Throwing Pennies Down A Drain
Some housing bubble news from Wall Street and Washington. Marketplace, “The SEC has released a report on the agencies that gave high marks to subprime securities. Kai Ryssdal: ‘Christopher Cox is the chairman of the Securities and Exchange Commission. Today, the SEC released its report on credit rating agencies and their role in the subprime mess. Moody’s, Standard & Poor’s, and Fitch are the big ones you’ve heard of.’”
“‘There are ten of them in all, though, and they’ve been criticized harshly for giving top ratings to some of the complicated mortgage-backed securities that tanked after the housing bust.’”
“Amy Scott: “This is the SEC’s first annual report on the credit rating agencies since Congress gave it express oversight in 2006 and a couple of things stood out to me. One was that the report describes just the sheer volume of these complicated deals that these agencies were rating.’”
“‘In one email that’s quoted in the report, analysts were concerned about whether they should be rating one of these deals and one said that the firm’s model for rating the bond didn’t capture half of the deal’s risk but that it could be structured by cows and we would rate it.’”
“Ryssdal: ‘Great.’”
“Scott: ‘The report also finds that the rating agencies failed to disclose significant aspects of the ratings process, they failed to adequately monitor the ratings after they’d been issued — you know, to make sure a Triple-A was still really a Triple-A — and some of the most interesting reading in this report concerns conflicts of interest.’”
OpRisk and Compliance. “Credit rating agencies rushed through ratings for in-demand complex structured products, while failing to effectively divide their analysis from the business side, according to Christopher Cox, chairman of the SEC.”
“‘The public will see that there have been significant problems. There have been instances in which there were people both pitching the business, debating the fees and were involved in the analytical side,’ said Cox.”
“Cox said ratings analysts were deluged with requests that were highly profitable to the agencies and their clients, and ‘the volume of work taxed the staff in ways that caused them to cut corners, that caused them to deviate from their models.’”
From Reuters. “Taiwan financial firms have suffered losses of T$42.572 billion ($1.4 billion) since August 2007 in investments related to U.S. subprime products, the island’s top financial regulator said on Wednesday.”
“‘The Financial Supervisory Commission will supervise financial companies to improve their risk control,’ said Gordon Chen, chairman of the commission, told a news conference.”
From Newsday. “The scaleback at IndyMac is the latest aftershock from the subprime mortgage collapse. Early last year, a hedge fund that had bought IndyMac mortgages as investments, hired Melville-based Continental Home Loans on a trial basis to call hundreds of borrowers to see whether they could work out options on delinquent loans.”
“But more than 90 percent of the loans were beyond saving, said Michael McHugh, head of Continental, and the trial ended two months later. IndyMac then tried to turn itself around by building up its retail business, where it had more control over who could get loans.”
“‘Trying to switch to retail was like turning an aircraft carrier around in a pool,’ McHugh said. ‘It’s a shame. I hate to see companies leave the market right now. We need investors and we need choices.’”
The Whittier Daily News. “An analyst who tracks IndyMac wrote a letter to his clients Tuesday telling them not to buy IndyMac shares. ‘We do not believe that there is any value left for common shareholders,’ wrote Paul Miller, an analyst at Virginia-based Friedman, Billings, Ramsey & Co.”
“Meanwhile Fitch Ratings gave IndyMac an ‘E’ individual rating, which, ‘reflects a bank with very serious problems,’ a written statement issued Tuesday noted. Fitch also rated the stock ‘CC,’ which is not investment grade.”
“An IndyMac spokesman defended the bank and said stock prices should not be the only measure of the company’s soundness, he said. ‘It shouldn’t come as any surprise in this climate that people are not lining up to buy stocks in companies that sell mortgages,’ said the spokesman Evan Wagner.”
The Orlando Sentinel. “Their construction business decimated, cars repossessed and mortgage in danger of default, Jason and Teresa Olive called for relief from their lender, Countrywide Financial Corp. Countrywide referred them to its own ‘Hope’ department.”
‘Six months later, after a call-center runaround, Countrywide’s ‘Hope’ had led to a dead end. The lender foreclosed on their home in June. ‘The ‘Hope’ people were hopeless,’ Teresa Olive said. ‘So we’ve just about given up on them.’”
“‘There are four foreclosures for every person that the Hope Now program has helped,’ said Kathleen Day, a consumer analyst for an advocacy group. ‘There’s just no way they can keep pace. The industry doesn’t have enough manpower to handle 2 million foreclosures.’”
“Countrywide would not comment on the case. ‘Our mission remains to assist our customers,’ the company said in a statement.”
“You’ll have to pardon Jason Olive if he doesn’t think so. ‘What a crock,’ said the house framer, who worked as a subcontractor for various builders until the housing boom went bust. ‘I’ve never been given a runaround like that in my whole life.’”
“‘One time we made too much; next time, we made too little. Whatever the case, they’d come up with another reason to turn us down,’ Teresa Olive said.”
The Morning Call. “Gov. Ed Rendell came to the newest epicenter of the mortgage crisis in Pennsylvania on Tuesday to sign a package of bills that will make mortgage fraud tougher to get away with in the state.”
“Rendell signed the bills at the Exeter Township library, not far from where now-jailed mortgage broker Wesley A. Snyder did business until his companies collapsed in fraud and bankruptcy last year.”
“The governor said 66,000 Pennsylvania families have adjustable-rate subprime loans, with more than 20 percent delinquent. The new laws, he said, can’t help homeowners already in trouble.”
“According to Rendell, the Poconos and the Reading area were the two places that had ‘the most horrendous outcomes’ from mortgage fraud, although the scenarios were different.”
