Corsi explained that the underlying rationale is that banks pursuing foreclosures have violated rules by not having the require documentation for mortgage loans packaged into complex securities instruments such as Collateralized Mortgage Obligations, or CMOs.

Last week, Virginia Attorney General Kenneth Cuccinelli said the deal proposed by the Obama administration is off.

The key provision rejected was that borrowers who enrolled in a trial loan modification under a federal program and made three loan payments on time would get a permanent loan modification, regardless of whether they were irresponsible in making the mortgage loan or were the victims of an unscrupulous industry predatory practice in the subprime market.

"In the final analysis, all the various Obama-contrived mo-mod schemes fail because banks make more money foreclosing on a home than cutting the interest rate on the loan or reducing the principal balance, as the Federal Reserve Bank of Boston demonstrated in a study of 29 million residential mortgages," Corsi wrote. "Besides, there are major political problems. If those with underwater mortgages should get their mortgage principal paid down by banks, why shouldn't all mortgage holders receive similar breaks?

"Mortgage modification schemes always end up politically being perceived as rewarding those who have made unwise economic decisions to the detriment of mortgage holders who continue to pay on time their more responsible above-water mortgage balances."

To date, only 20,000 mortgage loans have been refinanced under Obama mo-mod schemes, despite the fanfare with which the White House and the mainstream media have touted the program rollouts. CNNMoney.com estimates that some 20 million people own homes worth less than their mortgages.

For more information on state rejection of the Obama administration's recent mortgage modification scheme, read Jerome Corsi's Red Alert, the premium, online intelligence news source by the WND staff writer, columnist and author of the New York Times No. 1 best-seller, "The Obama Nation."

Red Alert's author, who received a doctorate from Harvard in political science in 1972, is the author of the No. 1 New York Times best-sellers "The Obama Nation" and (with co-author John E. O'Neill) "Unfit for Command." He is also the author of several other books, including "America for Sale," "The Late Great U.S.A." and "Why Israel Can't Wait." In addition to serving as a senior staff reporter for WorldNetDaily, Corsi is a senior managing director in the financial-services group at Gilford Securities.

Disclosure: Gilford Securities, founded in 1979, is a full-service boutique investment firm headquartered in New York City providing an array of financial services to institutional and retail clients, from investment banking and equity research to retirement planning and wealth-management services. The views, opinions, positions or strategies expressed by the author are his alone and do not necessarily reflect Gilford Securities Incorporated's views, opinions, positions or strategies. Gilford Securities Incorporated makes no representations as to accuracy, completeness, currentness, suitability or validity of any information expressed herein and will not be liable for any errors, omissions or delays in this information or any losses, injuries or damages arising from its display or use.

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