The Housing Bubble

A Busy week at the radio station. Still very little green shoots from the street. People are still doing their radio shows and hoping for better times ahead.

2 apartments on my street are still for rent (3months) I guess the LL would rather they be empty then lower the price.

$hi**ybank tried to pull a fast one by making the payment date on my CC on a Sunday. I wonder how many paid on Monday (next business day) and were charged late fees?

True confession: I thought the housing bubble would be so far deflated by now that the story of the collapsed bubble would be as boring as dentistry. Little did I know that Uncle Sam would pursue all-out bubble reflation, to be played out as a fight to the death between Mr Market and government intervention.

Spoiler alert: In the long run, Mr Market always wins.

Is this the program among those the Treasury Secretary recently announced would not be rolled out until at least a year from now?

U.S. Plans Big Expansion in Effort to Aid Homeowners
By DAVID STREITFELD
Published: March 25, 2010

The Obama administration on Friday will announce broad new initiatives to help troubled homeowners, potentially refinancing several million of them into fresh government-backed mortgages with lower payments.

House keys representing distressed homes were displayed at a hearing Thursday of the House Oversight and Government Reform Committee on preventing home foreclosures.

Another element of the new program is meant to temporarily reduce the payments of borrowers who are unemployed and seeking a job. Additionally, the government will encourage lenders to write down the value of loans held by borrowers in modification programs.

The escalation in aid comes as the administration is under rising pressure from Congress to resolve the foreclosure crisis, which is straining the economy and putting millions of Americans at risk of losing their homes. But the new initiatives could well spur protests among those who have kept up their payments and are not in trouble.

The administration’s earlier efforts to stem foreclosures have largely been directed at borrowers who were experiencing financial hardship. But the biggest new initiative, which is also likely to be the most controversial, will involve the government, through the Federal Housing Administration, refinancing loans for borrowers who simply owe more than their houses are worth.

About 11 million households, or a fifth of those with mortgages, are in this position, known as being underwater. Some of these borrowers refinanced their houses during the boom and took cash out, leaving them vulnerable when prices declined. Others simply had the misfortune to buy at the peak.

Many of these loans have been bundled together and sold to investors. Under the new program, the investors would have to swallow losses, but would probably be assured of getting more in the long run than if the borrowers went into foreclosure. The F.H.A. would insure the new loans against the risk of default. The borrower would once again have a reason to make payments instead of walking away from a property.

Many details of the administration’s plan remained unclear Thursday night, including the precise scope of the new program and the number of homeowners who might be likely to qualify.
…

New American
Housing: Washington Only Delaying Inevitable
Written by Bob Adelmann
Friday, 26 March 2010 20:30

home foreclosureFriday’s announcement of more intervention in the housing mortgage market will result in a deeper, longer, and more painful delay in the inevitable decline in housing prices that are necessary to clear the market. According to the Obama administration, the “broad new initiatives” will help troubled homeowners to refinance their existing mortgages with more favorable affordable ones provided directly by the government. Part of the new program is “meant to temporarily reduce the payments of [those] borrowers who are unemployed [but are] seeking a job.” In addition, the enhancements include inducements to “encourage lenders to write down the value of loans [already] held by borrowers in modification programs.”

In simple English, HAMP (the Home Affordable Modification Program), announced with great fanfare and high expectations early on in the Obama administration, isn’t working, and so more of the same is required. The original intent of HAMP was to “better assist responsible homeowners who have been [negatively] affected by the economic crisis through no fault of their own … and to help more people who owe more on their mortgage than their home is worth.”

Despite claims from the Treasury Department that “more than four million homeowners have refinanced their mortgages to more affordable levels…[and] more than one million are saving … over $500 per month through the … program,” the program “continue[s] to see challenges.” And so, the new program enhancements “will provide more opportunities for lenders to restructure loans for some families.”
…

It took no time whatever for bailout-stimulated moral hazard to come to fruition. I predict more bubbles and bailouts to come before we leave the woods of this manic episode in financial history.

Bankers return to their bad habits
By Francesco Guerrera
Published: March 26 2010 17:23 | Last updated: March 26 2010 17:23

After spending a week in Hong Kong talking to bankers and other assorted grandees, I am beginning to question whether the financial crisis actually happened.

I am pretty sure that the collapse of Lehman Brothers, the near-failure of AIG and the dance of death performed by Citigroup, Morgan Stanley and Goldman Sachs in 2008 were not figments of my imagination.

But after listening to the regional heads of large Wall Street and European firms extolling the virtues of fast-growing economies, speaking admiringly of bulging “deal pipelines”, and spouting clichés about the “world moving east”, one does wonder about the short-term memory of some financial wizards. All the talk in the glass-clad skyscrapers overlooking Hong Kong’s magnificent harbour was of the princely pay packages commanded by star bankers moving firms. In a week in which Kenneth Feinberg, the US “pay tsar” announced a retroactive probe into the compensation of Wall Street executives during the crisis, Asia’s financial titans could not stop swapping stories on the size of the bonuses being paid to new recruits.

Some even tried to claim that the industry was showing admirable restraint by limiting “guaranteed bonuses” – an oxymoronic ruse to lure coveted bankers – to “just” one year instead of the two or three popular before the crisis.

