The Fed should have bailed-out homeowners, not banks.
No level of government should be bailing out anybody.
Why would underwriting standards and all Agency/Fiduciary responsibilities be thrown out the door? Why did property appraisers continue to make outcome based appraisals for alleged lenders?
To summarize is simple but the devil is in the details.
Until we add fork-tongued Wall Street lingo like "REMIC", "Special Purpose Vehicles", "Credit Default Swaps", "Master Servicers, "Pooling and Servicing Agreements" etc., to our vocabularies we are unable to understand that devil.
A scheme was created such that a non-performing loan was actually worth more than a performing loan.
Whether in default or not, the wet-ink signatures that you placed on your closing docs were quickly distributed to multiple third parties who immediately over-collateralized the obligation at the outcome based appraisal, resulting in a great incentive for alleged lenders to ensure a default takes place. At that time, multiple parties will receive - in full - insurance money from AIG or Ambac.
These obligations were placed in pools that contained obligations that were declared to be in default. Not all were in default but the trust was closed down and enabled the unjust enrichment of many by the insurance payoffs (which we all know by now were dumped in the lap of the taxpayers with approval by Fannie and Freddie).
"Foreclosuregate" is not simply a matter that stems from sheer volume. All of these documents are being forged because some alleged lender has to step up to the plate and prove they were damaged by someone else's failure to pay. To do so would expose said alleged lender to the revelation of who exactly is looking for a free house.
Adding insult to injury, Wall Street insiders knew all about this scheme (considering they created it) and placed bets that all would fail at the end of the day causing further unjust enrichment to one side of a bad contract.
There is a little 58 page book entitled the "Declaration of Independence and the Constitution of the United States of America". Hold it dear...it may be our only way out.
Uh, the Fed is us.
“We” shouldn't be bailing out anyone.
Most people have forgotten that in 2008, the first federal action was just to supply short term liquidity to prevent an imminent collapse of the banking system. THAT was a good thing and proper role of a government. Basically a national defense type of action.
But soon after; that liquidity injection morphed into the bail out everyone monstrosity that we had.
Homeowners do not employ lobbyists in Washington, don't make large campaign contributions.