“In the Poconos cases earlier this decade, hundreds of families, many first-time buyers from New York, bought homes at inflated prices that fell into foreclosure, spawning civil and criminal cases.”
“‘I wish the legislative process wasn’t so slow,’ said Alan Jennings, executive director of the Community Action Committee of the Lehigh Valley, saying thousands of homeowners could have been spared foreclosure if the wheels in Harrisburg had turned more quickly. Still he said, ‘it’s important that we challenge the way mortgage brokers do business.’”
The Courier Press. “More than two-thirds of Indiana’s mortgage broker companies could lose their licenses for not complying with a 2007 state law intended to clean up the industry in the wake of the subprime lending and home foreclosure crisis.”
“The 2007 law said that each licensed mortgage loan broker had to have one principal manager, someone with three years’ experience who had passed a state examination. Of 950 affected loan brokerages statewide, principal managers at 639 of them still had not taken the exam by the law’s July 1 deadline, officials said.”
“‘The General Assembly has said this is how Indiana intends to operate,’ said Indiana Secretary of State Todd Rokita, whose office regulates the broker industry. ‘Especially when we have a loan crisis on hand, we are going to hold loan professionals up to a higher standard - and part of that standard is a competency test.’”
“Michael Monaco, president of the Indiana Association of Mortgage Brokers, said giving companies an extra 30 days was fair, since they already had one year to comply.”
“Dave Clark, president of Talon Mortgage in Evansville, passed the exam but said it was not easy. Some will quit the industry and send their clients elsewhere rather than face the exam, he predicted.”
“‘This needed to be done 10 years ago,’ Clark said. ‘They did the right thing, but at the wrong time.’”
The Sacramento Bee. “Federal Reserve Chairman Ben Bernanke announced a crackdown Tuesday on the exotic loan products offered to risky borrowers that fueled the housing boom.”
“But Sacramento brokers and others said the market has already taken care of that: Most of the loans Bernanke has in his sights haven’t been available for a while.”
“‘Gosh, it’s almost nine to 12 months ago that these loans stopped,’ said Brent Wilson, mortgage strategist with Sacramento’s Comstock Mortgage.”
“‘That, in some ways, is how government reacts. It’s kind of behind the curve,’ said Dustin Hobbs, spokesman for the California Mortgage Bankers Association.”
The Bradenton Herald. “During a news conference Tuesday, Department of Housing and Urban Development Secretary Steve Preston estimated the new guidelines will help 100,000 families refinance into ‘more affordable FHA-insured loans’ by the end of the year.”
“‘FHASecure will begin to provide additional assistance to subprime borrowers with adjustable rate mortgages and help to restore liquidity and stability to the markets,’ Preston said.”
“Many lenders have found it is not just those with subprime or adjustable rate mortgages that need help in a faltering economy. ‘I think it’s across the board. The exotic mortgages get a lot of publicity, but there are other people who are in trouble whose loans were rather vanilla,’ said David Freed, president of Aim Mortgage of Bradenton.”
“Much like in its previous incarnation, FHASecure is focusing specifically on assisting people in danger of losing their homes to foreclosure, not investors. ‘For investors, foreclosures are going to be something that hurts them financially and hurts their credit, but it’s not going to put them out on the street,’ Freed said.”
“Freed, like many mortgage brokers and lenders, is cautiously optimistic that the new plan will provide the relief needed but had difficulties with it before and are waiting to pass judgment on the new plan.”
“The original incarnation of FHASecure required homeowners to jump through so many hoops, many no longer qualified or were in pre-foreclosure before the paperwork could be completed.”
“‘I can tell you FHASecure was a total disaster,’ Freed said.”
The Press Association. “The average cost of a home being sold at auction has slumped by 17% during the past year, figures show. Homes that went under the hammer between March and May fetched an average of £140,500 - £28,700 less than they sold for during the same period of 2007, according to research by the Liberal Democrats.”
“The study, based on the sale price of 4,748 properties around the country, found the rate of price falls accelerated to 18.5% in May.”
“The party’s Treasury spokesman, Lord Oakeshott, said: ‘Auctions are the sharp end of the housing market where real deals show the prices paid by real buyers. The published house price indices are well behind the game.’”
“He said: “Ministers must wake up now and let housing associations and councils buy empty homes for social housing to rent. ‘The feeble Government response to the housing crash so far has been like throwing pennies down a drain.’”
The Wall Street Journal. “With Britain’s housing boom turning to bust, estate agents are finding it increasingly difficult to make money. For some, the downturn already has proved catastrophic.”
“Mortgage approvals in May dropped 57% from the same time last year, reflecting a roughly 50% fall in the number of homes purchased, according to the British Bankers’ Association.”
“‘Lenders no longer offer 100% mortgages [and] less than 42% of buyers had saved up enough for a 5% deposit,’ says Jo Whincup, an area director for William H. Brown. ‘Many buyers were looking for a property and making offers with no idea about what they could afford.’”
“It is already too late for some estate agents. Cesare & Co., recently absorbed the properties of Page Flatt & Co., a local estate agency in the town of Tring, but not much else of the firm remains and the former owner has moved on. ‘He’s available if we need him,’ a Cesare spokesman said.”
“Would-be buyers like Thom Harrison have the upper hand.”
“Mr. Harrison, a 23-year-old first-time buyer in Liverpool, said he and his partner had viewed 27 properties and considered all but two to be overpriced. They made an offer on one.”
“‘It needed £10,000 [$20,000] of work, so we took off £10,000 and [the seller] wasn’t very happy. If we don’t find [a place to buy] by the end of July, we’ll rent for another six months,’ he said. ‘It’s well worth the wait to save astronomical amounts of money.’”