The disconnect between this Asian exuberance and the restraint preached by regulators (and begrudgingly espoused by banks in Europe and the US) is partly explained by the physical distance between the region and the crisis’s epicentre.

In the words of an old Chinese adage on the power of local governments, “the mountains are high and the emperor is far away”.

The fact that Asia played a smaller role in the financial meltdown, and that its growth prospects are vastly superior to that of the Old World, also helps to explain the diverging moods. But the return of big pay cheques and aggressive hiring is also symptomatic of the broader malaise of an industry that stubbornly refuses to learn from its mistakes.

During the turmoil and its aftermath, Wall Street’s titans solemnly declared that the crisis had put paid to many bad habits.

Uneconomical lending, outsized pay packages and the reckless race to the regulatory bottom – we were assured – would go the way of the dinosaurs.

Today, those words ring sadly hollow.
…

Housing bubble ravages Hemet, CA. Send in the gangs!

“As the years went by, the gracious old homes with stately shade trees gave way to cookie-cutter tract houses and strip malls. Young families searching for affordable housing flocked here, swelling the population to more than 70,000.”

http://articles.latimes.com/2010/mar/25/local/la-me-hemet26-2010mar26

Years ago I read an article in the Atlantic Monthly about how soulless housing and zoning destroys communities and the individual spirit.

What we are seeing is failed political leadership. Nobody has the heart to tell the American people how deep the problems are. We are still in denial. Our president continues to spend money hoping to get past the next election. It looks like he might make it.

I hear a lot of snide comment about the Teabaggers. Granted they are a motley crew. At least they are trying to get engaged in the political process. I would rather have people question our government and then act than to have internet posters blog ad infinitum how the Teabaggers don’t represent them.

There’s going to be a lot of quite surprised folks here and everywhere , as this economy comes roaring back . Sure , housing may not be a part of it , as houses return to the historical status of a place to live in , not a piggy-bank of sorts . So what is going to drive this new spurt in the economy ? Wish we knew , so we could get on the band-wagon early . And then get off with pockets full at the apex .

This is where I lose the guy. Why would banks which are too big to fail ever need to worry about self-restraint, so long as they know that in a worst-case black swan event, sovereign governments stand ready to transfer their bad gambling debt to the currency base?

P.S. His first sentence suggests Wall Street’s Megabank, Inc has yet to exit the denial stage of the financial meltdown.

The Financial Times
Bankers return to their bad habits
By Francesco Guerrera
Published: March 26 2010 17:23 | Last updated: March 26 2010 17:23

After spending a week in Hong Kong talking to bankers and other assorted grandees, I am beginning to question whether the financial crisis actually happened.
…
Even in their current interventionist mode, governments and watchdogs cannot really tell banks how to lend funds or recruit staff. On this one, financial firms and their investors are on their own. If the industry wants to regain the public trust lost during the crisis, it will have to perform a feat it has rarely achieved in the past: trade off some profits for self-restraint.

francesco.guerrera@ft.com

Bank Failure Friday (BFF) Report:

March 26, 2010 saw the FDIC make a return to the land of Waffle House for two more banks out of Georgia, in addition to shutting down one bank each in Florida and Arizona. The last BFF of March (and the quarter) brought the total of failed banks in 2010 to 41, which compares to a total of 21 failed banks shut down as of the last calendar BFF in March 2009.

The pace of FDIC shutdowns in 2010 is 95% higher than that of 2009. If the current relative pace of FDIC shutdowns continues this year at the same pace as it has the first quarter, 2010 will see a whopping 273 bank failures compared to 140 last year.

$14 bn sounds like small change compared to the untold magnitude of the underwater problem.

Posted: March 27, 2010
U.S. to increase housing loans
$14 billion to help jobless owners refinance via FHA

BY GRETA GUEST
FREE PRESS BUSINESS WRITER

The Obama administration said Friday that it would widen the reach of its home loan modification program, which could help thousands of unemployed and underwater Michigan homeowners.

The Home Affordable Modification Program, criticized for its slow pace and low number of modifications, would put $14 billion toward the program by helping those who owe more on their homes than they’re worth get new loans backed by the Federal Housing Administration. Unemployed people would get a temporary break, with lowered mortgage payments for three to six months.

The FHA refinancing program would be available to those with credit scores as low as 500, said Vince Parlove, president of First Preferred Mortgage in Bingham Farms. The programs are expected to be available in the fall.

Drew Sygit, a certified mortgage planning specialist who leads the Lending Edge Team at First Michigan Bank in Troy, said the plan sounds great on paper. But he expects it would take months to roll out and could be difficult for banks to execute.

Mark Zandi, chief economist at Moody’s Economy.com, said the changes could spare 1 million to 1.5 million homeowners from losing their homes. And it could end the housing crisis earlier than expected.
Struggling homeowners eager for aid

Heidi Lucken, who has been working to save her Oak Park home for the better part of five years, was hopeful Friday that the expanded federal government loan modification program could help her stay.

Lucken, who lives in the three-bedroom, 1.5-bathroom house with her two sons, said the home that she bought in 2002 for $107,500 is now worth $55,000. She has been laid off, rehired and is now on a medical leave from her human resources job. She was granted a temporary loan modification last year, but has been waiting for something permanent.

