Tuesday, May 17, 2011

Domestic Terrorists

May I suggest a visit to the YouTube page this video came from to watch more videos? Also the Forclosure Diaries home page.

The video was suggested in the comments to You Have Got to be KIDDING - Nancy Jacobini's Home was Broken Into AGAIN.

The question is: why would the banks be doing this? I have a theory (gleaned from the comments at "Nancy Jacobini..."). Suppose through Credit Default Swaps (CDS)and other financial instruments the banks get paid several times the value of the property when they foreclose? What is the incentive to accept home owner payments? The incentive is to reject mortgage payments because the property is worth more in default than with an "owner" actually living in it.

With ordinary insurance once one company pays the others are off the hook. You can't collect several times the value insured. But CDSes are more opaque than real insurance. Thus the banks can get away with this sort of fraud.

Cross Posted at Classical Values

No comments: