The following is a summary of a Foreclosure Defense “white paper” currently being presented by Amstar Litigation all over the country as part of an effort to improve the quality and the quantity of legal representation that is available to US homeowners that are in financial distress.

The Mortgage Industry

1. The United States mortgage loan industry – Putting things in proper perspective

a. Pervasive, everywhere, everyone – 70% rate of homeownership – By the end of 2007, mortgage debt had exceeded aggregate home equity for the first time (in other words, Americans had borrowed more than half the value of every home in the country). 55,000,000 mortgages in place

b. Gigantic- approximately $1 Trillion in 1975, to $4 Trillion in 1998 to $10 Trillion in 2007- that’s a lot of money (2009 Federal Budget – $3.6 Trillion)

c. Complex—Bankers, Brokers, Lenders, Servicers, Conventional 30 year fixed, 15 year fixed, ARM’s, IO’s, PO’s, Prime, Sub-Prime, Alt-A’s, stated income (Liar’s loans), negative amortization loans and more

d. The “third wave”

i) First wave – speculators gave up because of declining prices

ii) Second wave – introductory or “teaser” interest rates expired – subprime and Alt A defaults

iii) Third wave – growing unemployment (currently 8.9%, projected to hit double digits) combined with declining prices

2. The default crisis

a. Defaults are increasing

b. “Home mortgage debt in the United States mushroomed from about $4 trillion in 1998 to $10 trillion in 2007. During the same decade, the median income remained virtually unchanged in constant dollars [$48,034 in 1998 to $48,201 in 2006] and the number of homeowners rose at a relatively modest pace. Inevitably, homeownership has become progressively less affordable, and the ability of Americans to service their growing mortgage debt has reached a breaking point.

c. The Office of Thrift Supervision (OTS) released a fourth-quarter report that found more than half of all loan workouts last year failed to reduce monthly payments, and nearly one-third actually increased the payments.

d. By the end of the third quarter of 2008, there were nearly 6 million mortgages delinquent or in foreclosure, and 14 million homeowners are projected to have mortgage debt exceeding the value of their property.