“I’m hopeful about it for everyone,” Lucken said.
…

I found this genus, Peter Atwater, spewing his special brand about banking regulation.

I took a close look at what he wrote. Nowhere in this piece did he mention transparency. Instead he says “But as a consequence, depositor due diligence is non-existent. ”

Transparency? He wants to eliminate FDIC insurance and leave someone like me at the mercy of lying, corrupt bankers. I know my limits. I cannot hope to intelligently and forthrightly determine the viability of my local bank much less a Cap One, Am. Bank, G-S, etc. I cannot compete and will be taken to the cleaners and left broke by these sharks. Worse, it will be perfectly legal for them to do this.

Atwater is advocating that no financial regulations be imposed at all. This lunacy clearly shows that the investment bankers are less into supplying money for good business projects and enterprises and more into making the “skim” as large as possible.

If there where ever an individual who needed some serious prison time, this corrupt, stupid, “screw up” Peter Atwater is the poster child. He should be in for an extended stay at a SHU somewhere. Let him throw his waste at the guards and suffer the consequences at their hands rather throw his brand of “reform” at me. I don’t have the power to protect myself from his kind. He and his kind will kill - literally murder - with a banality that chills me. No, I’m not overstating this. He wants to impoverish people who cannot fight back.

Here are a few excerpts:

Five Suggestions for Banking Reform
by Peter Atwater

“First, as a public service announcement, I must preface my comments with the explicit request from the Treasury Secretary that you not listen to me.”

“You see, I’m all but certain that my 10 years building JPMorgan’s (JPM) securitization business during the late 1980s and early 1990s likely qualify me as one of the early “masters of noble financial innovation” whom Mr. Geithner earlier this week explicitly requested that you “listen less to” during this period of time that banking reform is being debated.”

“First, as much as I admire Mr. Volcker and the noble intentions of the “Volcker Rule,..”

“Banks, insurance companies, money managers, hedge funds, and broker dealers are all in the same business — they take someone else’s money and do something with it all with the hopes of making money in the process. Until we have uniform rules (globally too), I assure you we’ll have regulatory arbitrage, which results in failed oversight.”

“Second, and at the risk of being bold, I believe the time has come to eliminate FDIC insurance.”

“… depositor due diligence is non-existent. And putting Wall Street aside, this crisis has shown, even with specific oversight, hundreds of now-failed banks took excessive risk in their traditional banking businesses and their insured depositors neither cared nor were adversely impacted. Their risk was borne by the government, while they earned returns far in excess of comparable US Treasuries. If we’re truly going to eliminate “moral hazard”/”too big to fail” we must eliminate deposit insurance in the process.”

“Third, we must demand that the rating agencies disregard “systemic support” when ascribing debt ratings. ”
…
‘Fourth, we must repeal the “Levitt Rule.” ‘
…
‘ Finally, our regulators must act courageously. This past week Moody’s wrote:

“We observe … that the current regulatory regime is already authorized to protect the soundness of banks and the financial system as a whole. In addition, the current banking laws give bank regulators the power to have banks cease and desist from activities and to require banks to have higher capital ratios. Thus, we believe that the benefits of a revamped regulatory regime will depend more upon how regulators implement and execute the law — rather than depend on the words of the law itself — because the proposed regulatory framework doesn’t appear to be significantly different from what exists today.” ‘

The link is on Yahoo Financials. I won’t post the link.

So he wants to continue TBTF and turn the spotlight away from WS and onto the local banks. The FDIC is doing its job. What more can I say?

I cannot express how angry I am. I’m glad for Ben and this blog. I can express my anger in a legal and civilized manner.

Roidy

What next? Will any CEO who suspects ObamaCare will increase his company’s health care costs have his freedom of speech rescinded by the constitutional law scholar in the WH?

I want to rescind my Fall 2008 vote.

* The Wall Street Journal
* REVIEW & OUTLOOK
* MARCH 27, 2010

The ObamaCare Writedowns
The corporate damage rolls in, and Democrats are shocked!

It’s been a banner week for Democrats: ObamaCare passed Congress in its final form on Thursday night, and the returns are already rolling in. Yesterday AT&T announced that it will be forced to make a $1 billion writedown due solely to the health bill, in what has become a wave of such corporate losses.

This wholesale destruction of wealth and capital came with more than ample warning. Turning over every couch cushion to make their new entitlement look affordable under Beltway accounting rules, Democrats decided to raise taxes on companies that do the public service of offering prescription drug benefits to their retirees instead of dumping them into Medicare. We and others warned this would lead to AT&T-like results, but like so many other ObamaCare objections Democrats waved them off as self-serving or “political.”

Perhaps that explains why the Administration is now so touchy. Commerce Secretary Gary Locke took to the White House blog to write that while ObamaCare is great for business, “In the last few days, though, we have seen a couple of companies imply that reform will raise costs for them.” In a Thursday interview on CNBC, Mr. Locke said “for them to come out, I think is premature and irresponsible.”

Meanwhile, Henry Waxman and House Democrats announced yesterday that they will haul these companies in for an April 21 hearing because their judgment “appears to conflict with independent analyses, which show that the new law will expand coverage and bring down costs.”

