We here at Consumer Defense Programs strive to keep our members up to date with the best information possible to help stop illegal foreclosures. The latest findings (that are winning in court and are getting settlements) is our findings in what’s known as Credit Default Swaps.
You see, when Wall Street securitized loans…ANYONE (and I mean ANYONE) can buy an insurance policy against a loan in the event that that loan defaults. Under a traditional insurance framework, only a party with a vested interest can buy an insurance policy, but this is not the case in a credit default swap. Let’s say you own 1/100th of the loan (meaning you are one of 100 investors in the pool), you can buy a credit default swap policy for the full face value of the loan….such that in the event that the loan defaults, you get paid in full.
Let me repeat that in case you missed it.
Let’s say John Doe works at a fast food joint on a minimum wage…goes out and gets a loan for a $1 million dollars with no money down. The loan gets securitized and is sold to 100 investors. Let’s say ABC Bank is the originator and underwriter for the loan and is also one of those investors…in other words, ABC owns 1/100th of the $1M loan….ie. $10,000.
ABC takes out a Credit Default Swap insurance policy through AIG for the full $1M. Because ABC knows full well that John Doe is likely to default on the loan, it is in ABC’s interest to insure the loan against the default.
Once John Doe defaults on the loan…ABC gets paid in full for the whole $1M.
This $1M goes to satisfy the loan in its entirety.
In other words, the loan has been fully satisfied.
The debt has been paid in full.
Yet…ABC continues to collect on the loan…and even goes to the extent of foreclosing on the homeowners.
Talk about “having your cake and eat it too”.
How many times do these people need to be paid to satisfy their greed?! How many bail outs does it take before the people start saying “ENOUGH!”
Here’s a quick video about Credit Default Swaps:
What we are finding now is increasingly, when homeowners go to court and present evidence that their loan has been fully satisfied and paid in full, the banks are backing off..and offering sizable settlements. Of course banks do not want you to know this sort of information and have gone to great lengths to hide it from the public.
Our researchers recently gained access to a vast database of all Credit Default Swaps in the USA. It is our belief that most loans are subject to credit default swaps.
So if you are a homeowner facing foreclosure, this might be another tool you might want to add to your arsenal.
Under the terms of the Deed of Trust, it says something like “upon complete satisfaction of the note, the lender/Trustee must reconvey the property back to the homeowner”. By this very definition, your loan has been satisfied and your lender does not have the right to foreclose on your loan.
Please forward this article to as many people as possible. Let’s wake people up!
The Foreclosure Defense Team at Consumer Defense Programs
Of course, as a homeowner….the burning question is…how do I find out if my loan is part of a Credit Default Swap….and how do I make this into Admissible Evidence? If you are interested in doing a search to see if your loan is part of a credit default swap, then click on the Credit Default Swap Search link here.