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Wednesday, March 28, 2012

FW: The Ultimate Smoking Gun

Date: Tue, 27 Mar 2012 21:37:23 -0500
Subject: Fwd: The Ultimate Smoking Gun
From: yahseph@gmail.com

check out this article....  how securitization REALLY works!!!


---------- Forwarded message ----------
From: Vince Khan
Date: Tue, Mar 27, 2012 at 4:53 PM
Subject: The Ultimate Smoking Gun
To: yahseph@gmail.com


We here at Consumer Defense Programs strive to keep our members up to date with the best information possible to help stop illegal foreclosures.  The latest findings (that are winning in court and are getting settlements) is our findings in what's known as Credit Default Swaps.

You see, when Wall Street securitized loans...ANYONE (and I mean ANYONE) can buy an insurance policy against a loan in the event that that loan defaults.  Under a traditional insurance framework, only a party with a vested interest can buy an insurance policy, but this is not the case in a credit default swap.  Let's say you own 1/100th of the loan (meaning you are one of 100 investors in the pool), you can buy a credit default swap policy for the FULL FACE VALUE of the loan....such that in the event that the loan defaults, you get paid in full.

Let me repeat that in case you missed it.

Let's say John Doe works at a fast food joint on a minimum wage...goes out and gets a loan for a $1 million dollars with no money down.  The loan gets securitized and is sold to 100 investors.  Let's say ABC Bank is the originator and underwriter for the loan and is also one of those investors...in other words, ABC owns 1/100th of the $1M loan....ie. $10,000.

ABC takes out a Credit Default Swap insurance policy through AIG for the full $1M.  Because ABC knows full well that John Doe is likely to default on the loan, it is in ABC's interest to insure the loan against the default.

Once John Doe defaults on the loan...ABC gets paid in full for the whole $1M.  This $1M goes to satisfy the loan in its entirety.

In other words, the loan has been fully satisfied.

The debt has been paid in full.

Yet...ABC continues to collect on the loan...and even goes to the extent of foreclosing on the homeowners.

Talk about "having your cake and eat it too".

How many times do these people need to be paid to satisfy their greed?!  How many bail outs does it take before the people start saying "ENOUGH!"

I've written a more detailed article about this on my blog.

For more information about how you can use this information to stop illegal foreclosures, come to:


Ps. Do your part in making Wall Street be accountable.  Please forward this to your friends.  We need more people to wake up to this fraud.

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