The Housing Bubble

Good morning from Gardiner, NY, where the cheapeast bottle of wine is $14.99. Boo!

When did Subaru replace Volvo up here?

Still working on that death ceiling.

A glowing example of just how ignorant the MSM is of our economic situation. Must have a college degree to be this stupid.

10 Ways to Get Americans Spending Again
U.S. NEWS - Philip Moeller, July 29, 2011

Despite years of near-zero interest rates and government stimulus programs, American consumers have not recovered their spending appetites. They are still reeling from big mortgage and other debts, facing stagnant wages and long-term unemployment, and desperately seeking reasons to once again believe in the American Dream.

Since consumer spending is responsible for more than two-thirds of U.S. economic activity, employers are reluctant to hire people until they see more demand. So while corporate profits continue to soar, those trillions of booked earnings stay on the sidelines while economic growth sputters.

Many of the most impartial judges of the U.S. economy and government fiscal policy can be found overseas, in governments and financial institutions, and among the many organizations that hold half of our public debt. They have a big stake in U.S. financial stability. And they’re not running for elective office in the United States in 2012.

For the most part, our foreign creditors want to see evidence that the United States is on a sustainable path toward meaningful reductions in annual government deficits. If this evidence was coupled with more short-term stimulus, their reaction would be, for the most part, favorable. But any short-term stimulus must be part of a longer-term plan–a binding plan–to reduce deficits.

In a recent overview of the U.S. economy, the International Monetary Fund (NYSE: IMF - News) listed two main concerns about the country’s fiscal condition and deficit fight. One was default. The second was steep spending cuts, or what the IMF described as “an excessively large upfront fiscal adjustment that would significantly weaken domestic demand.” Sorry, that’s the way economists write.

“A politically-backed medium-term framework that raises revenues and addresses long-term expenditure pressures should be the cornerstone of fiscal stabilization,” the IMF said in the report.

Here are 10 ideas that have been widely suggested by economists and others to get consumers back into the game. Don’t expect to find quick fixes. As the nasty debt-ceiling fight shows all too well, the United States has run out of easy solutions. Also, many ideas involve short-term increases in government spending. Maybe this seems like a non-starter. Many people think horrendous deficits are what got us into this fix in the first place. There is an enormous gap between liberal and conservative thought here, and it’s not going away. Increasingly, however, many fiscal experts have come to believe that government stimulus programs of the past two years were too small and not effectively targeted to create a lot of new jobs. The failure of those stimulus efforts does not, by itself, mean that stimulus programs don’t work.

1. Boost consumer confidence. The very public food fight between Republicans and Democrats has been terribly damaging to public confidence. Our “leaders” need to discuss their differences in less hostile ways, reach a solution, and give Americans some reason to trust that their national government has their best interests at heart. Even if sharp differences remain, Congress and the White House should abandon their scorched-earth politics.

2. Agree on a long-term deficit reduction plan. Yes, this is a no-brainer. But we haven’t seen one yet. To be credible, the plan must address healthcare and other entitlement programs. Don’t expect seniors to applaud fiscal restraint that comes at their expense. But they know cuts are coming and will accept them, particularly if accompanied by higher taxes on wealthier Americans. Shared sacrifice must be apparent.

3. Start fixing the mortgage mess. It will take years to work off the excesses of the housing bubble. But the clock won’t start moving in earnest until and unless the government does a more effective job of speeding the review of troubled mortgages and helping to get them cleared off the books. These mortgages are a toxic overhang to a housing recovery, and the lack of home purchases and new-home construction is a huge drag on the economy.

4. Continue the payroll tax breaks for Social Security taxes. President Obama supports an extension through 2012 of this year’s two-percentage-point reduction in the employee share of Social Security payroll taxes. The reduction reduced the tax to 4.2 percent from 6.2 percent of covered payroll, up to $106,800 in annual wages.

5. Extend unemployment benefits. Long-term unemployment is becoming a terrible legacy of the Great Recession. As more and more Americans find themselves out of work for a year or more, their financial safety nets have become shredded.

[See Credit Cards Gone Wild.]

6. Expand job-training efforts. Job skills erode quickly in a knowledge-based economy. If we want to help reduce long-term unemployment, we need to step up our efforts to refresh and enhance job skills. Many job openings now go unfilled for lack of skilled applicants.

7. Adopt a government stimulus program for public works. Much of our infrastructure is decaying and at risk of falling apart. What better time to address these needs, and will prices ever be cheaper? There is great unused capacity and labor for this work. But let’s do it smartly, with strong federal-local partnerships that define high priority work that’s ready to be done soon.

8. Let the government negotiate lower drug prices for Medicare beneficiaries. Medicare is not allowed to negotiate drug prices with pharmaceutical companies. Bills are regularly introduced to overturn this outdated nod to the myth of private price competition for branded prescription drugs. I guess we could all move to Canada, where drug prices are sharply lower than in the United States. But maybe there’s a better way.

9. Encourage just a bit of inflation. Somewhat higher interest rates would help to get capital off the sidelines in search of more attractive returns. It also would help reassure seniors by boosting their earnings on conservative retirement investments.

10. Strengthen the dollar. Higher interest rates also should boost demand for dollar-denominated assets. This will give American consumers more buying power for imported goods. If you want consumers to spend more money, give them more money to spend. A stronger dollar fits this bill. A stronger dollar would make it harder for U.S. firms to sell their exports. But the IMF study said that strong export activity by U.S. firms has not been contributing to overall domestic economic growth.

Summer TV Press Tour 2011: What Harry Belafonte would ask Congress about the debt crisis By Lisa de Moraes - The Washington Post

Singer Harry Belafonte, subject of an upcoming HBO documentary about his political activism, was asked what he would say to the White House and Congress about the gamesmanship in which they are engaged over the national debt.

“My question would be, to Congress and the president: What happened to moral truth? What happened to moral courage?” Belafonte said.

He’d also like to tell them: “Politics without moral purpose, really more often than not, winds up as tyranny.”

“Barack Obama and his mission has failed because it lacked a certain kind of moral courage, a kind of moral vision . . . a kind of courage we are in need of,” said the King of Calypso.

“When he said ‘Yes, we can,’ it was politically clever, but he never defined what it is we can do. So we filled in those spaces — what we thought he meant — only to find we were disappointed, because none of those points was satisfied.”

U.S. Homeownership Falls to Lowest Since ’98
(Bloomberg)

The U.S. home-ownership rate fell to the lowest level since 1998 in the second quarter as stricter lending standards blocked purchases and foreclosures forced people out of their residences.

The ownership rate through June was 65.9 percent, the lowest since the same rate 13 years ago, the U.S. Census Bureau said in a report today. The vacancy rate, the share of properties empty and for sale, was 2.5 percent, compared with 2.6 percent in the first quarter.

The strictest mortgage standards in more than a decade are disqualifying potential buyers while owners are being evicted from homes after falling behind on loan payments, said Wayne Yamano, director of research at John Burns Real Estate Consulting in Irvine, California. Home purchases fell in June to a 4.77 million annual pace, the National Association of Realtors said July 20. If housing demand remains at that level, 2011 would have the fewest sales since 1997.

“Tight underwriting standards and the lack of a down payment are keeping a big chunk of buyers out of the market and other people are being displaced by foreclosures,” Yamano said in an interview before the report. The ownership rate may tumble to about 62 percent by 2015, he said.

Conflicting data on sales and prices show the housing market that sparked the global recession continues to struggle. The number of contracts to purchase previously owned U.S. homes rose 2.4 percent in June, the Chicago-based Realtors’ group reported yesterday. Together with an 8.2 percent gain in the prior month, the index has almost erased an 11 percent plunge in April.

Today’s house:

http://www.zillow.com/homedetails/4800-Tallahassee-Ave-Rockville-MD-20853/37306296_zpid/

1959 3/2 rambler on 0.16 acre. 1056 sq ft but has a full basement and nice kitchen. Pretty house, but not cutie patootie. Good neighborhood, well-kept, move-in ready, but about $70K overpriced!

Sold 1973 $41K*
Zestimate 2002: $228k
Zestimate 2004: $313
Listed: $280K

——————–
* Interesting. The first house my parents bought was the same kind of house. It was on a little more land, but in the Northeast, and little farther out from a small city. They bought it for $27K in 1975. So comparable houses in the DC area cost a lot more even back in the 70’s. So even in a normal market, I can expect to pay about 1/3 more.

http://www.philly.com/philly/news/20110730_Teen_mayhem_hits_Philly_s_streets_again.html?cmpid=124488429

More of the edgy urban vibe so beloved by downtown condo-buying hipsters. Wait till austerity (and law enforcement layoffs) really start to bite.

