EVERYONE GETS TO SUE...EXCEPT YOU....

You may have heard (and likely not cared) that the U.S. Government is suing Standard & Poor's (S&P) over the mortgage fraud meltdown.

In plain terms, S&P "rates" investments. If you wanted to invest in, say, Commodore Computers, S&P may say that's not such a safe investment. If you wanted to invest in Apple Computers, S&P would likely rate Apple higher, telling you it's safe.

Well, of course S&P rated all those dangerous, shaky, tenuous, mortgage-backed investments which were backed up by undocumented loans and borrowers who couldn't afford them, and which eventually crumbled, bringing down major investment firms, banks, and the entire U.S. economy with them, as A++ (or whatever their highest rating is). And naturally, everyone including the U.S. Government took S&P's "these are safe--go for it!" recommendation, invested in these mortgage backed securities...and lost their shirt.

So now, the U.S. is suing S&P, presumably for all the money they've had to put out to bail everyone out and insure all the losses.

And this isn't the first lawsuit over these securities. Fannie Mae and Freddie Mac have sued numerous banks for selling them fraudulent, undocumented loans. The investors in the securities themselves have sued the banks and brokers, for selling them the fraudulent, undocumented loans. The investors and banks have sued S&P for the false ratings. Yes, it seems everyone has sued everyone for lying their way to profits, just to fill these faulty mortgage backed securities.

Except for you...the borrower. There is generally no defense in Florida to foreclosure, for being mislead and defrauded in the taking out of your loan. Absent the most extreme circumstances, Joe Borrower can't just say that he was told his loan was safe, told that his property value would go up, or was never told that his income wouldn't be able to justify his payment once it adjusted. The end result will be that "you should have known," and that you were aware of what you were signing when you closed on your loan.

I often hear people say that borrowers "knew what they were doing," and shouldn't have been foolish enough to take out loans so big they couldn't afford them. Why don't those people ask why the investors weren't foolish for investing in these scams in the first place? Why the government wasn't foolish for relying on ratings agencies? Why Fannie Mae wasn't foolish for knowingly turning a blind eye to the products they were purchasing from lenders? In those suits, nobody accuses the big pockets of being dumb or foolish or taking responsibility for their own actions.

The end result is that those with big pockets--investors, banks, trustees, the government--get redress. But you the consumer, have no cause of action. If a bank pays back investors 2 billion for fraudulent loans, that's "justice." But if a bank were to excuse your $200,000 loan for defrauding you, that would be seen as "injustice."

Quite the double standard. There is something seriously wrong with our system...

Questions? Call us at 954 987-0515 or jason@jasonweaverpa.com