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Want To Refinance? Good Luck

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Interest rates are at historical lows so many homeowners are calling banks and trying to get in on the action.

Only problem? Housing prices have fallen so much so that now people owe more on their homes than they’re worth…making refinancing an impossibility.

From Miami Herald…

In South Florida, four in 10 homeowners who bought or refinanced over the past five years owe more on their home than it is worth, according to sales and mortgage data analyzed by Zillow.com, a web-based real estate services firm. Many of them chose adjustable-rate loans and other expensive mortgages because that was the only way they could afford the payments.

Justin Miller, a broker with Resource Mortgage Group in Plantation, said the current rates, which essentially amount to ”free money,” are, in a sense, unavailable to those most in need.

”This is only putting people who are in a good position in a better position,” Miller said.

So let me get this straight…

  • …bankers put together trillions of dollars worth of questionable loan packages for people in every single income bracket…
  • …new rules allow the bankers to immediately repackage the debt and sell it off to other banks…
  • …banks start making A LOT of money off of this…
  • …so more questionable loans are created and more debt is sold off…
  • MEANWHILE…

  • …people start defaulting on those loans…
  • …bankers continue to sell the mortgages, but they are quickly becoming too toxic…
  • …home prices start dropping because foreclosures are happening left and right…
  • …thus creating a credit shortage…
  • …thus crippling the economy…
  • …thus necessitating the need for the federal government to pump nearly a trillion dollars into the system…
  • …thus forcing the Fed to drop interest rates so, among other things, people can refinance their homes with the new money available…
  • HOWEVER!

  • …only the people who paid enough equity into their homes to break even are now allowed to refinance because the “market” for homes has decided that our homes aren’t worth as much now? And who decides the value? Oh yes, the people hired by the banks who assess the value of the home. But let me ask you all something…how many of homeowners, at the time of purchase, had the value of your home come back at the exact same amount as the loan? Because I did…exactly. You know why? The bank tells them the value of the loan and wants to make sure that your property isn’t valued for more than the loan so they can keep you at the interest rates they signed the loan at!

How do I know all of this?

Because I recently tried to refinance my home and came face to face with this backwards logic.

Mind you, I’m not in any trouble financially, but because the values in my area had dipped a little bit I was unable to take advantage of these lower rates without coming up with a big pot of money to put towards the equity.

The irony here is that ALL of these banks don’t even have hardly any money to begin with. They merely had a little bit of cash and the blessing of the Fed to create more money out of thin air to lend it. That’s right, banks just create money they don’t have. That’s why you’re seeing all of these banks fail…because the amount of loans they created out of “fake money” was defaulted upon and exceeded the amount of actual cash reserves they had.

And the double whammy is they they get to charge a fixed interest rate on this fake money and we can’t do ANYTHING about it. And this was an interest rate that was gamed in the first place because the value of the property was determined before the person assessing the value even got there. Because, let’s remember, the value was created by the loan, not the actual market around the home.

Folks, I’m starting to become convinced that our entire banking system is predicated on systemic fraud and not one single bank has enough skin in the game to actual foreclose on ANY home since they never even had the money to lend in the first place.

And to that point, does anybody know of any legal precedent that basically states that a bank has to actually have the money they say they’re lending in order to lend it? Because that would seem to be the basis for all property law. And if they don’t have the money, if they just created it out of thin air, it would seem that every single homeowner can essentially tell the bank that if they don’t refinance they’re home, they will sue them to take their property back from the bank because the bank didn’t have any right to make the loan in the first place.