And for another of Today’s Houses:

http://www.zillow.com/homedetails/7447-Woodbine-Rd-Woodbine-MD-21797/64618422_zpid/#{scid=hdp-site-map-list-address}

Tiny 3/1 on an acre.
$199K.

I would call this a semi-Oil City house. This is way the heck out of town — boonie farmland. It’s about a 45 minute drive to the main suburbs and uncommutable downtown. Nowhere near a train or bus, but a half hour at most from a nearby hospital. It would be a great homestead for a middle-class income in a nearby small city, like a manager at a bank branch.

http://www.thenation.com/article/162317/how-america-could-collapse

How America Could Collapse (from The Nation, a non-Rupert Murdoch publication)

Inside the Sausage Maker of Executive Compensation at RIMM

Executive compensation is a hot button issue for many investors. They can’t understand why executive pay keeps going up whether or not the company’s performance goes up with it.

My bias is that management usually tries to stack the deck in their favor of getting the maximum amount of compensation out of the company for the least amount of performance. They do this in a number of ways such as:

- Filling the Compensation Committee with friends who will feel obligated to pay whatever management basically wants to be paid, whether or not they perform

- Ensure the performance criteria to be judged on is sufficiently vague so you can claim victory when bonus time comes and;

- Hire compensation consultants to sign off on your compensation practices (who have a vested interest in making you and their other management clients happy by continually approving higher and higher compensation every year) — these consultants make money by basically giving the Comp Committee on the board “cover”

When you go back and read the history books on RIMM for last year, even the most impartial observer will say it was a year where management was overwhelmed by the competition and had to take drastic steps to try and save the company.

According to RIMM’s Compensation Committee, that performance meant the two co-founders deserved $5.1 million each last year.

Apparently, both co-founders think they are very important to the company’s success. They appoint the Compensation Committee that decides they are worth 3x what another member of the management team can get in a given year. Yet, they aren’t among the 2,000 who were let go yesterday. And they won’t be affected by the next round of layoffs promised in the months ahead.

Heads, I win. Tails, you lose.

http://news.yahoo.com/inside-sausage-maker-executive-compensation-rimm-211131917.html

NH hospitals facing upheaval as the state slashes medicaid reimbursements. This is just the latest of quite a few hospitals forced to lay off staff and quite a few hospitals are suing the state for their reimbursements.

I haven’t heard a peep of this possibility in NY. In fact as I’ve mentioned numerous times it’s a good time to be in medicine in CNY. We’ve seen a few out of state doctors move in here and buy some incredibly nice digs so they’re putting quite a few eggs in the basket of confidence that the status quo will hold.

Debt-ceiling crisis: Why won’t Republicans compromise?

The hardcore Republican debt hawks fueled by November’s tea party victories say that Congress has historically gone back on promised spending cuts. So far, they are refusing to budge without some guarantee that the cuts will actually materialize.

Republican Reps. Jason Chaffetz of Utah (left) and Jim Jordan of Ohio are leading debt hawks in the House. They both voted against the Republican plan to raise the debt ceiling Friday, saying it didn’t go far enough to cut spending. They are seen here in the Capitol rotunda in Washington on July 22.

By Mark Sappenfield, Staff writer / July 30, 2011

As the United States moves closer to an Aug. 2 default on some of its payments – perhaps including checks for Social Security recipients and veterans – it is becoming ever clearer that the two most important numbers in the debt-ceiling crisis are 1982 and 1990.

In short, hardcore Republican debt hawks remain determined to prevent a repeat of those two years, even as a historic default that many economists say could seriously damage an already weak economy looms in less than three days.

What happened in those two years? Presidents Ronald Reagan and George H.W. Bush both agreed to tax increases after Congress promised to make even greater cuts to spending. In both cases, the tax increases took effect, the spending cuts did not.
…

Insiders selling at unusually fast pace
CHAPEL HILL, N.C. (MarketWatch)

In fact, one measure of that selling activity shows insiders of NYSE- and AMEX-listed companies recently were selling at the fastest rate since data began being collected in the early 1970s, four decades ago.

On the theory that insiders know more about their companies’ prospects than do the rest of us, this is an ominous sign.

