Gerald Romine's Politically Incorrect News

Last week Treasure Secretary Henry Paulson announced the “freeze” program where mortgage lenders will freeze interest rates on a limited number of subprime loans. It’s all dressed up and sounds good to the general public but this is really nothing but another fraud and cover-up!

This fraud is just like previous bailouts and has nothing to do with US house prices, the average American, or keeping families in their homes. Sorry, but anytime something is offered in the best interest of the public you can smell something fishy.

The real purpose of the freeze is to prevent the owners of the mortgage backed securities from suing US banks and forcing them to buy back the worthless mortgage securities (loans) at their face value.

Example: Let’s say 100 million dollars worth of loans were made and the package was sold. The face value is 100 million to the owner of the mortgage backed security. But now the package has a value of 50 million dollars and the owners of the securities are not happy because they are losing money hand over fist.

The problem is if the US Banks are sued and there was fraud involved in the origination process (it was rampant) the investors in mortgage bonds have the contractual ability to require the banks to buy back the loans at face value.

The 5 year freeze is the banks attempt to fix the problem. This will allow the banks to go back and refinance fraudulent loans with the consent of the owners of the mortgage backed securities. Why is this important? Because if the loans are refinanced with the consent of the owners of the mortgage backed securities they can not later claim fraud!

Right now there is a HUGE game being played and most people are not aware of it.

How does this help the investor?

Simple. We can capitalize on buying properties subject to with fixed rate loans on properties that cash flow. Owners will refinance ARM loans into fixed rate loans and try to survive and hang on. Some will. Some won’t. The bottom line is our pool of subject to properties will be increasing in the coming months.

All we have to do is analyze the properties then take over the ones that make sense. This lending fiasco is far from over as are the ways we can profit from it.

Now Go Buy A House!

Gerald Romine

PS – If you want to know how to buy Subject To watch this training video.