In other words, shoot the messenger. Black-letter financial accounting rules require that corporations immediately restate their earnings to reflect the present value of their long-term health liabilities, including a higher tax burden. Should these companies have played chicken with the Securities and Exchange Commission to avoid this politically inconvenient reality? Democrats don’t like what their bill is doing in the real world, so they now want to intimidate CEOs into keeping quiet.
…

EDITORIAL: $12,670,895,780,689
Runaway public spending endangers America’s future

“Massive, abstract numbers such as these defy comprehension. It’s far easier to grasp their personal impact: The share of the enormous total debt figure for each American household is $120,125.”

“The current debt, however, is the least of our problems. According to the Social Security and Medicare trustees, Social Security has made $17.5 trillion in future promises that it has no money to fulfill. Add to this amount Medicare’s unfunded liabilities of $89.3 trillion, and the grand total is $106.8 trillion. That means each household’s share of current and future debt is a staggering $1.1 million. ”

“This trajectory is obviously unsustainable”

Nuff said, we need to stop the spending yesterday.

Lip

Ignore this Nobel Prize winning economist; after all, he is not a member of the Obamanomics Dream Team!

P.S. I like how this Op-ed piece touches on the popular practice of blaming the recent financial meltdown on “free markets.” Even Adam Smith, father of capitalism, never suggested one could have a functioning market economy without a rule of law. Equating a banking system that operates outside the rule of law with “free markets” is a dangerous straw man which should be repudiated every time it appears in print.

* The Wall Street Journal
* OPINION: THE WEEKEND INTERVIEW
* MARCH 27, 2010

‘Basically an Optimist’—Still
The Nobel economist says the health-care bill will cause serious damage, but that the American people can be trusted to vote for limited government in November.

By PETER ROBINSON

Stanford, Calif.

“No, no. Not at all.”

So says Gary Becker when asked if the financial collapse, the worst recession in a quarter of a century, and the rise of an administration intent on expanding the federal government have prompted him to reconsider his commitment to free markets.

Mr. Becker is a founder, along with his friend and teacher the late Milton Friedman, of the Chicago school of economics. More than four decades after winning the John Bates Clark Medal and almost two after winning the Nobel Prize, the 79-year-old occupies an unusual position for a man who has spent his entire professional life in the intensely competitive field of economics: He has nothing left to prove. Which makes it all the more impressive that he works as hard as an associate professor trying to earn tenure. He publishes regularly, carries a full-time teaching load at the University of Chicago (he’s in his 32nd year), and engages in a running argument with his friend Judge Richard Posner on the “Becker-Posner Blog,” one of the best-read Web sites on economics and the law.
…
I begin with the obvious question. “The health-care legislation? It’s a bad bill,” Mr. Becker replies. “Health care in the United States is pretty good, but it does have a number of weaknesses. This bill doesn’t address them. It adds taxation and regulation. It’s going to increase health costs—not contain them.”
…

The more I read this, the more I can`t believe they are saying this about the same people who were masters of the universe for buying or owning a house in 2005. I listened to them brag about how much money they had made and how much more they were going to make. Some of the same people who told me and my kids that I would never be able to own a house, and now we have “prevention for responsible homeowners, who, through no fault of their own find themselves in a situation of negative equity,”

By Kimberly Miller
Palm Beach Post Staff Writer
Updated: 9:06 a.m. Saturday, March 27, 2010

The Obama administration announced more assistance Friday for underwater and unemployed homeowners, saying the foreclosure crisis has shifted from volatile subprime loans to “hardworking” people.

Changes in the year-old Making Home Affordable mortgage modification program could be particularly significant in Florida where nearly half of all home loans are underwater and the 12.2 percent unemployment rate is well above the national average of 9.7 percent.

Under the plan, lenders will be required to consider cutting balances on loans where the borrower owes more than 115 percent of what the home is worth. Lenders will receive incentive payments for each dollar of principal reduction.

Unemployed homeowners can receive up to six months of cut-rate mortgage payments, while as much as $3,000 in relocation assistance will go to borrowers who ultimately cannot afford to stay in their homes.

The plan will also allow some underwater borrowers who can prove financial hardship to refinance through the Federal Housing Administration with lower interest rates and principal reductions.

“This will focus on affordability and foreclosure prevention for responsible homeowners, who, through no fault of their own find themselves in a situation of negative equity,” said FHA Commissioner David Stevens.

Administration officials said Friday the changes to the

$75 billion federal foreclosure-prevention program will not require additional tax money, but should help the program’s initial goal of reaching between 3 million and 4 million homeowners.

But critics of the program say the changes are not enough to save a plan that isn’t geared to fix today’s problems.

The eligibility requirements for a modification are largely the same, and the government is just asking banks to consider principal reductions first, rather than after other options such as extending the life of the loan or interest rate reductions, said Shari Olefson, a Fort Lauderdale attorney and author of the book, Foreclosure Nation, Mortgaging the American Dream.

“There is so much confusion and the more I learn the more I realize this program is doing more harm than good and they should just scrap it,” she said. “The big problem is people still don’t know how to navigate the system and the banks are overwhelmed.”

As of last month, 170,000 homeowners nationally had received permanent loan modifications.

