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Richard Maize: US Recession, Real Estate Crisis - Why Are Banks Criticized?
PRWEB / United States News Agency ^ | October 30, 2010 | Joel Leyden

Posted on 10/31/2010 11:58:54 AM PDT by IsraelBeach

Richard Maize: US Recession, Real Estate Crisis - Why Are Banks Criticized?

Los Angeles, CA (UnitedStatesNewsAgency)--- October 30, 2010 ... Responding to the fact that more Americans face losing their homes to foreclosure, Richard Maize, one of the world's most successful businessmen and a respected philanthropist speaks up in defense of the banks.

"About 2.6 million homes have been repossessed by the banks since the recession began. Between January and September more than 800,000 homes were seized," says Maize.

"According to CBS News, if this pace continues, more than 1,000,000 homes throughout the US will be repossessed this year," a sad record states Richard Maize.

But then asks: "who's to blame?"

"Mr. Taylor has a nice family," says Richard Maize. "He has a wife of 15 years and 3 kids all of school age. In 2006, Mr. and Mrs. Taylor had found the house of their dreams within the area and approximate price rage they were looking for. This could have been anywhere from Los Angeles, Chicago or New York to Detroit, Houston or Atlanta."

"They consulted with a mortgage broker that the real estate agent recommended to them. A mortgage broker who was very competent with many years of experience. He went over the available programs that the lenders offered. Very attractive to the borrower. Mrs. Taylor really wanted the house for her kids and would enjoy the great school system for the neighborhood. Mr. Taylor was willing to work the grave shift on a few days a week to continue their life style and pay for this new higher expense."

Richard Maize, who became the leading mortgage banker in the US, continues: "The Taylors, like millions of other families in America, borrowed the 10% down payment and got into the house of their dreams. Both the mortgage broker and real estate agent reassured Mr. Taylor reminding him that the real estate market is hot and will most likely continue increasing so that not only will they be living in their dream house but will be accumulating additional wealth as well. The Taylors purchased the house and were elated. They were so grateful, they sent fresh baked cookies to the lender and all of the brokers that were involved."

"Let's zero in on what the bank did so far; they helped the Taylors get into the house they desperately wanted," says Maize.

"The kids got into the fine school system and the Taylors met a group of new friends from the neighborhood. The bank did exactly was asked of them. The Bank loaned the Taylors the money to buy their house."

"The only thing they did they perhaps should not have done is offer borrowers like the Taylors with good credit a loan whereby if they didn't offer a "no income qualifying" loan, their income would likely not qualify the Taylors to purchase the home. Is this act really predatory lending?"

Richard Maize says: "Now let's go fast forward".

"The economy crashes affecting almost every industry from automotive, real estate and food to travel, steel and construction. Mr. Taylor loses his second employment position which makes this very difficult for him to continue their obligation to the bank to make their home mortgage payments. On top of that, the value of the real estate property is now lower than the loan balance."

"What do the Taylors do now?" asks Maize. "They have a tremendous amount of pressure. They go to a lawyer who calls "bloody murder" of either a technical issue with the loan documents or that the bank had no business loaning money to borrowers who really did not have the means to make the payments for a long period of time and the lenders should take the majority of the downfall because they in fact made this bank real estate loan."

"The lender will now either discount the amount owed and take a sizable loss or have to take back their collateral in a foreclosure sale which now is being halted by the government so that the banks will take bigger losses by not converting their bad paper into a saleable asset."

Richard Maize adds: "Was this really a high risk investment for the lender that was making a low risk return of about 5%? The banks, from Bank of America Corp. J. P. Morgan Chase & Company and Citigroup to Wachovia Corp., Wells Fargo & Company and HSBC North America Inc. were and are being blamed for simply doing what was asked of them by US consumers and the real estate community as a whole.'

In conclusion, Maize reflects on what the banks should have avoided.

Maize says: "Not to have allowed borrowers to buy a house with no money down, not to have permitted the borrower to borrow money without being qualified, the banks should have worked with people as if they are living and breathing rather than as a number in order to meet the numbers for the month. This transaction is likely the biggest and most of their lives. and they should have helped the prospective borrower by using the bankers (or mortgage broker's) expertise and guidance as to what they can afford and what type of program would best suit them."

Richard Maize states what borrowers need to do.

"Take responsibility for their actions and stop blaming the banks. US banks are only guilty of one thing - helping Americans to realize their dreams and achieving a better quality of life."

Richard Maize adds: "The banks shouldn't be blamed for the foreclosures. At the same time I am not suggesting that the banks callously turn their backs on the homeowners who really want to keep their homes."

"These are good people, honest hard working borrowers that are also victims of the economic crash. The banks and the borrowers are both victims and should try to help one another other. The banks could help the borrower by providing relief in the payments and the borrowers could help the banks by paying the loan back at an agreed and reasonable date."

