Predatory lending is just one bad practice. I was curious if anyone thinks it makes sense to create a class and sue the investment banks for creating this whole mess in the first place. I would think it makes sense to start a class action where homeowners can band together as a class and sue the Wall Street firms including Lehman Brothers, who happens to allegedly own my note via a CDO(collateralized debt obligation), which are these securitized bundles of mortgages. Everyone who has a mortgage is part of a CDO. A ride back in history is in order. The problem is that way back when, Wall Street firms (Lehman, Merrill, Bear Stears, etc) decided they could bundle mortgages into multi-layered single securities and sell these like hotcakes if they were to successfully obtain a AAA rating on the top layer. They were indeed able to obtain this rating and they did sell the heck out of these to all kinds of investors everywhere including whole governments, banks, money market funds, and insurance companies. This led to the housing bubble which I and everyone else participated in via our owner-occupied home purchases and home improvements. Others participated via housing speculation (flipping and the like). These Wall Street firms started owning increasing amounts of CDO's on their balance sheets. The former Merrill CEO was quoted as saying Merrill Lynch started "committing suicide" in 2005 by never selling any of it's CDO's and completely removing their risk. Lehman and Bear Stearns were no different. Seeing this increased concentration of assets that were benefiting from the housing bubble, Hedge Funds (these evil unregulated inefficient and costly mutual funds) decided a great strategy to capitalize on this was to buy insurance on the bet that the Wall Street firms would be succumbed by their risky CDO holdings and that this would cause the entire firm to fail. Such insurance (a.k.a. credit default swaps) was happily sold to the hedge fund firms by the largest of insurance companies - AIG, and the hedge funds were even allowed to buy, if they wanted to, up to 40 times (40x!) the amount of the risk, a completely irresponsible practice but I digress. The hedge funds knew they would benefit if they were able to sink Lehman and the rest as they would cash in on the insurance. So they issued press releases essentially warning about the failure of the Wall Street firms. This caused traders everywhere to sell Lehman stock. And these very same hedge funds who sent the press releases started shorting the stock of these firms at the same time! Since the "uptick rule" was abolished by President Bush, another irresponsible act but I again digress, anyone could short a stock (betting on the stock price going down, not up) to their heart's delight. The uptick rule allowed shorting twice only after a stock price's "uptick" or increase in it's price, but the rule was not in effect. All of this shorting and all of the negative press releases, drove the Wall Street firm's stock price into the gutter and caused the firm's to fail. Washington's first reaction, thanks to the self-regulation ideology of the Bush administration, was to let the first of these firm's to simply fail. This happened to be Leman Brothers. And so the hedge funds were victorious in their strategy because they not only made billions shorting Lehman stock, but could also now cash in on the AIG swap insurance policies. Yet these very insurance policies bankrupted AIG or could have bankrupted them. Having learned that letting Lehman fail was a terrible mistake because of the message it sent and the ensuing financial panic that resulted, the Bush administration and later the Obama administration decided to bailout AIG multiple times and with multiple billions of dollars. Once the housing market bubble finally popped, it was learned that these AAA CDO's, that originally started this whole mess, were really not AAA and were very sensitive to the housing market going down and foreclosures going up. This began the falling of the "house of cards" that CNBC reported David Fabier so eloquently reported on, because it decimated the CDO market and caused further financial panic because banks held a lot of these and they were required to mark the value of these CDO's to their market price (a.k.a. mark to market). Well, there was no market anymore and a zero value meant banks could not lend anymore. They were essentially "maxed-out" in a credit card analogy of sorts. This caused the feds to bail them out, pumping more and more of our taxpayer money into banks to keep them alive and lending. Meanwhile, the folks who are bailing everyone out, the taxpayer, are left holding the bag. Many taxpayers are also homeowners. And even though we are bailing out the banks with tax dollars, for generations to come I might add, these same banks are breathing down homeowner thoats with foreclosure lawsuits because they cannot either sell their home at all or for any reasonable amount, or they were sold into mortgages that were ridiculous to any trained eye, and aren't even sold anymore, or we simply have less income thanks to this whole economic mess brought on by the Wall Street firm's way back when they decided to create mortgage-back CDO's and sell them to everyone. The start of the house of cards being built was the creation of the mortgage-CDO. Thus, I think a new defense for homeowners in trying to save our homes is to sue the owners of the notes, or the alleged owners as it is in most cases. In my case, this would be Citibank as trustee for Lehman Brothers (Lehman has failed and Citibank is working things out for their assets I guess). Other firms are still in business such as Merrill Lynch(now owned by Bank of Amer). Or they have been taken over as is the case with Bear Stearns who is now owned by JP Morgan. Banks such as BofA and Chase should also be sued, but many were simply servicers, although they certainly benefited from the bubble. All of these firms contributed to this whole mess and have shared culpability in my view. Homeowners are now having to pay for the cleaning up of this mess while also having to pay increased taxes for generations to come. In essence, we are being forced to pay twice the amount borrowed for our homes because of the increased taxes that will definitely be needed to pay this nation's deficit. That was not part of the deal when we took out our mortgages. That is wholly unfair. And that is just plain wrong. Homeowners need to sue these firms, as a class action, to at least get their note returned to them free-n-clear because getting cash in these class actions is, generally, not going to happen since the atty's get the lion's share of settlements, which is fine by me, and that is only after expenses which will be sizeable(years of court battles). But homeowners can be given their notes back while any cash can go to the attorney's for fighting the good fight. Again, fine by me. Ultimately, I think it is in the nation's interest to simply give the mortgagees back their notes from the lenders because of the situation created. They don't ask for free housing. We are all going to pay for our housing, believe me. All of us. Increased taxation is the only way to crawl out of this. So, it is not a handout. It is a bailout, which if it is good for banks, it darn well should be good for homeowners. This will also cure the property tax problem that so many cities are now suing for damages. People will start paying taxes again, having a home free and clear. A class action lawsuit seeking to obtain relief from the alleged owners of the CDO's is just what is needed in addition to the standard fights everyone should already be doing alongside their good real estate attorney or other advocate.