Jack's Final Prediction On Where The Foreclosure Mess Is Headed

William Arthur Baldwin-Where This Whole Mortgage Mess Is Heading
I have been honored to have Bill Baldwin as a friend for 45 years. He is a real gentleman. He graduated from Rice University (“The Harvard of the South”). He has written several acclaimed books and screen plays. He had a major role in the Robert Altman cult classic Brewster McCloud.

Right now Bill should be a great screen writer and a well-known character actor like Judd Hirsch.

Sadly, like many, of us, Bill never reached his great potential. He became just another middle class man in an average neighborhood with a mortgage on this house. Like millions of other people, he became unemployed and could no longer pay his high mortgage payments.

Bill could have easily become another statistic in the awful stories of millions of people who have lost their homes. His case would have been especially sad since he has lived in his home since August of 1965; some 45 years.

Unlike many other people Bill decided to fight his foreclosure. He had no money to hire high-powered lawyers. He and I worked for 14 months to stop the foreclosure.

Bill lives in Houston, Texas. Texas has an awful image of being #1 in executions and a bastion of right-wing ideology. Under that awful reputation Texas is very compassionate to debtors. Bill ended up in court on the foreclosure. We did not have the money to buy case laws from Texas cases on foreclosures. Thanks to the US District Court in Cincinnati and US Court of Appeals in Cleveland we had ample case law to show the judge. These cases affirmed the issue that if a bank cannot prove that they own a mortgage, they could not take foreclosure action. A female judge in Texas took note of this case law. (Normally judges would reject “out of state” case law.) She stopped the foreclosure. Bill is still in his home. He has a suit pending to get the lien stripped from the house.

What happened to that poor investor who put up $93,000 for that mortgage? I suspect they are suing the brokers and HSBC bank who put the loan together.

My dear readers, despite all of the assurances by the big banks, media, and government officials, Bill Baldwin’s story is “the wave of the future” in this whole mortgage mess.

Here is my final prediction. The banks set up the MERS electronic mortgage registration system. It was quick and expedient. It bypassed all of the old and archaic county court houses and title laws going back to England circa 1000 AD. They were so arrogant that they never took the time to pass new state and Federal laws affirming this “revolutionary change” in proof of ownership. They got by with this big gamble as long as houses and commercial property kept going up in value. When the foreclosure crisis hit large sums of money were used by the big banks to lobby politicians and pay legal fees to keep the whole mess “out of public view or consideration.”

Now it is all out in the open. The investigations by the 50 state Attorney General’s are interesting. They will produce some big financial penalties and low-level players in this game will be prosecuted and jailed. Federal prosecutors will also file charges and jail some lower-level people. But what is more ominous is the decision on the part of title companies to refuse to guarantee the titles of foreclosed homes so they can be resold. Homes already foreclosed and sold will also be subject to challenges to their titles. Please do not be fooled by assurances from the big banks that: “this is just a technical defect that will be cured in 3-4 months.”

Soon there will be hundreds of thousands of Bill Baldwins living in their homes with foreclosure blocked by the courts and the title companies. The big banks, who committed one of the largest frauds in US or world history, will be swamped with lawsuits from angry investors who bought these loans, homeowners, and title companies.

Several big banks will be forced into insolvency. Any hope of an economic recovery will be put off for years or decades. The result will be high unemployment, economic stagnation, and the rise of radical politicians from the left and right promising to pull us out of this problem. The Federal Reserve will fire up the printing presses and print a massive amount of money. High inflation rates will follow.