The Rochelle and Richard Maize Foundation is a philanthropic organization that supports and contributes volunteer and financial resources to causes locally in the community and worldwide by supporting meaningful programs focusing on art, culture, family services and health care that work to help people live more fulfilling lives.

Richard Maize has generously supported organizations and causes both locally and worldwide including the American Cancer Society, Vista Del Mar Child and Family Services, Hurricane Katrina, Los Angeles Police Foundation, humanitarian causes in Israel and Haiti, and the Cedars Sinai Board of Governors.

Richard Maize and his wife, Rochelle Maize, are longtime benefactors of the American Cancer Society, among many other organizations, and Richard Maize has been recognized for his efforts on behalf of more than a dozen charitable groups and community projects.

The Rochelle and Richard Maize Foundation supports an extraordinary number of foundations, organizations, and non-profit groups. The Rochelle and Richard Maize Foundation is a philanthropic organization that supports and contributes volunteer and financial resources to community and global causes by supporting programs focusing on art, culture, family services, and healthcare. The Rochelle and Richard Maize Foundation's efforts also help people with cancer and those who care for them lead live more fulfilling lives.

TOPICS: Business/Economy; Culture/Society; News/Current Events; US: California
KEYWORDS: banks; pr4felons; realestate; recession; richardmaize

1 posted on 10/31/2010 11:59:02 AM PDT by IsraelBeach
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To: IsraelBeach
In conclusion, Maize reflects on what the banks should have avoided. Maize says: "Not to have allowed borrowers to buy a house with no money down, not to have permitted the borrower to borrow money without being qualified, the banks should have worked with people as if they are living and breathing rather than as a number in order to meet the numbers for the month.

IOW, the bank should not have made a loan that they could very confidently predict would be defaulted on. But hey, they made the numbers for the month and now that loan is Freddie Mac's problem, right?

2 posted on 10/31/2010 12:17:19 PM PDT by jiggyboy (Ten per cent of poll respondents are either lying or insane)
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To: IsraelBeach

Mr Maize: the banks made low down payment loans for fees, not altruism. They made loans even once they knew the housing market was starting to collapse.

3 posted on 10/31/2010 12:21:45 PM PDT by whitedog57
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To: IsraelBeach

This crisis is a reflection on our society as a whole.
When our parents and grandparents warned us to avoid debt, many did not heed the warning.
I have been self employed for over 30 years, credit was virtually unavailable to me. So I learned to be prudent, paying cash, suffering from affluenza to this day. I feel sorry for those who promised their future for instant gratification now. But not sorry enough to sacrifice my own future. I believe in tough love. That which doesn’t kill you, makes you stronger.

4 posted on 10/31/2010 12:27:27 PM PDT by griswold3 (Nov 2 is not just an election, it's a restraining order)
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To: IsraelBeach

He makes it sound so simple the poor banks but it’s not simple at all take for instance cases like this...

Ex-mortgage broker to plead guilty in Ponzi scheme

TAMPA - The victims were as old as 91 and their losses could add up to nearly $20 million.

Peter Bakowski, a 58-year-old former Tampa mortgage broker, has admitted orchestrating a Ponzi scheme that involved more than 30 investors and institutions and more than 150 deals, documents show.

Bakowski has agreed to plead guilty to a federal charge of making false statements to a financial institution, which carries up to 30 years in prison. He also faces a likely order to pay restitution to the victims.

According to his plea agreement, Bakowski sold mortgages to more than one investor at a time. The mortgages taken out by home buyers were sold by lending institutions to investors, who would assume the risks and benefit from the interest being paid.


Then this 80% of their loans defective...

Richard M. Bowen, former chief underwriter for Citigroup’s (nyse:C) consumer-lending group, said he warned his superiors of concerns that some types of loans in securities didn’t conform with representations and warranties in 2006 and 2007.

“In mid-2006, I discovered that over 60 percent of these mortgages purchased and sold were defective,” Bowen testified on April 7 before the Financial Crisis Inquiry Commission created by Congress. “Defective mortgages increased during 2007 to over 80 percent of production.”

In full

The next scenario went on all over the country..

A loan for $360,000 went to a Chicago woman who supposedly earned $6,833 a month at an auto body shop. In truth she was a part-time housekeeper who was posing as the buyer to help her sister. The Countrywide loan officer not only knew these facts, she came up with the idea of having the borrower pretend to work at the auto body shop.

The lawsuit uncovered a raft of similar examples — case after case where the loan officers not only knew that fraud was being committed, but were actively engaged in committing it. “By about 2006,” says the lawsuit, “Countrywide’s internal risk assessors knew that in a substantial number of its stated-income loans — fully a third — borrowers overstated income by more than 50 percent.” And that is just one small subset of what went on at Countrywide. The truth is, any rock you turn over in the Countrywide subprime portfolio, something slimy is going to emerge.