The Birmingham News. “Regions Financial Corp., the largest bank based in Alabama, is facing a $23 million loan default related to a Florida condo development.”
“The Palms of Riviera Dunes, in Palmetto, Fla., owes the $23 million, according to a Regions lawsuit filed in that state’s Manatee County. Regions, which operates in 16 states, wants to take control of the property and sell it to recoup the lost money.”
“According to the development’s Web site, the condos offered ’spectacular water views of the Manatee River, spacious terraces, granite and Corian countertops, ceramic floor tile, raised panel wood cabinets and much more! The Palms condominiums range from $346,900 to $1.8 million.’”
“It didn’t work out, as have not many of the riskier real-estate loans Regions and other banks made from 2001 through 2005, when it seemed property values would never fall.”
“‘The defendant does not have the financial capability of seeing that the condominium project proceeds forward while maintaining the costs associated with running the common areas of the condominium project,’ Regions said in its suit.”
“The bank will probably have a tough time selling the property promptly, according to Tony Plath, a banking professor at the University of North Carolina Charlotte.”
“‘Not in that market, which is one of the most overpriced and ill-liquid in the country,’ Plath said of the southwest Florida coast. ‘Now, Regions is going to have incur additional costs to keep the grass cut and the alligators out of the swimming pool.’”
Listen to the latest from the NY ‘guru’:
‘The current housing downturn isn’t over and is “much much worse” than past downturns, says Barbara Corcoran, who built The Corcoran Group into a multi-billion firm during the real estate busts of the mid-1970s, 1980s and early 1990s.’
‘This downturn is “grossly different” than those past cycles because homeowners are much more willing to “walk away” from homes, says Corcoran, who sold her namesake firm in 2001 for a reported $66 million and is now an author and widely cited real estate guru.’
‘There aren’t enough “brave souls” to stem the decline which Corcoran says will take prices down another 5%-to-10% nationally and end next Spring - in a best case scenario.’
May 9, 2005:
‘Newsday interviewed this “real estate celebrity, barefoot, wearing a cranberry colored blazer and slacks. Barbara Corcoran is even more of a symbol of the city’s obsession with real estate now. She’s on “Good Morning America” and the “Today” show advising people how to buy and sell. By September she hopes to host a weekly real estate show on national television.”
“A newsletter from a group of Prudential downtown Manhattan brokers said recently, ‘You heard it here first: The market is slowing down and pretty significantly too.’ One of those brokers says people are reducing ‘really extreme asking prices’ for high-end apartments but that the market’s still strong.”
“Corcoran concedes there are periods when housing markets drop. Over a 3 1/2 year period beginning in 1987, city prices dropped about 32 percent. She admits there are some people who risk getting hurt badly in this housing boom.’Is it dangerous to be a flipper if you don’t have an educated eye? It’s ridiculous,’ she says.”
“Her advice? If you’re a seller, underprice your property by 10 percent and you’ll set off a buying ‘frenzy.’ If you’re a buyer, overbid to get the property you want, and the rising tide of the real estate market will protect you.”
April 29, 2005:
‘Is the US real estate sector in a bubble market? And if so, is it in danger of popping? ‘While some areas will always tend to be more volatile, on a national scope, there’s probably no housing bubble.’
March 29, 2005:
‘I think it’s a much scarier world that we live in. When kids are scared, where do they run? They run home. People are staying home more..it’s really reassuring for people to know they own the walls around them. People have also become more distrustful. People don’t trust the government, they don’t trust Corporate America, they don’t trust the stock market. They trust their house.’
‘I think the bubble theory is nothing more than an intellectual expression of people’s typical worry that good times can’t last forever. When your marriage is going well, you worry there’s a problem on the horizon…Other than my boyfriend and business partner marrying my secretary, it has been my hardest transition.’
she was a buy,buy ,buy right up to the end
I cannot find the video clip of her interview I watched earlier. My impression from the clip was that she did not expect things would drop by more than an additional 10% decline.
Here is the clip:
http://finance.yahoo.com/tech-ticker/article/37552/We-Need-a-Bailout-Housing-Legislation-‘Close-to-a-Joke’-Corcoran-Says?tickers=FNM,FRE
This woman is pathetic. She made her fortune in the free market, but now she wants her ill-gotten gains saved by “nationalizing” the crisis and the government to “save the day!”
Go $CREW yourself Barbara! You’re one of the poster-children for the problem. LOOK IN THE MIRROR!!! Your ever-bullish spam all the way up as the bubble got bigger and bigger had you there cheering it on, louder and louder as the top grew near.
HOW DARE YOU SAY EVERYONE WAS TRICKED! NONSENSE! IT WAS A BUBBLE & I DON’T CARE IF THEY ARE NICE PEOPLE! THEY OVERPAID!!!!!! THEY ARE FOOLS!!!
Now the market is doing it’s JOB by clearing out the excesses and booting these people to the curb (as they should be ) for foolishly buying into this absurd bubble. They can RENT - which is what they should have stayed. RENTERS!!!
Stop calling them homeowners - they aren’t and never should or will be…… Excuse me, I have to go PUKE after watching her nonsense!
she makes me nauseous
poster child for the bubble in nyc
She was never correct in any of her bullish assertions right up until it was painfully obvious to even the most distracted observer that this market was toast. Who gives a rat’s ass about her opinion now? No one should even quote this dumbass windbag, who’s biggest accomplishment to date was figuring out that skimming 6% off of a mult-million dollar house sale equates to a damn big paycheck. All IMO of course.