I was born a poor black child. “The Jerk,” Steve Martin

‘Hardship letter’ key to loan modification

By Kimberly Miller
Palm Beach Post Staff Writer
Posted: 9:03 p.m. Thursday, March 25, 2010

Banks aren’t big fans of ultimatums, especially when they’re being asked for a favor.

But Robert Quesada, over his head in debt and underwater in his mortgages, said his first letter requesting a reduction in his monthly home payments may have come off a little like a challenge.

“You are just so overwhelmed with your situation, you say, ‘I’m willing to do this under these terms or you can just keep the house,’ ”

But weaving a persuasive tale of financial woe that quickly communicates the facts while eliciting a certain amount of sympathy is no easy task.

“People don’t think about that because they just want to tell their story,” said Paul Baltrun, director of loss mitigation for LaBovick & LaBovick.

Baltrun suggests making the letter about one page, and including specific dates of events that led to the hardship, such as loss of a job, or illness.

But don’t give too much information about medical conditions, cautioned Jonathon Ende, CEO of FreeHampReport.com, an online guide to filling out loan modification applications.

One bank spokesman, who didn’t want to be identified, said sob stories aren’t as effective as just stating the bottom line. Bank employees don’t have time to read through soap opera-style tales.

Nancy Norris, spokeswoman for Chase, said sticking to the facts is best.

“Writing the letter seems to be very difficult for people,” she said. “It’s a very emotional topic and can mean rehashing some bad parts of their lives.”

One thing everyone seems to agree on is not to insult or chastise the bank.

Jeni McGowan has written four hardship letters in her more than yearlong attempt to get a modification for her Acreage home.

She’s chronicled her husband’s fight with renal cell carcinoma and the removal of his kidney. She’s written about the couple’s bankruptcy and her property’s plummeting value.

Earlier this year, McGowan learned her request was granted. But she’s not especially pleased with her savings — $154 each month.

“Did it help?” she said about her letters. “I don’t know if anything helped.”

This Health Care System isn’t based on supply and demand Capitalism but
rather a insurance system . In addition the system was tied to the Employer giving lessor wages to provide the benefits of Health Care .

Whatever the system was it became corrupted and the costs are exceeding the price of that which is affordable to the Majority .

I don’t see yet how this new Health Bill has solved the problem of costs .I don’t see how this Health Care Bill solves the problems by maintaining the
price fixing of Insurance companies and the ability of them to pass high risk pools to the government (or by taxation of segments of the population ) while keeping the overpricing of policies .

A National Health care single payer system with price controls seems to be the answer for the future . Since the system can never be under a
Capitalism supply and demand system and its a insurance system ,than the least costly insurance system would be the answer ,maybe .

In other words the Insurance system would charge the healthy to cover the unhealthy . Now it comes into play that money will be extracted from economic sectors of the population to compensate (as in charging
the upper middle glass more for their policy than the lower middle class)

So now its not only the healthy paying for the unhealthy but the economically able will be taxed to compensate for the unhealthy .

Can’t they just come up with a National Health care tax and that way
the costs are spread out more even ? A system like this would have to be in conjunction with price control on the costs of Medicine and Pharmacy ,
I know that this is anti-capitalism ,but the price fixing private insurance monopolies with all their bad faith are even worse .Private Insurance Companies have become a oppressive force to the point that they interfere with the Doctor/patient relationship ,just as Defensive medicine has increased costs and lowered efficiency .

I don’t know if anyone noticed, but in broke California, last week they proposed an additional $200M in tax credits for people to buy new homes and for first-time buyers. That follows on the heels of a $100M similar program about a year ago.

Face it, this bubble is never going to deflate in line with fundamentals. I’ve been on here since 2005, and as much as I love the commentary, Ben has been saying that either (a) the federal government wouldn’t directly bail out people in all this and (b) even if they did, it would not be effective. I think everyone truly underestimated the resolve and the political courage to subsidize “entitled” struggling homeowners.

Prices are going back up. In my community of Eureka, California, prices only dropped 15% and have been heading back up. The government will stop at nothing to boost home prices. It doesn’t matter if the “owners” of these homes are unemployed, tapped-out, etc. The government will continue to roll out ever more aggressive and costly programs to keep people on unemployment payments, welfare, food stamps, housing credits, etc.

We lost. And rather than being bitter about it–as I am–it is probably more productive to do other things than be angry. They are going to win this fight…they people who HELOC’ed themselves and bought multiple investment properties were indeed winners. And if it makes sense, you probably should buy since you too will enjoy all the entitlements that come along with defaulting on a mortgage…as homeowners are the new protected class.

During the Great Depression Lenders did a lot of rent back situations ,
instead of foreclosure or along with foreclosure . Of course a lot of the foreclosures were on farms in those days . You lose the productiveness of the farm as well as the job that the farmer had when you foreclose on a
farm.

Today someone loosing a house they can’t afford is not a loss of anything but a unsustainable debt by faulty lending ,especially if it was simply gambler speculation behind the purchase .

They are misunderstanding some of the bail outs of the Great Depression
and Wall Street tends to be dishonest this way in twisting concepts for their own benefit . Just as claiming that capitalism is bad is a faulty claim in that regulated capitalism with the rule of law is necessary .
The Pig Men talked Politicians into removing regulations and the rule of law and transparency for no other purpose than to create money making schemes that are the opposite of productive capitalism .