Corporate insiders, of course, are a company’s officers, directors and largest shareholders. They are required to file a report with the Securities and Exchange Commission more or less immediately upon buying or selling shares of their companies, and the SEC makes those reports public.

One firm that gathers and analyzes the data is Argus Research, which publishes its findings in the Vickers Weekly Insider Report. One indicator that the firm calculates is a ratio of the number of shares that insiders have sold in the open market to the number that they have purchased.

In the week ending last Friday, according to the latest issue of the Vickers report, this sell-to-buy ratio stood at 6.43 to 1. This is higher than 95% of other weeks’ readings over the last decade.

That’s ominous enough, but consider last week’s sell-to-buy ratio for just those issues listed on the NYSE or AMEX. That came in at 13.10 to 1, which is the highest reading for this ratio since when Vickers began collecting the data, which was October 1974.

Apple has more cash than the U.S. Treasury
Apple is sitting on a pile of money that’s bigger than the Treasury’s dwindling balance. By David Sarno, Los Angeles Times

Apple Inc. may not have more money than God. But it’s got more cash than Uncle Sam.

As the government struggled to reach an agreement on raising the debt ceiling, the U.S. Treasury’s cash balance fell to $74 billion this week. That’s less than the $76 billion that Apple now has in cash.

It’s not terribly likely that the government will ask Apple Chief Executive Steve Jobs for help. But it wouldn’t be the first time the government has asked for a bailout from an industry mogul.

In the mid-1890s, with the U.S. economy still recovering from the financial panic of 1893, the U.S. Treasury was in danger of going bankrupt as worried investors clamored to collect what they were owed from U.S. gold reserves. With few options left, President Cleveland met with New York financier J.P. Morgan, who pledged a whopping $60 million in gold. Adjusted for inflation, that would be about $1.5 billion today.

“The fact that Morgan had become a cosigner on the federal debt was what impressed the markets,” historian H.W. Brands wrote in his account “The Upside-Down Bailout.” “Within days the Treasury’s condition stabilized; within weeks the dollar’s danger had passed.”

To be fair, comparing Apple’s cash reserves with the Treasury’s is not exactly apples to apples.

Apple’s billions are essentially the funds in its bank accounts, while the federal number represents the amount of money the government has left before it hits the legal debt limit — a figure that can be changed by Congress.

At about $362 billion, Apple is the second-largest company in the world by market value (behind Exxon Mobil Corp. at $395 billion) — big by any standard, but still far smaller than the U.S. government, which will spend close to $3.8 trillion this year, 10 times what Apple is worth.

Still, Apple’s reasons for keeping such a giant cash stockpile may well be related to worries about the stability of the U.S. government’s finances.

“One of the reasons U.S. companies have amassed so much cash is that it provides them financial flexibility in times of heightened uncertainty,” said Laurie Simon Hodrick, a professor of business economics at Columbia University’s business school. “It might seem ironic, but as the risk of a government default grows, bringing with it the specter of higher interest rates, the incentives for firms to finance with internally generated cash grows as well.”

Failure to rasise the Debt Ceiling will bring the Recession to those who have not had one yet. That is all its going to do.

“What’s The Matter With Kansas?”
Thank you HBB’ers for the introduction to the book and Documentary. (Full viewing free on HULU.) It was an eye opener.

http://www.foxnews.com/politics/2011/07/30/us-contractor-in-iraq-charges-pentagon-00-for-7-control-switch-report-finds/

No wonder McSame never met a neo-con military misadventure he didn’t like. His Defense Contractor pals are making obscene profits at taxpayer expense, all in the name of “keeping us safe.”

The 14th Amendment of the U.S. Constitution clearly states that the validity of the public debt of the United States “shall not be questioned. Defaulting would be “questioning” our debt.

One could make a case that Pres. Obama might have to go the 14th Amendment route just to uphold his Constitutional oath.

(I’m not a Constitutional scholar but I’ve read a lot of John Grisham’s books.)

July 28, 2011, 2:01 PM ET

Foreclosure Filings Down Across the Country
By Wesley Lowery

Foreclosure activity has fallen throughout the country, slowed by paperwork problems rather than an improvement in the market.

During the first six months of 2011, 84% of U.S. cities with populations of 200,000 or higher posted declines in new foreclosure activity, according to a study released today by RealtyTrac, a real-estate research firm. Foreclosure activity slowed in 178 of the nation’s 211 metropolitan areas when compared with last year.