About a year ago some HBB regulars, including yours truly, popped in on Bab’s blog to stir things up a bit. Amidst the mindless gushing of Bab’s syncophants in response to drivel like “How to Sell Your Home in a Weekend,” there suddenly appeared a spate of postings amdist the Cult of Babs that rained all over her lovefest and called her out for the charlatan that she is. Apparently her site wasn’t getting much traffic, because nobody seemed to notice for several days, and then the “negative” postings suddenly disappeared. Perhaps its time to make another HBB foray into their Land of Delusion?
Lemme tell ya a little secret about the blogosphere, Sammy. There are lots of blogs out there, Bab’s included, where the comment-ers are expected to bow down and worship the blog owner.
And that’s one thing that’s really nice about this blog. Yes, we do admire Ben. But he doesn’t shy away from allowing us to have vigorous debates, and, gasp, disagree with him.
In her defense (hides face from shoes thrown at me)…I was reading financial self-help books from the pre-bubble to bubble times telling everyone to “extract their equity” from their homes, because otherwise the money “is just sitting there, not earning anything”. These clowns were telling everyone that putting their cash in anything that wasn’t earning 8-10% or higher per year was “throwing away your money”.
I didn’t follow their advice, but probably only because I was in grad school and decided to be very conservative until I had time to improve my own financial literacy.
I’m only pointing out that *everyone was saying the same crap, and I don’t know if she was intentionally misleading the public. Even if she had seen it coming, she would have been mocked by everyone, and I doubt history would have turned out any different. Very few people were talking financial sense about any asset classes that have held up today (except for maybe oil), and the ones who were pointing it out (like Ben’s blog) were getting shunned or ridiculed.
http://activerain.com/blogsview/41979/How-to-Sell-Your#198196
Here was my response to Barbara Corcoran’s “How to Sell Your House in a Weekend” blog entry of early 2007. Several other HBB regulars weighed in as well with some priceless comments.
“Your profession will go the way of the dodo”…. lmao… Nice.
She is now saying we need much bigger bailouts. Talk about selfish.
http://finance.yahoo.com/tech-ticker/article/37552/We-Need-a-Bailout-Housing-Legislation-‘Close-to-a-Joke’-Corcoran-Says?tickers=FNM,FRE
Thanks so much for that Tim, I just spent the last 7 minutes (the length of that video) screaming at my monitor.
What a dirty, self-serving, w**re that lady is. She’s happy to lay blame all over the place except for where it most belongs, right on her own dirty head.
Don’t even consider those that didn’t get “tricked” (her words) by their evil MTG broker; just bail them all out, right? Oh man, it’s Miller time, that was just maddening to a whole new level. Couldn’t they put Mark Zandi on there to debate her on the topic? Nice balance.. NOT.
we got a new song coming out….”I shot the broker but I did it only in self defense.”
Give her a break. She’s ONLY calling for a $3 TRILLION bailout! (sarcasm off)
I really hope she’s an alien like the creatures in the classic “They Live”. Then I wouldn’t feel bad about giving her a good smackdown.
Is it just me, or does it look like she can unhinge that jaw?
You rarely see so bold a call, after a stock has lost 98% of it’s value…
______________________________________________________________
“An analyst who tracks IndyMac wrote a letter to his clients Tuesday telling them not to buy IndyMac shares. ‘We do not believe that there is any value left for common shareholders,’ wrote Paul Miller, an analyst at Virginia-based Friedman, Billings, Ramsey & Co.”
They should know. In 2005 FBR was called the ‘investment bank to the housing bubble.’
It was all about the NINJA, dude!
While searching the first use of the term NINJA, as applied to loans, discovered this fascinating and prescient article entitled “Ponzi Nation” pubbed in Febuary 2007, which examines the shaky foundations of the “New Paradigm.”
http://www.iimagazine.com/Article.aspx?ArticleID=1234217&PositionID=16672
And to think that there had been rumblings about IndyMac’s troubles for quite some time. Oh, wait a minute. It was those housing bubble bloggers doing the rumbling. Can’t listen to them, now can we?
Too bad the mail won’t get to his clients in time.
Maybe he should call them, a little more timely?
It’s like getting a tip from a racetrack tout on a horse, just seconds before it crosses the finish line dead last.
FBR has been promoting the mortgage banks all along during the bubble.
Reminding us of the Bear Stearns analyst that upgraded NFI one day
before it exploded. MA has been investigating that call.
dude, where’s my Bell Curve?
“Federal Reserve Chairman Ben Bernanke announced a crackdown Tuesday on the exotic loan products offered to risky borrowers that fueled the housing boom.”
“But Sacramento brokers and others said the market has already taken care of that: Most of the loans Bernanke has in his sights haven’t been available for a while.”
“‘Gosh, it’s almost nine to 12 months ago that these loans stopped,’ said Brent Wilson, mortgage strategist with Sacramento’s Comstock Mortgage.”
“‘That, in some ways, is how government reacts. It’s kind of behind the curve,’ said Dustin Hobbs, spokesman for the California Mortgage Bankers Association.”
Sort of like playing whiplash on the playground when you were a kid. If you were on the tail end you got whipped around pretty badly, and were usually the last one to get to the “starting point”.
There are still banks making stupid loans. I know of at least one instance as recently as a week ago. I think that there is an incentive because they are trying to raise capital and that borrowers are wising up to how to outsmart them and get into loans that have lower ‘up-front’ costs.
can’t resist…
“We are from the government and we are here to help” …” LOL
“‘One time we made too much; next time, we made too little. Whatever the case, they’d come up with another reason to turn us down,’ Teresa Olive said.”
