

We then show them how to remain in their homes for up to two years or so without paying a penny to the banks so that they can accumulate some money to get a fresh start. In some cases, the banks pay my clients thousands of dollars to leave the premises.

What about the eventual foreclosure? Won't it hurt their credit?

Yes it will, but they would be in the same situation credit wise when they eventually lost their homes.

Their choice is to be evicted from their home penniless, after going through their life savings or with the savings intact and a few dollars to move on with.

Also, when the dust settles, they will be able to buy a house for less than half of what they paid for the one they lost, according to knowledgeable experts.

If the banks and their proxies in government will not bail out the home owner, he must bail himself out, period.

Copyright 2008 Bill Young. Bill is a Personal Financial Coach. You can sign up for a free, year long course with Bill in How to Solve Your Money Problems here: http://HowtoSolveYourMoneyProblems.Com