A Bold U.S. Plan to Help Struggling Homeowners

http://www.nytimes.com/2010/03/27/business/27modify.html

“To lubricate its efforts, the government plans to spread taxpayers’”

ROFL

Finally a Journalist got something right. Spit out my coffee when I read that line, too damn funny

Made it through the inspection ~ my first one ever. What a process!

No huge surprises, but a few things that (in my opinion) warrant credit back or lowering the price (and if neither happens, I’m ok with walking away).

Biggest issues are some termite damage (minor, apparently, but affecting one of the main double beams in the house; recommendation is to add a sister beam and have the property treated). Also, the HVAC system is over 20 years old and needs replaced (age was not known in seller disclosure). Currently runs out the chimney that should have been lined, but was not. Recommendation is to replace with system that vents out the foundation and close off the chimney.

Also, I knew the windows were original (with triple track storms), but the inspector found some sashes to be soft so he said replacing the windows sooner rather than later would be best. There are 18 windows to be replaced; 3 of them, however, I would replace with a bay window eventually. So out of the gate, I’d be replacing 15.

And there was other minor stuff along the way - not at all atypical for a 60 year old house. Good news was roof is solid, plumbing and electric all good, and walkout basement is bone-dry - even without a sump pump!

My plan of attack is to discuss either lowering the price of the house (I’d like it reduced by $15,000 - 20,000) and repairing everything myself. Or, having her repair the termite damage and giving me a credit towards some of the other work.

To be continued.

Anthony …….Bankers/ Ponzi-schemes are the protected class . They protected the systems that mastermind bubbles for unearned gain . Big Investment firms going out of business as well as being sued silly for their fraud would of been the necessary correction .

These bail outs didn’t help the man on the street . The government
extracted funds from different sectors to bail out unproductive Pozi-schemes . This rescue is just as unproductive as trying to bail out a gambler speculator in a over-priced house that crashed in value were that borrower couldn’t sustain that bogus toxic loan that was designed for leverage .

The gig is to put the losses on the taxpayers books with the idea that
by bail outs and incentives you can increase that fake value again and that will make the bag-holders whole because investment banks did not have the reserves or sustainability to be their own bag-holders ,just as
gambler borrowers can’t be .

The interference won’t work because it was a epic fake value increase that it would take years to actually go up based on true value based on true incomes and sustainability .

It’s just like Health Insurance Companies raising policy prices in a recession .In fact ,all prices these days are not based on true capitalism anymore and thats why we are not getting value for the dollar in any way . Do you think that the crap from slave labor is value when it last a quarter of the time ,fills up more landfills quicker ,is made with inferior plastic and there is evidence of many potential poisons in products ,such as drywall . The worker or the consumer is not gaining ,but something is
gaining a unearned profit from this and I will let you guess who/what it is .

Always remember, a closely watched pot never boils over.

Another thing: According to The Economist’s writers, weather is the main problem facing the U.S. housing market. Once the red hot spring sales season gets underway, the market will take off again like a rocket.

Property prices
Waiting for the other shoe to drop
Fears are growing of a second dip in the housing market

Mar 25th 2010 | WASHINGTON, DC | From The Economist print edition

IN ITS early days, the Obama administration argued over whether the financial system or the real economy should be the economic priority. Critics disputed the premise. They argued that no lasting recovery would be possible until housing markets were healthier.

Yet the housing-market recovery has almost run out of steam. Sales of new and existing homes have fallen for three consecutive months. As a result inventories have grown, putting downward pressure on home values. According to some measures, prices are dropping again: the Federal Housing Finance Agency reported national declines in December and January.

Things looked rosier last autumn. An $8,000 homebuyer tax credit helped stabilise both prices and sales, while Federal Reserve purchases of mortgage-backed securities held down mortgage rates. House values climbed across the country, and existing-house sales hit levels not seen since the end of the boom in early 2007. By September building-industry confidence had more than doubled from January’s all-time record low, generating optimism about new employment. Anxious to keep the recovery going, Congress extended the tax-credit programme to the end of April this year. But the magic has not survived the winter.

America’s weak labour market deserves much of the blame. Job losses continue to drive loan defaults. Foreclosures declined from January to February, but remained above 300,000 for a 12th consecutive month. Bank sales of foreclosed properties are depressing prices further and dampening the industry’s hopes (see chart). The latest data show declines in both builder confidence and new housing starts.

The weather hasn’t helped. Fierce winter storms hit house-hunting in January and February. But with prices, sales, construction and builder confidence all losing ground and foreclosures still frequent, there is growing concern that the housing-market stabilisation of 2009 was entirely a product of market interventions, most of which are about to end.

This pessimism may be overdone. With the deadline to take advantage of the housing tax credit looming and with better weather on the way, potential buyers kept indoors by February snow may rush into the market.
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Has anyone here noticed more beggars than normal? I just came back from a grocery store and some man who did not look the type asked if I had some spare change. He looked kinda like Dave Ramsey.

I said no. He thanked me and walked off. He could probably see from my expression when he first said “Excuse me sir…” that I anticipated what he was up to.