Yes. You make too much to qualify for govt. assistance (so far), and too little to pay for a fixed rate mortgage on your over-priced investment. Welcome to the new middle class. Enjoy your stay, however brief it may be.
bink,
What angered me was the fact that there was PLENTY of people, time and resources to write these loans when they were getting PAID on them!
Now all of a sudden that the loans are defaulting they simply can’t handle the work load? I’m not buying it. Yeah, sure it sucks but these remaining lenders need to man up and git r’ done. In the “good times” they were writing billions in new loans every month. Now go back to the black board and re-do your homework! I’m so tired of it.
“What angered me was the fact that there was PLENTY of people, time and resources to write these loans when they were getting PAID on them!”
“Now all of a sudden that the loans are defaulting they simply can’t handle the work load? I’m not buying it.”
Given the types of loans they were making and the way they were making them (minimal underwriting), it was far less labor-intensive to make the initial loans than to go back later and work with investors to modify loan terms.
If there had been proper underwriting, many of those loans would never have been made and I suspect most that would have been made using stricter underwriting would still be performing and would not need to be modified.
SD Greg,
Oh I’m not going to argue that and I realize that’s why they call it a “rubber stamp”. But that doesn’t make it any less frustrating. In defense of that I will say;
Car dealerships aren’t exactly wild about warranty work ( but they have to honor it )
Come to think of it, since “buying a home is the biggest investment most people make” you’d think there would be more to the relationship than “Here’s your payment book, good luck”. In many cases I’ve had things replaced and repaired without even having to ask or pitch a fit!
You’re going to be paying 500-750K over the life of the loan and you get an automated/self-service system? I’d say anyone paying that kind of money over the next 20-30 years was a pretty good customer. (Evidently that doesn’t cut any ice with the REIC?)
You’re going to be paying 500-750K over the life of the loan…
– don’t forget interest.
I’m fascinated by the fact I have yet to see a single on-line mortage calculator have a function that shows the total cumulative dollar amount paid over the lifetime of the loan. All those linked to Realtor (TM) sites certainly don’t. A CCIM site might have one, but I have not seen it yet. In fairness, even the venerable HP-12c requires a few extra keystrokes to come up with a total.
Of course they’ll say they don’t have the people to process the calls. They wouldn’t dedicate people to a task that doesn’t make them money. More importantly, if they were honest and told their customers they simply do not qualify for a mortgage based on their income, and they never should have qualified in the first place, those customers will simply walk away. If they string them along they’ll at least have a chance of collecting a few more partial payments and they’ll have that many more loans that haven’t yet gone bad.
Why aren’t you buying it?
You can’t run a business that’s losing money.
It’s called going bankrupt.
The more you lose, the faster you go insolvent.
No, they don’t have the personnel. if they hired more, they’d sink.
“Countrywide would not comment on the case. ‘Our mission remains to assist our customers,’ the company said in a statement.”
Like many companies, their supposed mission sometimes differs greatly from what they actually do.
“You’ll have to pardon Jason Olive if he doesn’t think so. ‘What a crock,’ said the house framer, who worked as a subcontractor for various builders until the housing boom went bust. ‘I’ve never been given a runaround like that in my whole life.’”
“‘One time we made too much; next time, we made too little. Whatever the case, they’d come up with another reason to turn us down,’ Teresa Olive said.”
It sounds like it’s still impossible to get a straight answer out of Countrywide. That they’re supposedly “helping” one in five borrowers seems high. I’d be surprised if they’re helping one in five borrowers for those borrowers that are contacting Countrywide. Among all Countrywide borrowers I’d guess the number is a lot less.
Granted, there’s not much that can be done for a lot of Countywide borrowers given the types of loans they were making, but the “efforts” by Countrywide seem mostly intent on stringing borrowers along as long as possible to extract as much in payments as possible.
If you keep contacting them and providing them information as requested, you might be “lucky” enough to hit the moving target. However, at no time in the process do you know if you’re getting close or what you might need to do to get closer.
Most borrowers should put a firm deadline on how long they will try to work through this process before “walking”. Countrywide will string you along indefinitely if you let them.
SD Greg,
Excellent suggestion. Be it 3 mos. or 6 or whatever. It puts the lender “on notice” in several ways. Can we set up a web site called “I already walked away” ? That way investors as well as potential buyers could seperate the wheat from the chaff?
“Can we set up a web site called “I already walked away” ? That way investors as well as potential buyers could seperate the wheat from the chaff?”
While I like the idea, I’m not sure it would be all that helpful. Given the array of loan products, the range of borrower circumstances, and rapidly changing background conditions, what gets approval today may well not get approval tomorrow.
There seem to be few discernible patterns in lender actions thus far. Trying to make a forecast of future actions based on past actions under such circumstances is very difficult at best.
SD Greg,
Again, hard to argue. Where I feel it would be of use is for everyone from shareholders to bottom feeders as they are able to better guage just how dire a certain lenders situation is. While CFC has a link to their foreclosures it’s probably the tip of the iceberg.
This would be a better way for foreclosed FB’s to express their frustration than throwing a bowling ball through the wall?
“Want to really… get even with your lender as his “Hope” program?” Just let us know!
I realize there’s a lot of legal issues but the idea is to hold these lender’s feet to the fire.
Thank you for the additional explanation. With the examples you cited, a site with lots of stories from people that have dealt with lenders, especially from borrowers, could be very valuable.
We are told by lenders that most borrowers aren’t contacting the lenders before walking away. For those involved in intentionally fraudulent actions, that may be true. For others, I’m not so sure.
Lenders say they are trying to work with borrowers, but we see nothing but stories from individuals about the difficulty of working with lenders for loan modifications and the number that have been successful is tiny.