Of the country’s 20 largest metro areas, Seattle was the sole market to post an increase in foreclosure activity, with 1 in every 98 housing units receiving a foreclosure filing, up 10 percent from the first half of 2010. “Foreclosures have slowed down not because of a recovery of the market, but simply because of procedural delays,” said Rick Sharga, senior vice president at RealtyTrac.
…

Hey Blue Skye, thanks much for being willing to share your live-aboard info yesterday. Much appreciated!

Eve Shreve Set Fire With Foreclosure Docs: Police
Simon McCormack First Posted: 7/27/11 10:09 AM ET Updated: 7/27/11 10:19 AM ET

CORRY, Pa. (Associated Press) — Police say a northwestern Pennsylvania woman tried to smother her adult son then attempted suicide after setting fire to her home with a foreclosure notice.

The Erie Times-News reports 47-year-old Eve Shreve was arraigned Tuesday on charges including attempted homicide and arson in the March 18 fire in Corry.

Police say Shreve’s husband told officers his wife had admitted setting the fire using foreclosure papers received the day before and then attempted to kill herself. Investigators say medical records support their case.

Corry Police Chief Fred Corbett says authorities also determined the two small fires were intentionally set.

Shreve was released on $5,000 bail. A phone call to her attorney rang unanswered early Wednesday.

Amid the crisis, staying the course…

https://personal.vanguard.com/us/insights/article/ici-reid-interview-05182011

Worked for me.

Why does anyone say that the president spent the money.

Only the house can recommend spending money, and only the Senate can agree, and the president only gets to approve or disapprove the spending.

Blaming the president for spending is like blaming the husband for the money the wife spends.

Blame the Legislature, that you voted for!

I find it difficult that anyone can believe that giving the government more money will improve production of goods in this country!

You want to create jobs in the USA . eliminate the EPA!

Or at least prevent them from controlling production businesses.

If you don’t pay taxes it is easy to recommend that taxes be increased on those that do!

Oh well.

traderjack

I think this letter explains the problem very well, if you haven’t seen it. Long, but, in my opinion, worth reading

http://www.denninger.net/letters/mccain-daucher.pdf

From Aug 2008

Realtors Are Liars®

Jobless Recovery hits chicken farm industry in NC:

1000 layoffs overnight-

http://www.charlotteobserver.com/2011/07/30/2491233/chicken-plant-closings-deal-blow.html

A house divided cannot stand.

Last-minute debt deal still eludes Congress

In public, at least, neither Democrats nor Republicans show much inclination to work out an accord as the clock ticks toward a federal default.

By James Oliphant and Lisa Mascaro, Washington Bureau

July 30, 2011, 5:53 p.m.
Reporting from Washington—

Efforts to reach a last-minute deal to stave off a potentially disastrous federal default remained at an impasse Saturday as House Republicans engaged in some psychological warfare and their colleagues in the Senate seemed poised to block a key vote on a bid by Democrats to raise the debt ceiling.

With just days to go until the federal government’s authority to borrow money expires, neither Democrats nor Republicans showed much inclination to bridge their differences and hammer out a deal.

Instead, the action — at least the events playing out in public view — suggested that partisan distrust remained as high as ever. The House convened only to take a purely symbolic thumbs-down vote on a debt plan crafted by Senate Majority Leader Harry Reid (D-Nev.), even though that plan hasn’t yet cleared the Senate.

In the meantime, Senate Republicans said they would filibuster a vote planned for just after midnight on Reid’s revised proposal.

Reid spent the day trying to persuade Republicans to support some version of his plan; he would need seven to break a filibuster. Sen. Lisa Murkowski (R-Alaska) was one of a few who sounded ready to work with him.

“We’re angry, frustrated and mad here too,” she said on the Senate floor. “I would like to suggest that as the hours wind down, we come together as a body here in the Senate and in the House to find a compromise.”
…

Prison time is a great sanction!

Judge threatens to sanction CEO of HSBC for ‘robo-signing’
By Jonathan D. Epstein
NEWS BUSINESS REPORTER
Published:July 30, 2011, 12:00 AM

A State Supreme Court justice in Brooklyn is threatening sanctions against the chief executive officer of HSBC Bank USA, blaming her personally as head of the bank for filing what he called false and misleading documents involving “robosigning” in a home foreclosure case.

