by Diana Howard

Created on: July 17, 2008   Last Updated: August 28, 2008

The Mortgage Crisis can be solved, and we are making some progress, but much will depend on cooperation between the Mortgager and the Mortgagee. This crisis will continue unabated until the lenders and investors come to the understanding that they must participate in the cure and not remain aloof on the sidelines.

National Suicide in the Real Estate Market is being caused by a vicious cycle whereby, homeowners even those who can afford a home, find that they are unable to refinance their predatory loans because they have lost so much market value. The mortgage industry's inability to admit their greed and avarice has helped to get us into this mess along with an uneducated and trusting consumer. Now the only way out is for "both" parties to take their medicine.

It seems simple for them to work together, but it isn't. The complication is due to the way in which we allow people to invest in Real Estate. Each home loan may have as many as twenty to thirty different entities invested in that particular mortgage. These passive investors were just as ignorant of the pitfalls involved with the types of fraudulent easy money loans being offered to consumers, as the consumers that took them out. The ultimate mistake was allowing the stock market to be the base for many of these loans. Now there are millions of passive investors involved, that must approve any adjustments or aid given to the homeowners. You can imagine what a log jam that has created.

As for the banks and mortgagors, they are unwilling to admit that they overstepped the bounds of good lending practices. The true villain, as I see it, is the fund managers, bankers who greedy for a profit, saw that market prices were exploding. They gambled and lost, as did the uneducated consumer who dove in without seeing if there was water in the pool.

Not long ago this issue was being discussed by various "superstars of investing" among them Robert Kiyosaki. When asked if the homeowner should be bailed out, he said smugly that he didn't think so, because we shouldn't reward stupidity"; his words, not mine. I don't think that any comment has ever made me more angry. Mr. Kiyosaki did not allude to the complete stupidity of the bankers, pension and investment portfolio fund managers who allowed their investers to become involved with mortgage companies who approved under-qualified buyers and giving them "easy" money; mortgages backed by the volatile stock market. As always, they were merely hoping to make a profit on the

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