Policymakers need another source of information beyond the questionable public statements of these lenders. Such a site might fill that gap.
“‘Our mission remains to assist our customers,’ the company said in a statement.”
‘Oh, we missed our goals? Rest assured we will strive to do better next time!’
“…but the ‘efforts’ by Countrywide seem mostly intent on stringing borrowers along as long as possible in order to extract as much in payments as possible.”
BINGO! That’s exactly what’s it’s all about.
Keep the hope alive and keep those payments coming in, folks. The economy needs the money.
From the NPR interview discussing reform of rating agencies:
You know, the companies that issue these bonds pay the agencies to have them rated and some of these internal emails suggest that analysts were well aware of the agency’s need to win that rating business and the problem with that is there’s an incentive to give a higher rating than the security might have deserved.
This is the fundamental flaw of the current rating system. It’s like the appraisers who were blacklisted for not “delivering” the right appraisal for the banks. Risk management of exchange traded securities is something that needs to have some kind of incentive for wrong appraisals and there needs to be accountability.
If you don’t feel you can properly rate something because you’re too busy or don’t understand it, then DON’T RATE IT!!!
But.. then they wouldn’t make as much money.
IMO, this lies at the heart of how these CDOs got passed around the world. If these securities weren’t marketable as AAA, the credit crisis would have potentially never happened.
Naw, as long as OPM is used there will be a market for the junk.
A lot of people trusted AAA debt. It had the same rating as the US Treasury, scary as that is…
combotechie,
Not necessarily. Part of the problem was that much of this paper was shuffled off on institutions. ( You know, the “smart” guys ). This paper was hard to move retail. For the most part the yield still wasn’t attractive enough.
If you’ll recall the Income Fund of Boston returned something like 29% in 2002 with a 7-8% yield. Much of the retail dollar went into hi-yield bonds ( junk ). As someone mentioned earlier, the inst. viewed this as a “risk free” cash alternative. You can’t make that kind of claim when peddling it retail. Just an observation..
The mantra was “Real estate prices always go up”. As long as that belief was held then it didn’t make any difference what ratings were used; If a loan got into trouble all the noteholder need to do was to sell into the forever rising market and reclaim his money.
Maybe the rating agencies should be paid by counterparties instead of the banks issuing the bonds themselves. Sure, it will raise the costs of insurance, but it puts the burden where it should be…the companies that stand to lose the most if an improperly rated stock tanks.
combotechie,
Precisely. The loans were made on the property ( not to the people! )
The ULTIMATE Straw Buyer Scam!
Add the use of OPM (Other People’s Money) and the risk disappears completely for the OPM user.
He shares in the profits and someone else eats the losses.
How about making the rating agencies accountable by throwing the crooks in jail.
“Cox said ratings analysts were deluged with requests that were highly profitable to the agencies and their clients, and ‘the volume of work taxed the staff in ways that caused them to cut corners, that caused them to deviate from their models.’”
Nice job SEC. Like we didn’t already know that greed was driving the process. What’s wrong with a little oversight when it might be helpful instead of a belated report stating the obvious?
You should never put people in charge of a regulatory agency that have no interest in providing the oversight provided by that agency. When the fox is put in charge of the hen house, it shouldn’t be surprising when some hens turn up missing.
What? You want INTEGRITY? What’s with you, man?
This is heard just last week from relatives in flyover:
“Housing prices here won’t go down because they never went up like in California.” These people are 100% convinced they deserve $180,000 for their terribly outdated starter 1200sft POS. Funny thing is I grew up there and remember you could buy a brand-new 2,000sft box for $70Ks in early 1990s. Funniest part is this is in a 100% blue collar area of St Charles, MO where most people drop out of high school and work in construction or auto factory, and Chrysler just announced 1.5 plant closings there.
From a different nondescript midwestern city “Housing is slowing. Everyone wants to move here but can’t sell their houses back home.”
Sunday with friends,early 60’s. Contractor/construction guy..mostly out of work now.
Eeeck, How would that feel or does that feel when that is all you know or set yourself up for to make money from.
“Housing prices here won’t go down because they never went up like in California.”
Ask them what a typical house there costs now and what it cost 10 years ago. Then ask them how much typical wages are. If prices are out of line with historical price to income ratios, they bubbled.
The same types of risky financing and fraud that occurred in places like California and Florida occurred in many other places to varying degrees.
Nah, that would require a brain to respond. BTW are you the guy that recommended drinking 12 keystone lights?
Get used to that lame excuse. I hear it ALL the time. You’ll find it used liberally outside of CA, FL, NV and AZ…. basically most of the country.
“It’s well worth the wait to save astronomical amounts of money”
6 month.
Well, if only some of the early Knife catchers had that sense!
Some people have bad fashion sense.
Some people are lazy sloths.
Some people think triathlons are fun.
Some people never saw a “deal” they can’t pass up.
They are all a vital part of the food chain — let knife catchers be knife catchers. Their stupidity makes our lives a little easier.
“‘It needed £10,000 [$20,000] of work, so we took off £10,000 and [the seller] wasn’t very happy. If we don’t find [a place to buy] by the end of July, we’ll rent for another six months,’ he said. ‘It’s well worth the wait to save astronomical amounts of money.’”
YOU FOOL! You are going to rent for another six months? Try renting for another three years–then you will really save astronomical amounts of money.
Keep the popcorn popping,
Red Baron
Well, Red Baron, I’m beginning to think I may not have any money to worry about in 3 years. Will the FDIC have enough money to pay off account holders when the banks start dropping like flies? Is 50 billion going to cut it? I don’t think so.
