An Open Letter To President Obama
Wed Jun 13, 2012 by Oppenheim Law on Florida Law News
President Barack Obama talks on the phone with Prime Minister Monti of Italy aboard Air Force One, June 6, 2012. (Official White House Photo by Pete Souza)
Dear Mr. President:
As you know historically, since the great depression, refinancing mortgages has been this country’s exit strategy when it comes to pulling us out of the economic ditch.
So it’s nice to see that you are now pushing Congress to pass refinancing reform. It’s the most effective and efficient way to craft a bailout that actually helps everyone.
I’ve seen a number of bailouts which have been structured to save the banks, the bankers, and their bondholders. But never the average Joe.
But the truth is everyone, from the government to the private sector, relies on the consumer to keep the economy going. Saving the banks has so far done nothing to get us out of the economic doldrums.
So your effort to put a few hundred extra dollars in homeowners pockets is certainly a step in the right direction. I sincerely hope this isn’t an election year ploy and a true effort to rev up the U.S.’s economic engine. But you’ve got a long way to go to convince me and the American public that you are serious.
We’ve all heard the speeches, from you and countless other politicians. But what we need now is action.
Since your White House staff is soliciting the public’s opinion on this policy, please allow me to make this direct appeal to you sir.
Continue your focus on the underwater homeowners who are as you like to call them, ‘responsible’. In our efforts to save the ones who have fallen behind, it seems the vast majority of them (9 out of every 10 underwater homeowners are still paying their mortgages) have been forgotten and left out in the cold. You need to do more, much more.
These homeowners have been made to feel like suckers, their only reward for trying to do the right thing has been unconscionable interest rates. Your plan as it stands now will not offer them substantial principal reduction, so I suspect many will take the position that they don’t want to refinance their homes when they are so underwater.
And your plan I fear doesn’t do enough to hold the banks feet to the flames. Making refinancing easier for the banks to do isn’t the same thing as making them do it.
And if the banks aren’t going to do it on their own, then it is your job to force their hands. During your State of the Union you promised ‘smart regulation to prevent irresponsible behavior’.
Part of that regulation needs to focus on distancing your government from Wall Street. Capitol Hill now resembles some sort of human centipede of its own creation. We still can’t tell the difference between the government, the private sector, the Federal Reserve and the banks.
It’s all just one big ugly living organism without clear boundaries. And until you put those boundaries back in place, I suspect little will change.
But Mr. President, thank you for at least making an attempt to shake up the status quo. Your GOP counterparts refused to offer any substantive ideas beyond allowing the market to ‘correct itself,’ which I and my clients have yet to see happen.
While expanding the refinancing option beyond Freddie and Fannie backed loans is a nice idea, and some homeowners have had success through HARP 2.0, many more are still frustrated by the process.
It’s still basically optional for the banks to participate in, and there really isn’t much incentive for them to comply. As long as you’re dealing with securitized trusts, I’m not sure how the government will have the authority to get loans modified.
The problem as I see it President Obama, is that with all the energy and effort you are putting forth to persuade Congress to change the refinancing rules, it still do not address the root causes of the housing collapse.
The real estate market does not need another band-aid sir, it needs open heart surgery.
If the market was not completely dysfunctional, if it were not controlled by only 5 banks which possess over half of our country’s banking assets, I suspect you wouldn’t have to push this reform because the banks would have to implement it on their own in order to remain competitive.
These 5 banks together employ more than the population of 8 U.S. states and the District of Columbia (where you now reside). If that’s not proof the banks are too big to fail, and too big to jail, then I don’t know what is.
They have become omnipotent, invidious and insidious.
Mr. President you need to show true leadership, that is what this country is begging for. The proof that these banks need to be broken up is simply too big to ignore, and your legacy could be cemented if you stood up and did just that.
Instead of encouraging the banks to compete, make competition a necessity.
You must hold people accountable and responsible sir.
Sincerely,
Roy Oppenheim
Attorney-At-Law
That’s a nice kind letter.
Please add [in my opinion] any mediation program for foreclosures or other type of principal reduction effort needs to include the ‘real party in interest,’ the person actually entitled to receive the loan payments, the actual investor/owner, not just the mortgage servicer. However well intended, existing programs are a farce. IF the actual owner of the payment steam actually understood the value of the property was much less that the principal balance, some reality in their evaluation process might occur. The banks and the ‘servicers’ usually don’t own the notes.
[In my opinion] Mr. President, you need to start getting advice on the banking and financial decisions from others than those that are part of creating the problems. You were willing to let the shareholders of GM & Chrysler loose their equity and that was appropriate because they continued to allow the directors to make unsound business decisions. That same position needs to apply to banks; their accounts receivable and vast land holdings are real assets that could be used by ‘new’ banks formed from the asst base of existing banks that make decisions that aren’t successful in the market.
Roy,
I can tell you care a lot about our country and the awful problems we are having. But, your open letter will have no meaning to Obama whatsoever. He just won’t get it. He’s hardcore and clueless.
Write to the people first by telling them “truth” and then to our elected officials telling them we will vote out those who care much more about themselves and the everyday citizen. We all know who they are.
Mitch Pennington
Until there are principle reductions for ALL underwater homeowners, the problem will continue. Over 16 million people are underwater, which equates to approximately 40 million people, over half of them voters. While lowering interest rates puts a band-aide on the problem it does not fix it and it still rewards the wrong doers who created the situation.
Lower principle, to 80% – 90% of home value on all underwater homes with no qualification process required. This would cut back on the overload placed upon the bank in modification backlogs. If home buyer can make payment they will immediately begin paying. If not, they will sell with dignity and move on. Lender legal fees would probably drop below half of what they are now, thus making up for a considerable amount of revenue loss.
This would free up our economy to “reboot” so to speak and the market could begin moving again.
It would cause a more equitable sacrifice by lenders and borrowers who were – let’s face the facts – defrauded. (see FBI report).
Just a thought.
the reason the government wants to push refinancing is simply because all the paper work on the American homeshave been lost. Refinancing is the only way since all the fraudclosure a paper trail can be established to any house nowdays. First do something about those that are committing fraudulent acts against the American People. I say don’t refinance but ask those you make your mortgage payments to for a copy of the note which is never suppose to be separated from the assignment of mortgage!
[…] « An Open Letter To President Obama […]
[…] In a open letter posted on Oppenheim Law’s South Florida Law Blog, Oppenheim calls the President’s current push to allow more underwater homeowners to take advantage of today’s low mortgage rates a step in the right direction, although one that should have come much earlier in Obama’s first term. […]