In full

Even the Fed!

Fed Wants Banks to Buy Back Some Bad Mortgages

Read this one it will detail how investor’s were sold bad goods. Oh and by the way many of us lost money that were in 401k’s/pension plans etc. as a result of these banks bad deals so we took a double hit the first being as a taxpayer on their losses.

Then there is Mers (here it shows you how states lost money and people who buy these homes in the future may not get a clear title if this is not all done properly)

What You Don’t Know about “Mortgagegate” Could Crush the U.S. Banking System


In order to easily buy and sell mortgages between themselves so that these loans might be repackaged, securitized and then sold to investors as mortgage-backed securities, banks and other lenders needed a quick way to “trade” individual mortgages. They created a company called Mortgage Electronic Registration Systems (MERS). This group includes Bank of America Corp. (NYSE: BAC), GMAC LLC (NYSE: GMA), Wells Fargo & Co. (NYSE: WFC), Washington Mutual (now owned by JPMorgan Chase), the United Guaranty Corp. unit of American International Group Inc. (NYSE: AIG), Fannie Mae (OTC: FNMA), Freddie Mac (OTC: FMCC), mortgage-servicing companies and other similarly interested members.

You may not realize it, but at your home-purchase “closing,” you sign a document that appoints MERS as the “nominee” for the lender that granted you a mortgage. That gives the nominee the right to flip your mortgage to any other bank or lender it chooses. That’s how banks move mortgages around to package them into different securities.

But that brings us to the crux of the controversy: Every time there’s change on the title (a change occurs when the nominee switches the lender on your title out for another), local governments require that a new title be recorded. Of course, those governments - the county or municipality that you live in - also charge a “recording fee.” MERS also charges a fee, but it’s a lot less than government recording fees.

Here’s the problem. In creating MERS, these institutions actually changed the land-title system that this country - for much of its history - has relied upon to determine legal ownership status of land titleholders.

Not only did the lenders sidestep (read that to mean avoid) paying billions of dollars in fees to local governments, they paid themselves from the fees that MERS collected.

MERS is facing class-action lawsuits and civil racketeering suits around the country and their members are being individually named in all these suits. One suit alleges that MERS owes California a potential $60 billion to $120 billion in unpaid land-recording fees.

It’s not simple at all notice who pushed that bill through D Leahy.

Why are people mad because we were forced to bail them out and lost Billions as taxpayers on AIG and Tarp, we have trillions of this bad crap that the banks sold to fannie/freddie as well and since they are GSE’s we the taxpayers are on the hook for that as well. Then as individuals who had money in Bonds for example whether it was through 401k’s or other pension plans or as a singular investment we lost as well.

If the bank’s hadn’t started Liar’s Loans to begin with we wouldn’t be facing these problems today. If the banks were allowed to fail like other capitalist business’s are allowed to do we wouldn’t be mad about being forced to bail them out. They socialized their losses but kept their privatized profits.

plus we know who they have in their pocket

5 posted on 10/31/2010 12:58:04 PM PDT by FromLori (FromLori)
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To: jiggyboy
It's very easy to fall for a faulty dilemma fallacy, it's a very common tactic for deflecting blame. In the case of the housing market collapse, banks do indeed bear a considerable amount of responsibility. But there is also plenty of culpability left for individual borrowers, real estate agents/brokers, builders, etc, etc. Oh yeah, don't forget the Federal Government (including Fannie Mae/Freddie Mac) and Federal Reserve. Please note how the story makes absolutely no mention of Federal arm twisting to make loans to otherwise unqualified borrowers in the name “affordable housing”.

Thomas Sowell's "Housing Boom and Bust" provides a very good balanced explanation of how the perfect storm was brewed.

6 posted on 10/31/2010 1:38:49 PM PDT by Red Dog #1
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To: FromLori

Richard Maize makes it sound easy because it is.
Maize only states that the banks perform a service. And by doing so, they take on lethal risks. The borrower is bound by a contract. As Maize states, that contract might be easier to abide by with more flexible payments.
One question that I pose is how does one obtain credit in the US after having spent many years living abroad? It appears that one needs to go into debt in order to secure credit. Somewhat of a Catch-22 for those us who maintain a positive balance!

7 posted on 10/31/2010 1:44:09 PM PDT by IsraelBeach
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To: IsraelBeach
It seems that Richard Maize has hit the nail on the head. It's easy for the banks to dish out cash in good times and even easier for clients to take that cash - and why not? Richard Maize has just put it all in sharp perspective...a little more conservatism and care on both sides of the table.
8 posted on 10/31/2010 11:57:49 PM PDT by israelmarcom (Richard Maize puts it in perspective.)
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