The FDIC will have enough money, but only because the government will be printing it like crazy.
I will repeat my tips for the surviving the depression that has already started–do them and post them on your refrigerator:
1. Get and keep a job.
2. Rent or live in an RV so you can mobile for your job.
3. Save at least 25% of your after-tax income.
4. Eliminate debt unless you could pay it off if you lost your job.
Keep the popcorn popping,
Red Baron
More than half of the Fed’s balance sheet is already committed. When the Fed runs out of money on its balance sheet to bail out financial institutions, it will simply print money.
What investors are only beginning to realize is that many large banks, brokerages, and other firms are technically insolvent. In that group, I would include Citigroup, Ford, GM, Lehman Brothers, National City, Wachovia, and Washington Mutual.
What is going to happen is that banking in the US is going to be nationalized, just as it was in Scandinavia in the early 1990s. Getting from there from here is going to be very painful.
Keep the popcorn popping,
Red Baron
‘When the Fed runs out of money on its balance sheet to bail out financial institutions, it will simply print money. What is going to happen’
You know, when people start “telling” me whats going to happen, my BS alarm goes off. If you can’t explain these things, it no better than those crackpot newsletters people read in their bunkers. I’ve been hearing this stuff for 30 years.
This is related - for entertainment purposes only, I quote Russ Winter’s recent response to someone claiming Wachovia was not the walking dead.
“Russ Winter wrote:
#7
WB has $121 billion in option ARMs, Alt A, and subprime exposure against about $31 billion in exaggerated equity. That’s a disaster in my book… They also have about $23 billion in HELOC, and builder loans. High risk exposure constitutes 460% of capital, see Citigroup data.
Posted on 08-Jul-08 at 10:46 am”
******
From Russ Winter - The Wall Street Examiner:
http://wallstreetexaminer.com/blogs/winter/?p=1765
Citigroup data showing Wachovia at 460% “High Risk Assets vs. Tangible Equity” (highest ratio); the banks average 188% (others here, too):
http://wallstreetexaminer.com/blogs/winter/wp-content/uploads/highrisk.png
It does help to sell the books and DVDs.
Predicting that the population as a whole is simply going to muddle on through, not so much.
For the record, I am not selling books, DVDs, or anything else. If I were selling something, there are a lot better way to do so than posting anonymously on a blog without mentioning any products whatsoever.
If you look through my posts, I have never predicted the end of the world or anything of sort. Life will go on in this depression, just like it did in the Great Depression.
Keep the popcorn popping,
Red Baron
Banking getting nationalized? I highly doubt it. But it does seem that the Treasury could shore itself up by raising interest rates, which would have the additional benefit of convincing J6P that he should be saving money and depositing it in the bank. With long term treasuries and aggressive cost cutting (starting with the Iraq War) and aggressively curing the deficit (by taxing appropriately), they might even be able to offer some pretty attractive yields.
#5 Grow your own food, or some of it.
FDIC or no, it seems to me that the dollar is tanking almost as fast as housing, in real terms. Why wait 3 years for housing to drop the last 30%, if the dollar is going to drop 30% as well?
Another out of state bank got stucco with Florida condos?
_____________________________________________________________
“Regions Financial Corp., the largest bank based in Alabama, is facing a $23 million loan default related to a Florida condo development.”
“The Palms of Riviera Dunes, in Palmetto, Fla., owes the $23 million, according to a Regions lawsuit filed in that state’s Manatee County. Regions, which operates in 16 states, wants to take control of the property and sell it to recoup the lost money.”
“The Palms of Riviera Dunes, in Palmetto, Fla., owes the $23 million,”
I didn’t do it!!!!!!!!
I thought people were presumed guilty, in Florida?
“According to Rendell, the Poconos and the Reading area were the two places that had ‘the most horrendous outcomes’ from mortgage fraud, although the scenarios were different.”
“In the Poconos cases earlier this decade, hundreds of families, many first-time buyers from New York, bought homes at inflated prices that fell into foreclosure, spawning civil and criminal cases.”
Wow. I seem to recall the someone on this blog posted a link, seems like a year ago, about HOAs in the Poconos and how they were infested with crime exported from the NY area, courtesy of the housing bubble. In fact it was a pretty scary story, how homeowners were locked into these communities, gated and otherwise, that had gang activity and break-ins, and where the local constabulary refused to help in some cases, leaving it up to the HOA to handle.
Gangs in the Poconos! What happened to the heart shaped bath tubs ?
The Mean Streets of Wall Street aka living beyond your newly depleted means…let’s all get out our tiny violins:
http://tinyurl.com/5me3ca
More like our nano violins.
No violins here, got a bass and a guitar and I could sing the blues. BTW, the way I sing is slightly better than Yoko Ono.
“We do not believe that there is any value left for common shareholders”
BUHAHAHHAHAHAHAHA!!!
ummm….YAH THINK!!!!!!!!!!!
November 2006
“Big Bonuses Seen Again for Wall Street,” says the New York Times.
“Never in the history of Wall Street have so many earned so much in so little time,” adds a Bloomberg report.
“Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos. are about to reward their 173,000 employees with $36 billion of bonuses. That’s a 30% increase from last year’s record, and it doesn’t include the billions more that will be paid by Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co., the three largest U.S. banks, as well as the hundreds of hedge funds and
private-equity firms that constitute the financial industry.
“Enriched by the unprecedented value of takeovers, equity trading and credit derivatives, this year will be the best ever for the major brokerage firms,” said Brad Hintz, an analyst at New York-based Sanford C. Bernstein & Co.