This is in a good part of Torrance.

In retrospect, he must be new at begging. The rule for them is you ask people before they go into the stores, not after. That way people fear their car getting scratched up and hand over some change.

I have several questions that will remain unanswered from him since I said no. 1) FB? 2) Screwed by a divorce? 3) out of a job? 4) HELOCed like crazy? 5) Foreclosure?

It was a beautiful spring day today! I went riding my Airhead (BMW R75/6 for the uninitiated) in the cool spring sunshine.

The trees were the light green of new growth and the flowers were just knocked out. I’m still waiting on the Camellias to bloom.

There was a lot of pollen in the air so I had a nice big, “productive” sneeze in a full face motorcycle helmet.

I love spring motorcycle riding. Just beautiful.

Roidy

A-Rod might be evicted if his rented apartment sells.

http://www.nytimes.com/2010/03/28/realestate/28deal1.html?ref=realestate

http://www.bloomberg.com/apps/news?pid=20601109&sid=anl9vTKXKYyk&pos=10

JP Morgan, Lehman, and other banks charged as co-conspirators in rigging the municipal bond market, following lawsuits by municipalities. They’ll get off with a slap on the wrist, of course, but its nice to see some of their victims going after them in court.

http://www.latimes.com/news/nationworld/world/la-fg-korea-famine25-2010mar25,0,3828796,full.story

Brainwashed dupes losing faith in their Dear Leader after years of economic stagnation, government mismanagement, and a collapse in the value of their currency that has left them starving and living a troglodyte existence.

No, not here - not yet, anyway. North Korea.

I still don’t get how the new cramdown program will deal with mortgages that were sliced and diced then packaged into MBS with myriad other mortgages. Maybe if the Fed has snapped up enough toxic MBS, they will be able to play the role of the “investor” agreeing to writedowns?

Need help lifting a mortgage burden?
Getting a loan modification requires tenacity and patience.

By Lesley Mitchell

The Salt Lake Tribune
Updated: 03/20/2010 01:18:22 PM MDT

Roz Dalebout is fighting to keep her home, and she’s not alone.

The Salt Lake City homeowner, who has faced several financial setbacks in recent years, first contacted her lender last June when she began to worry about her ability to pay her mortgage each month.

Like many others who are struggling, her only hope was a loan modification, in which a lender agrees either to lower the interest rate, extend the life of the loan or defer some of the amount owed, all of which can lower the monthly mortgage payment.

But nine months and countless calls later, she’s still waiting to find out whether she qualifies. Selling her home probably isn’t an option because with the housing market’s downturn, she probably can’t sell it for enough to cover her mortgage.

“I’m scared to death I’m going to lose my home,” she said.

Nationally, hundreds of thousands of homeowners such as Dalebout are being considered for help under loan modification programs. But housing advocates, analysts and others warn that most of those borrowers will eventually lose their homes. Even the widely touted $75 billion foreclosure-prevention program pushed by the Obama administration has helped about 170,000 homeowners in the past year out of up to 4 million in need of assistance.

One reason for the low rate of success is the complex way mortgages are originated, sold and packaged to investors.

The company a homeowner makes payments to often is only
servicing the loan. After a loan is originated it is sold to investors on what’s called the secondary market. It’s the investors, such as pension funds or hedge funds, that own the loan as part of a bundle of mortgages, and they must provide permission for any modifications.

Even in good economic conditions, it takes time for modification plans to be approved. Investors must determine whether modifying a mortgage will result in less of a loss than refusing to make concessions to the homeowner, or even letting the home fall into foreclosure.

With the Great Recession, however, the high volume of modification requests is slowing down that decision-making process even more.

Further complicating matters are the personal situations of homeowners, some of whom have multiple mortgages on their properties.
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Standard MSM conventional wisdom: The housing market will recover within ten years.

Professor Bear’s question: How do ‘they’ know we won’t go down the path of Japan, which is down for two decades, with no recovery in sight?
How will FB’s feel if they spend the next twenty years paying off a loan whose underlying never recovers to even the value of the original principal balance? The principal certainly would not end up being the FB’s “pal” in that case, would it?

Underwater in your mortgage? Options have consequences

Before you walk away from your home, experts advise weighing the alternatives.

By Christine Dugas

USA Today
Updated: 03/26/2010 04:36:25 PM MDT

Utah’s deflated housing market, spurred by a continued increase in demand, will see a reflection of its former self.

More home owners are walking away from their mortgages, even if they can keep up the payments.

Falling into foreclosure — voluntarily or not — has become less taboo for many people as they have watched their home values tumble far below the amount they owe, putting them underwater.

Purposely defaulting on a mortgage, often called “strategic default,” may be a very rational personal finance decision, but it’s not without major consequences. And it’s not necessarily the best option for anyone underwater who can afford to make monthly mortgage payments but who does not want to wait up to 10 years for the housing market to turn around.
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Posted on Friday, 03.26.10
New mortgage plan still has holes, White House concedes
By Kevin G. Hall
McClatchy Newspapers

WASHINGTON — The White House Version 2.0 mortgage-relief plan announced on Friday is a recognition that the moribund housing sector poses a grave threat to the nation’s economic recovery. By the administration’s own admission, however, the effort may save at best only a third of the homes facing foreclosure in coming years.

