Restitution is not Socialism

The greatest Ponsi scheme of them all is the Mortgage scheme. Swindlers convinced the mortgage rating companies to give AAA rating to mortgages issued to borrowers whom they likewise convinced to overstate their incomes thus making them co-consiprators in Fraud.

But, having been told that the value of their homes would continue to rise at least 6% per year
and the profits would bail them out if they couldn't afford to keep it, that co-conspirecy wasn't a vital part of the fraud. The false ratings and marketing of them was something without which a simple mistatement of income would mever have obtained a mortgage.


Home buyers did not have the knowledge to fraudulently rate their BBB mortgages into AAA rated CDOs and CPO's and then mislead investors into buying them.

With trillons in CDOs and CPOs outstanding worldwide. the mortgage brokers that sold them need to make restituion of the stolen funds and charged criminally.

Their co-consspirators... stretching the defintion, since they were equally duped, put the proceeds of their share into improvement or spent it. Foreclosing and evicting them, does not produce any restitution. It just leaves cities with unattended unoccupied overvalued homes,
a source of squatters, deterioration, burgarlary and infextuous devaluation of occupied neighboring housing.

Letting occupants rent at 31% of their incomes makes sense and is not rewarding them.
rental income provides some measure of resitituion to the mortgage holders until new buyers show up who offer more rent. Vacancy is insanity.

Most likely these "Troubled Assets" will remain troubled until their appraised value coincides with the incomes withn the community in which they are located. It will be decades before higher incomes replaces current growing unemplyment. The appraised values were always imaginery even though undected by some. Residential Reale Estate is worth no more than the average income in the community of matching mortage qualification.

Will it help to reduce the mortgage balances.? Renting for present income already solves foreclosure and eviction. Restating the mortage to present real value baased on the rental
equivalent mortgage, makes permanent immediatly the loss of investors. Might as well wait until offers of higher rental (the new synonym for mortgage payents) are raised by new potential occupants.

Unfair to performing mortgages? Responsible owners probably didn't borrow the excess valuation attributed to all neighboring properties Their valuations are dropping back to real. Realismand affordability of mortgage payments is their reward. No point in joing the defaulting. There mortgage balances are reponsibly lower than their current appraised value. Keeping 6 million homes occupied is absolutely necessary to avoid civil unrest, anarchy, violence and perhaps revolution.

The Tzar aof Russia and The Queen of France found out that if you transfer the resources of the country too much from the poor to the rich society disintegrates. Hitler's Nazi Germany was the direct result of hyper inflation created by the demand of the allies that Germany had to repay all of the Allies WWI expenses. That approach was corrected after World War II by the Marshall Plan which rebuilt Gemrany and similar rebuilding of Japan at the expense of the Allies.

Wehave learned that you can't punish the surviving population of the American TARP debacle
by letting our communities disntegrate. We have irresponsible Americans in our population
When some go to Casinos and race tracks it's manageable. They bring their own cash not ours.
But when the richest banks in the country aid and abet homeowners to borrow more by convincing them their homes will appreciate at a rate that is impossible to maintain without incomes rising accordinly, then punishment is not the answer. Demanding restituion from the real culprits is the sensible if irritating thing to do.




Peter Palms