In a complex decision issued in early July, Justice Arthur M. Schack denounced what he called the “frivolous conduct” and the submission of fraudulent paperwork by HSBC and the attorney representing it in the case, Frank M. Cassara of Shapiro, DiCaro&Barak LLP in Rochester.

He said the documentation submitted to the court by Cassara and HSBC to support the foreclosure is full of defects and “material factual statements that are false.” And he criticized their case as a “waste of judicial resources.”
…

AP Exclusive: Mortgage ‘robo-signing’ goes on
By MICHELLE CONLIN, AP Business Writers – Jul 18, 2011

Mortgage industry employees are still signing documents they haven’t read and using fake signatures more than eight months after big banks and mortgage companies promised to stop the illegal practices that led to a nationwide halt of home foreclosures.

County officials in at least three states say they have received thousands of mortgage documents with questionable signatures since last fall, suggesting that the practices, known collectively as “robo-signing,” remain widespread in the industry.

The documents have come from several companies that process mortgage paperwork, and have been filed on behalf of several major banks. One name, “Linda Green,” was signed almost two dozen different ways.

Lenders say they are working with regulators to fix the problem but cannot explain why it has persisted.

Last fall, the nation’s largest banks and mortgage lenders, including JPMorgan Chase, Wells Fargo, Bank of America and an arm of Goldman Sachs, suspended foreclosures while they investigated how corners were cut to keep pace with the crush of foreclosure paperwork.

Critics say the new findings point to a systemic problem with the paperwork involved in home mortgages and titles. And they say it shows that banks and mortgage processors haven’t acted aggressively enough to put an end to widespread document fraud in the mortgage industry.

“Robo-signing is not even close to over,” says Curtis Hertel, the recorder of deeds in Ingham County, Mich., which includes Lansing. “It’s still an epidemic.”
…

Robo-Signing Still an Epidemic
Posted by Carole VanSickle on Tuesday, July 19th 2011

Although foreclosure servicers have, for the most part, cleaned up their act under intense public scrutiny, robo-signing is still rampant in many areas of the mortgage industry, alleges the associated press, citing an investigation that, among other things, found the signature “Linda Green” signed more than 20 different ways in just one firm[1]. The Linda Green in questions actually worked for a company that processed mortgage paperwork and was shut down more than a year ago. Yet based on these documents, she is still signing away.

The study raises concerns that although the foreclosure processes in many major lenders may be on the mend, other servicing acts may still be barely, if at all, legitimate. According to the AP, “county officials in at least three states say they have received thousands of mortgage documents with questionable signatures wince last fall,” with lenders responding that they “cannot explain why the practice…has continued”[2]. An investigation in Salem, Massachusetts, for example, yielded so many robo-signed signatures that the local registrar of deeds concluded that about 3.5 percent of all homeowners in the county probably have paperwork on file with fraudulent paperwork (that’s more than 25,000 homeowners in Salem County alone). “Robo-signing is not even close to over,” says Curtis Hertel, recorder of deeds in Ingham County, MI, calling the issue an epidemic. “My office is a crime scene,” adds the registrar of deeds in Salem.

And the paperwork is not all foreclosure-related anymore. In fact, much of it is for refinancing or for new purchases by people “in good standing in the eyes of the bank.” What do you think should be done about robo-signing when it is not related to foreclosures?
…

Isn’t document forgery a felony? Why aren’t perpetrators going to prison for committing these document forgery crimes?

RPT-Behind foreclosure corner-cutting, troves of missing documents
Tue Jul 19, 2011 4:00pm EDT
By Scot J. Paltrow

NEW YORK, July 18 (Reuters) - Why have sketchy mortgage procedures been so difficult to root out? Some lawyers blame misguided efforts to cut costs. Most foreclosures are uncontested, they note. And so servicers save money by avoiding costly searches for missing original documents or hiring additional staff to deal with the surge in foreclosures.

There are signs, however, that servicers resort to doubtful documents because they have no choice if they are determined to foreclose: To a great extent, originals simply don’t exist.

It’s one of the overlooked legacies of the housing boom.

In the rush to make new home loans and sell them off as fast as possible to investors on Wall Street, the original lenders –big banks as well as now defunct makers of subprime loans –destroyed original documents, or never turned them over as required to the ownership pools that scooped them up. From 2004 through the end of the housing boom in 2006, more than half of all new mortgages were securitized and sold to such pools, known as mortgage-securitization trusts, according to the Securities Industry and Financial Markets Association.