The new measures, funded through $50 billion already set aside for mortgage relief, seek to provide three-to-six-months of temporary help for newly unemployed homeowners in making mortgage payments.

They also ease the refinancing of mortgages now valued well above the current home price — so-called underwater mortgages — and give incentives to issuers of piggyback mortgages to get out of the way and allow a mortgage modification to happen.

The effort to have banks forgive principal gives greater incentive for homeowners in foreclosure-troubled states such as California, Florida, Arizona and Nevada to stay in their homes rather than hand the keys back to the bank, which would swell the glut of vacant or bank-owned homes on the market — and further depress home prices.

The White House was careful not to raise expectations too high, noting that up to 12 million foreclosures still could occur during the next three years. The new program seeks to help at most 4 million of those homeowners.

One in four homeowners is thought to be underwater, or owe more on a mortgage than the home’s underlying value, according to researcher First American CoreLogic, a number that threatens to swamp refinance efforts.

Friday’s proposals follow a steadily growing drumbeat of criticism about administration efforts to prod lenders and investors in housing securities to modify distressed mortgages aggressively. After a year of effort, fewer than 200,000 permanent modifications have taken place.

“We’re trying to adjust to changing circumstances over time,” Assistant Treasury Secretary Herbert Allison explained during the White House rollout of the upgraded mortgage relief program.

Advocacy groups have criticized the administration’s prior effort as too timid. Elizabeth Warren, a Harvard University professor who heads the special Congressional Oversight Panel that oversees the expenditure of taxpayer bailout money, for months has warned that the Home Affordable Mortgage Program wasn’t even keeping up with the pace of new foreclosure notices.

Lawmakers too have been pressuring Team Obama to give more aid to unemployed homeowners, especially those with good payment histories.

“While clearly there are some people in trouble on their mortgages who bear some of the responsibility for their plight, this is not true of the unemployed who are fully deserving of this help,” said Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee.
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My hunch how this plays out sequentially:

3) Homes that sold for under $500K in 2010 drop in value, even though the new owners won’t find out unless they have to sell, as their values get smashed down by falling prices in the high end of the market. For instance, if a home that used to cost $600K fell to $450K in value, lesser quality homes that used to sell for $450K will have to fall still farther to restore hedonic equilibrium.

Home / Business
HOUSING: As peak selling season begins, parts of market red-hot

Buyers find more leverage in SW Riverside and in higher-priced SD neighborhoods

By ERIC WOLFF - ewolff@nctimes.com | Posted: March 27, 2010 8:17

buy this photo Independent contractor Clark Damico hangs a For Sale sign in the front yard of an Oceanside home Wednesday morning. (Photo by Jamie Scott Lytle - Staff photographer)

Even in 2008 and 2009, when the unpredictable real estate market demanded steel nerves and a tortoise’s persistence, the warm-weather months were also the high season for buying and selling a home.

In those years, agents sold about 200 more homes per month between May and October than they did in the other months, according to the North San Diego County Association of Realtors.

Now, as the peak selling season approaches, homebuyers and sellers dipping their toes into the market may be surprised at what they find: Overbuilding in Southwest Riverside County and among high-priced homes in San Diego County has lowered prices for buyers, but federal policies have created a market for sub-$400,000 homes in San Diego County that has gotten downright hot. While many of these policies are set to expire this spring, real estate agents and economists said the impact won’t be felt until next year.

How hot is that lower tier? Scorching. According to the Case-Shiller Home Price Index, which measures the change in housing prices, home values rose at an annual rate of 12.9 percent between June and December 2009.

“Interest rates are artificially low; FHA is allowing low down payments; it’s nuts,” said Chris Thornberg, an economist with Beacon Economics. “We’re reindulging in the same excesses that got us into the housing mess in the first place. We’re seeing the re-emergence of a minibubble.”

In the wake of the housing market collapse that followed an extraordinary boom in the 2000s, the federal and state governments installed policies that, intentionally or not, induced buyers into the market while cutting down on the number of homes available.

The cost of purchase for all homes has been held down by Federal Reserve policies that kept mortgage interest rates under 5 percent, and by the market collapse that pushed values in San Diego and Riverside counties down 40 to 50 percent from a 2006 peak, according to data from MDS DataQuick.

As if that weren’t enough, the Federal Housing Administration backs loans with low down payments for new homebuyers purchasing lower-priced homes; and the Internal Revenue Service offers an $8,000 tax credit to buyers who haven’t owned a home in three years, and $6,500 to homeowners who want to move. In the past, lower prices, government incentives and cheap financing have provided the ingredients for a favorable market for homebuyers.

But analysts say the supply of lower-priced homes is artificially tight, as owners try federal home loan modifications and banks delay foreclosures or approval of “short sales,” in which borrowers seek permission to sell for less than the mortgage balance.

Back to the 2000s?

This combination of stoked demand and curtailed supply has caused a return to double-digit inflation in the overall housing market in San Diego County.

The 12.9 percent annual growth rate since June in the median price was driven largely by a 20.1 percent annual growth rate between June and December among homes priced under $304,000. Those homes pushed the countywide median up last month to $322,000, 13 percent over the previous February, according to MDS DataQuick.
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