The Exploitation of the Housing Crisis: We need an alternative.

Many financial institutions and investors profited on the upside of the housing bubble, and on the downside, by investing in “short positions”. Last summer, there were announcements in the financial news, discussing a meeting in Switzerland, of Hedge Funds who were going to start investing in distressed properties. Since then banks, hedge funds and other private investors have begun buying distressed properties and mortgages, anticipating the recovery of the housing market.


One such effort was the formation of PennyMac, (http://pennymacusa.com ) funded by the Blackstone Group, a publicly traded Hedge Find. As part of this effort, others are now increasing their efforts to offer “loan modifications”. These may sound good, but they actually just provide the financial institution or organization more leverage over the homeowner, in order to expand future profit. The recent news by Secretary Paulson, that the TARP would not be used to buy distressed mortgage assets, (a reversal of the centerpiece of justification for the bailout), further pushes homeowners towards accepting mortgage modifications. If anyone would do even a small amount of research on America’s Servicing Corporation, a subsidiary of Wells Fargo, which services distressed homeowner loans, with extremely unethical tactics, it would be clear, that distressed home owners need an alternative that is not only motivated by greed.



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