Be Prepared for a Backlash - Part II.

He who has the gold is not going to view the “produce the note” defensive maneuvers of borrowers lightly, and because in so many cases the additional legal expenses cannot be recovered, the rules are going to have to change. And if (more likely when) the BK rules allow judges to modify loans, the squaliformes will use the onslaught of filings as a rationale for pushing their changes. The quid-pro-quo for allowing Washington to change the rules will include getting things like:

- More aggressive action to get more states into the “non-judicial” foreclosure camp and to prevent those with non-judicial processes from bowing to local pressure to make it more difficult to foreclose.

- Less interference from regulators looking into abusive servicing practices that are designed to eliminate the modified loans as rapidly as possible.

- Accommodation of document imaging technology for mortgage notes just as the industry has done with checks.

- Efforts to limit or impede the use of MERS will be legislated out of existence.

- Blackballing anyone using bankruptcy to force a modification. BK filers will become a financial pariah. If you thought it was hard restoring your credit score post-discharge, this new scarlet letter will at least ensure you will never get back into debt.

Finally, and worst of all, we’re seeing the media rally to the squaliforme's backlash against anyone who is having trouble with their mortgage no matter who caused the trouble. The squaliforme’s professionally-managed media strategy has succeeded in twisting public opinion against people who have been abused instead of focusing attention on the abusers and the responsible parties in Washington. Certain politicians are more than happy to let the squaliformes handle this for them and things will only worsen as victims are assigned more and more blame for everyone’s declining circumstances.

As I have recommended on another forum, I suggest everyone should pull that old copy of George Orwell's Animal Farm off the shelf and read it.

The Honorable Judge Roy Bean