The Firing Line Forums - View Single Post - The bailout bill and the Fourth Amendment

**Mike Irwin** · October 7, 2008, 12:47 AM

"The homes aren't a military reservation, but they are now federal property until the revised loans are paid off and the homeowners are in the clear."

NO, they are NOT Government property!

I'm not sure where people are coming up with those fanciful (and blindingly WRONG) concepts about this process.

The government will hold an equity INTEREST in the property, it will have NO titular interest in the property.

It is absolutely NO different than were you to walk down the street to BIG BANK CO and take out a mortgage loan with them to buy your own home.

The fact that you receive a loan from BBC to purchase the house does NOT make them the owner of the property.

YOUR name will be on the deed of trust as owner, NOT BBC's.

BBC will hold an equity interest in the loan (in essence, a lien) they have made to you that is secured by the tangible property -- the home for which the deed of trust names YOU as OWNER.

It is exactly analogous to your car title. Until you pay off the note on that shiny silver Blumpkin 500, the lending institution has a lien on the property that protects its extension of credit to you.

Now, say you're paying your mortgage on time, but BBC gets caught up in the equity derivative mess and has to sell off its mortgage portfolio to the government under the terms of the bail out.

Does that mean that in a few days you're going to get a knock on the door and a "man from the government" will be handing you a revised deed of trust with your name scratched out and "The Government" written in?

Once again, NO.

The government is purchasing the EQUITY INTEREST in the loan, it is NOT purchasing the home out from under you.

Understand that. It is a very important distinction.

Until such time that you default on the mortgage and the holder of the equity interest (formerly BBC, now the government) takes steps to repossess the home under applicable state and federal laws.

This sort of buying and selling of mortgage loans goes on all the time. Most banks will have sold your mortgage loan to a servicing broker (like Norwest) before you make your first payment.

A couple of years down the road, Norwest may very well sell it to someone else.

Does that mean that every time someone sells the equity interest in your mortgage loan you are stripped of ownership?

NO.

October 7, 2008, 12:47 AM	#5
Mike Irwin Staff Join Date: April 13, 2000 Location: Northern Virginia Posts: 41,379	"The homes aren't a military reservation, but they are now federal property until the revised loans are paid off and the homeowners are in the clear." NO, they are NOT Government property! I'm not sure where people are coming up with those fanciful (and blindingly WRONG) concepts about this process. The government will hold an equity INTEREST in the property, it will have NO titular interest in the property. It is absolutely NO different than were you to walk down the street to BIG BANK CO and take out a mortgage loan with them to buy your own home. The fact that you receive a loan from BBC to purchase the house does NOT make them the owner of the property. YOUR name will be on the deed of trust as owner, NOT BBC's. BBC will hold an equity interest in the loan (in essence, a lien) they have made to you that is secured by the tangible property -- the home for which the deed of trust names YOU as OWNER. It is exactly analogous to your car title. Until you pay off the note on that shiny silver Blumpkin 500, the lending institution has a lien on the property that protects its extension of credit to you. Now, say you're paying your mortgage on time, but BBC gets caught up in the equity derivative mess and has to sell off its mortgage portfolio to the government under the terms of the bail out. Does that mean that in a few days you're going to get a knock on the door and a "man from the government" will be handing you a revised deed of trust with your name scratched out and "The Government" written in? Once again, NO. The government is purchasing the EQUITY INTEREST in the loan, it is NOT purchasing the home out from under you. Understand that. It is a very important distinction. Until such time that you default on the mortgage and the holder of the equity interest (formerly BBC, now the government) takes steps to repossess the home under applicable state and federal laws. This sort of buying and selling of mortgage loans goes on all the time. Most banks will have sold your mortgage loan to a servicing broker (like Norwest) before you make your first payment. A couple of years down the road, Norwest may very well sell it to someone else. Does that mean that every time someone sells the equity interest in your mortgage loan you are stripped of ownership? NO. __________________ "The gift which I am sending you is called a dog, and is in fact the most precious and valuable possession of mankind" -Theodorus Gaza Baby Jesus cries when the fat redneck doesn't have military-grade firepower.