“The average windfall for each individual at the five largest U.S.
securities firms will be enough to buy a $165,000 Bentley Continental GT, the two-door coupe favored by Nikki Hilton and Cher. They’ll have plenty of change for a box of Romeo y Julieta cigars and a case of Pol Roger champagne - the stuff enjoyed by Winston Churchill, Britain’s prime minister in the 1940s and 1950s.”
Tiny Violins!
The visions this inspires. LMAO
Wow! Nice market dump. Still holding above the lows though.
I wish I could say I cared.
It’s beginning to sound like a song with a familiar tune:
Chorus:
Row, row, row your boat gently down the Dow, merrily merrily, merrily life is but a trade
Refrain:
Still holding above the lows though…from two weeks ago!
Debussy: “music is the space between the notes”
Yesterday you said the Market Lows were in. Today you don’t care?
“The scaleback at IndyMac is the latest aftershock from the subprime mortgage collapse. Early last year, a hedge fund that had bought IndyMac mortgages as investments, hired Melville-based Continental Home Loans on a trial basis to call hundreds of borrowers to see whether they could work out options on delinquent loans.”
“But more than 90 percent of the loans were beyond saving, said Michael McHugh, head of Continental, and the trial ended two months later. IndyMac then tried to turn itself around by building up its retail business, where it had more control over who could get loans.”
“‘Trying to switch to retail was like turning an aircraft carrier around in a pool,’ McHugh said. ‘It’s a shame. I hate to see companies leave the market right now. We need investors and we need choices.’”
No…..we don’t need either one. We need fewer investors and fewer choices. All the investors and choices created this problem in the first place! We need less of everything - fewer real estate brokers, mortgage brokers, and contractors.
Go back to the old days when you verified income and assets and you had to put at leat 10% down - and if you did put 10% down, you had better have been in your job a long time and have lots of other assets. It’s not that difficult to have a stable financial system people, just use a little common sense.
By the way we also need fewer big box electronics retailers, fewer discount stores, fewer home improvement stores, fewer trendy clothing stores, fewer coffee houses, fewer chain restaurants, etc….etc….etc….. this “shopping” culture has got to stop….
So if the “shopping culture” stops and people aren’t buying things, what’s going to fuel the economy? If businesses aren’t selling stuff, they won’t hire and people won’t have money to buy and the economy will spirla into a total collapse.
Oh wait - we’re pretty much on our way now…..
The Greater Depression!
Quote: No…..we don’t need either one. We need fewer investors and fewer choices. All the investors and choices created this problem in the first place! We need less of everything - fewer real estate brokers, mortgage brokers, and contractors.
Actually, there is one thing that we need more of: people who actual produce goods and services.
Unfortunately, that’s the one thing that our government strongly discourages. We should abolish the income tax, and use the capital gains tax to make up for any shortfalls. That would cut back on all these bubbles.
If you’ve seen The Palms at Riviera Dunes, you know just how much of a bath Regions is going to take on it.
Palmetto is Biloxi, MS, without the gambling and class.
Soon, the illegals will be roaming the halls and stealing everything that’s not bolted down. It will be as bad as a south Chicago housing project tower was in the 70’s.
“Countrywide referred them to its own Hope department”
“six months later” “The Hope people were hopeless Teresa Olive said”
What does the Hope department at Countrywide do? Hope Angelo Mozzillo has fun spending all the money he made selling Countrywide stock while going on T.V, and telling all his investors everything is fine. That guy should be in jail.
Hey Mr. Hoz, how many icon names are hitting “decade lows”? Is there a list for that or does Warren just keep a pencil & note pad in one of his pockets?
GM, Ford, NY Times, etc. etc. etc. said the King of I
Oh, and how come he is hardly ever selling one of his companies?
He’s quite the Wasscally Wabbit ain’t he?
Last Call: New York Times shares tumble, hit low:
http://biz.yahoo.com/ap/080709/new_york_times_last_call.html
Mr. Buffett uses a pen. Pencils are for amateurs.
Everyone of Mr. Buffett’s companies is for sale. Make a bid.
What you’re sayin’ he has wishful listed prices?
I thought he used those free little one’s you get at the golf course or local library…you know…the one’s without an eraser!
Federal Reserve Chairman Ben Bernanke announced a crackdown Tuesday on the exotic loan products offered to risky borrowers that fueled the housing boom.”
Well Wilbur. Let’s shut the barn door now to keep the horses in. Never mind that they escaped a long time ago and we haven’t seen em in so long we have no idea where they went. But at least we can tell Ma we did something. That will make her happy.
Federal Reserve Chairman Ben Bernanke announced a crackdown Tuesday on the exotic loan products offered to risky borrowers that fueled the housing boom.”
————————————————————–
Whoa….wait a second……is BB inferring that A. Greenspins policies were wrong….perhaps event corrupt?
“You’ll have to pardon Jason Olive if he doesn’t think so. ‘What a crock,’ said the house framer, who worked as a subcontractor for various builders until the housing boom went bust. ‘I’ve never been given a runaround like that in my whole life.’”
You wouldn’t have gotten the “runaround” if YOU MADE YOUR FRIGGIN’ PAYMENTS.
What do these people expect? A hug and a juicebox?
Like the reference. My cousin was in the original cast of The 25th Annual Putnam County Spelling Bee on Broadway.
I saw the original cast twice. (Once on a “Parent Teacher’s Night” conference!)
Maybe we should have Comfort Counselor Mitch Mahoney spend some time with the FBs! It would be a great way to provide employment to parolees…
You know I wrote a joke jingle the other day that contained “or one day soon we`ll be shootin at our food” But I just cought the end of the CBS news and they had a guy on that had taken up bow hunting to put food on the table.