So, banks and intermediaries in many cases never turned over the two essential documents underpinning a home loan — promissory notes and mortgages — that would convey ownership to the investor trusts. That means many pension funds, insurance companies and hedge funds that invested in the trusts never got formal title to mortgages they had paid for.

One example: Public records in foreclosure cases indicate that New Century Mortgage, the nation’s second-largest subprime lender until it collapsed in 2007, almost never endorsed promissory notes or assigned mortgages to trusts that bought its mortgages.

A Reuters sampling of 50 foreclosure cases filed in Duval County, Florida, involving New Century mortgages found that none of the promissory notes filed in the cases had any endorsements at all on them. Records show that similar large-scale lapses occurred with other big lenders.
…

Since when is document forgery not a felony offense, punishable by hard time?

Does it somehow make it different if banks were involved?

The Deep End
Insight and investigations from our expert reporters
Fake documents suggest bigger problem
Jul 19, 2011 15:37 EDT

Action in March by federal bank regulators wasn’t enough to scare banks away from the way they handled foreclosures. Reuters found that big banks that service mortgage loans continue to use robo-signers, file false documents and mislead courts in their efforts to take houses from homeowners delinquent on their mortgages.

The findings point to the need for a widespread audit of mortgage documentation by federal bank regulators, a step they have so far strongly resisted. The pervasive use of questionable documents in foreclosures suggests that the cause is deeper than just corner-cutting by mortgage loan servicers. It suggests that to a large extent, original lenders never turned over the required ownership documents when pools of new mortgages were securitized and sold to investors. Investors may have spent billions to buy mortgages they never received.
…

Chart of the Day: The Housing Market Is Worse Than You Think
By Daniel Indiviglio
Jul 25 2011, 4:08 PM ET

Has the state of the housing market gotten better or worse since the first quarter of 2009? To answer this, you have to define what you mean by the state of the housing market. If you mean sales alone, then the state of the market hasn’t changed much: existing home sales are up a little from that time, while new home sales are down a bit. But assessing the inventory of defaulted, unsold homes in the market probably provides a better measure of health.

The following chart created by Laurie Goodman, a housing market expert at Amherst Securities, shows the ominous rise of shadow foreclosure inventory. It was part of a slide in a presentation she recently gave at an event last week at the American Enterprise Institute on how the Dodd-Frank financial regulation bill is stifling mortgage credit. Click to enlarge:

[CHART SHOWN HERE IN THE LINKED STORY]

This chart answers the question: what’s happening to the homes of all those defaulted borrowers that we hear about? Many of those properties are a part of so-called shadow inventory. This is the sort of limbo between when a home’s loan defaults and when the property is put on the market for purchase.

The increase shown above is staggering. The shaded area shows mortgages more than 12 months delinquent or in foreclosure (darker blue) and those seized by the bank (lighter blue). The sum has risen from just below 2 million in early 2009 to 3.35 million in April 2011. That’s an increase of more than 67.5% over this period of about two years.

Also interesting: despite accumulating more defaulted properties, banks are very careful not to increase the number of loans sold very much. Loans sold has been very steady from 80,000 to 95,000 over this period. So recently prices have begun declining again even though the inventory for homes available for sale is being kept relatively low compared to the number that should actually be available to buyers.

According to Goodman’s presentation, even though homes sold are only about 90,000 per month, inventory is growing by around 60,000 per month. So the homes sold each month would have to increase by two-thirds just to keep up with the growing inventory — not to begin to cut the 3.35 million homes in the shadows. To conjure up enough demand to meet 150,000 sales instead of just 90,000, home prices would almost certainly have to fall faster.

I aint afraid of no Ku Klux Klan.

the robosigners have to sign to earn there $10 an hour, their bosses don’t care because they have to get the work out, the heads don’t care because they don’t know it is happening, and the country doesn’t care because it is not a big showy crime, just a bunch of peons doing jobes.

It is up to the courts to handle the problem, by having the staff checking the stuff, and then throwing the foreclosures out with predjudice, and making the companies take the loss.

that, of course, would mean that the courts would have to be immune from corruption, and that might be the sticking point of the solution.

Perhaps whistleblowers should be compensated for reporting felonious actions by their companies, and get a percentage of the recovery from the investors for the failed loans.