When on the Government dole.......

This is too good not to talk about.

There are literally hundreds of thousands of homeowners "underwater", meaning they owe more than their home's appraisal value, with their mortgages. First the Bush administration, and now the Obama administration, have gone to great lengths to warn homeowners not to pay a fee for an attorney to help you negotiate for a loan modification. If done properly, a loan modification can reduce interest payment, reduce the principal owed, or both. It is especially helpful if you happen to have taken an Option ARM loan, which can carry severe increases in payments beyond the "teaser" period.

The last thing a bank or servicer wants to do is lessen the amount you pay. Every nickel matters to a bank, more so if you are with one that placed an additional bet on the performance of your mortgage by creating a CDO, CMO or similar credit derivative which they have kept on their books. Those losses are magnified.

If you are paying your mortgage on time, no matter where you live, or what type of mortgage you have, the bank will NEVER let you modify. Your loan is performing, and they have no incentive to reduce what you are paying them. Both neighbors directly on either side of you may have already gotten a loan mod, or worse, walked away from the house, and the bank still has no incentive to help you reduce your payments. Many who read this will agree with the bank. The borrower has a contractual obligation to fulfill the terms of their mortgage. It is hard to say these people are wrong, because deep down, we all know the law is the law.

But then don't tell me you are angry about AIG executives, who wrote the derivatives that are sending all of us into a depression, shouldn't get their bonuses. Henry Paulson and the Bush White House wrote the contract with AIG. Yes, Geithner knew of it back in October, when it was written. But, the contract had already been signed. Long before Obama was even elected.

What the government is doing now, advertising to the public to avoid loan modification companies that charge a fee, while they are giving massive amounts of money to these banks to keep the derivatives hidden, is criminal.

None of these loans that are now blowing up should ever have been given, none of them. What was so wrong about a thirty year mortgage with 20% down and a Debt to Income ratio of 35% or less? That is prudent lending.

105% financing with 50% Debt to Income ratio is something a fool does. If a bank wants to give you money under "the deal of a lifetime", and tells you it is okay, isn't it the bank's duty to know right from wrong when lending their depositor's money.

What does it say about that bank when they knowingly sell that risk to someone else?

What character flaws have to be present for a company to buy tens of thousands of these loans, package them into MBS, and then create a CDO, which they then sell to a pension fund or a money market account for huge fees, knowing there is great risk of default?

The Federal Reserve, and now the government itself, not only are cognizant of these underlying causes for the meltdown, they are extending them. While they tell the public that you should not let an attorney help you modify your loan, they are giving the banks Trillions of dollars. What the government does not tell you is most Loan Modification companies charge $2500 - $4000, depending on the amount of your mortgage. The average savings to homeowners, over the life of their loan, can exceed $100,000 on the average house. That seems like a deal to me.

Maybe it's because the government has had its own modification plan for over 5 months. It is called "Hope for Homeowners." It was touted by the previous administration as the financial panacea for over 400,000 families. $300 Billion has been allocated by congress to go to this program.

And what a rousing success it has been. In 5 months, there have been 752 applications. It has helped prevent 1 (one) foreclosure. Maybe the other 751 applicants decided it was better to use a loan modification company and have an attorney argue with the bank.

The reason for the failure of Hope for Homeowners- The banks are to voluntarily refinance delinquent mortgages by reducing the principal balance on loans to 90% of a home's current market value. In states like California, Florida, Arizona and Nevada, the decline in housing values exceeds 50% in some neighborhoods from the peak.

As long as the Federal Reserve, Congress and the Government give banks free money to keep them alive, and pay million dollar bonuses, they essentially are saying "screw the average American."

Why should Ken Lewis voluntarily do anything? After all, he is only interested in keeping his stockholders happy, and his compensation package whole. The rest, well, Bank of America is too big to fail, right? So, let the taxpayers pay for his losses.

Folks, until the banks that need taxpayer money to stay open, due to their own stupidity and lack of character, are forced into doing anything differently, they won't.

Here's how you force them. Every financial institution that must have government money to stay open, must immediately go to the Government's own pay scale. Everyone in the financial institution immediately goes to the new pay scale, at their equivalent government grade, for as long as they need the government money. They can resume their old pay structures when they get out of the hole, pay the government back, and be a self sustaining business.

If they don't accept those terms, they can choose to go it alone.

We would find out very quickly who the Good Americans are, and those that just wrap themselves in the flag for their own benefit.

Why should Ken Lewis get paid more than a General in Afghanistan? It is that General who makes Ken's life possible. If Ken screwed up, why should anyone else have to pay for it?

And the average homeowner should be able to level the field and negotiate with Ken with the aid of an attorney.

Just food for thought.