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Latest Comments69 Comments
A Little Known Fact, And Good News, About This Crisis
In addition to that you failed to recognize that the primary problem was making loans to people who were lying about their incomes and had no money to put down. As the mortgage lenders played the role of the little monkeys with their hands over their eyes, their ears and their mouths we continued to sell homes to people who could not afford the payments.
By the way your numbers on available inventory are staggeringly wrong.
Ten Reasons to Hate Mortgage Modifications
According to servicers 25% of modified loans are going delinquent after 1 payment meaning the process is a complete and utter failure. After multiple payments the delinquency rate exceeds 50% according to LPS who has been heavily involved in the servicing of modified loans.
We need the government to get out of the way and let homes find their current real value in the market place. Every action that is taken to manipulate loan performance and uphold value is prolonging the pain indefinitely and potentially deepening this crisis.
Calling for Fed Intervention in the Housing Market
If I end up owing more than my home is worth that is a problem for me to deal with not you and not the government. I am glad my father and most of the World War II generation is not around to see this generation's unwillingness to take responsibility for their own actions. I don't want to be bailed out, I don't want the government to use my tax money to bail out anyone else and those asking for it should be given a free one way ticket to the socialist nation of their chosing with a revocation of their citizenship attached.
The Economics and Ethics of Mortgage Default
I read this morning that 25% of the modified loans are delinquent after the first payment beyond modification and 50% are delinquent after mulitiple payments. Why bother? Anyone who would consider this approach to the mortgage note they signed has no right to ever own a home again. In fact I have just bought some new appliances and will happily donate the boxes for their new home under the local interstate highway overpass. I hear they have lots of bridges in California.
By the way, anytime the government offers you money, the collateral is your soul. It is hard much harder to walk away from that lien than it is to walk away from the mortgage.
Solve the Housing Crisis by Rewarding the Prudent
1. It would take several years to process the loans.
2. No one would want to participate because there is no profit to be made originating loans at below market prices.
3. The cost would be staggering.
4. The benefit would be extremely small in reality, my personal savings would be less than 1% in rate.
5. It would destroy the entire mortgage industry because they would be dragged into a longterm welfare mortgage program for 93% of the population which doesn't want or need it.
6. In the end the government would probably want a percentage ownership of your home, a percentage of the profits when you sell and your first born child.
Prosecutors Going after Fraudulent Mortgage Borrowers
By the way, credit reporting systems do not have income data and income and occupancy were the primary items lied about on applications. A "stated income" loan originated by the guidelines established by the lenders did not permit the loan officer to verify the information. If you verified the income, according to the program guidelines, the loan was not eligible for stated income processing. These rules were almost completely ignored but they were still the rules.
On Nov 13 04:54 AM The hand wrote:
> with todays credit verification systems, i personally fail to understand
> why the lending agencies even ask for more than a ss number. when
> the lender has this kind of power, i do not see legally how you can
> hold the borrower accountable.
>
> the lenders did not do due diligence in entering into the loan agreements.
> and that, my friends begs the bigger question - is it not obvious
> that the lenders must have encouraged the borrowers to lie?
>
>
>
The Housing Solution No One Wants to Hear
Take the TARP funds if we must have them at all and invest them as follows:
1) purchase at below market bank foreclosure properties that will currently not sell at any price.
2) contract for the completion, rehabilitation or improvement of these properties to reduce negative impact on surrounding homes.
3) offer incentives, low fixed rate, etc. to willing buyers, whether owner occupants or investors
3) sell what will sell and rent those that will not sell.
In doing this you will put Americans (restrict to legal residents of US) to work doing the construction work and reduce the negative impacts of foreclosure activity on the communities by moving people back in. You will assist the qualified buyers who are willing to make an investment in the properties. The banks will indirectly benefit by selling non-performing assets albeit at significantly below book value. The economy can begin to recover for real and responsible homeownership will be supported. This type of recovery can be sustained and amounts to an investment in the future instead of a bailout of the past.
Oh God...I forgot, they already spent most of that $700 Billion and have nothing to show for it other than larger banks at the top of the pile.
No Hope for Homeowners? Foreclosure Prevention Program Falters
For the Hand> the homebuyer in the neighborhood benefited from the same artificial inflation of the value of the home which the government wants to force the lenders to write down. Why should the government step in to protect their value when it is just as artificial as the value given to the neighbor's property.
Let the bad loans made to people who can't afford them go the way they are destined to go eventually anyway. Let them fail. The market can then re-calculate the value of both homes. It is painful & it is distasteful but it is necessary and it is the fastest possible route to recovery.
Real HOPE for Homeowners
The write down portion of the program is an insult to every responsible homeowner out there who continues to pay their mortgage regardless of the Loan to Value. This program should be terminated before it can even get off the ground.
IT WILL DO NOTHING EXCEPT PROLONG THE CRISIS WE ARE NOW IN.
By the way, the lenders are not promoting this program and many, particularly wholesale lenders, are not participating at all. I get calls on the program every day but have no place to sell the loans even if they did make sense for anyone.
On Rescuing Homeowners Undergoing Foreclosure
McCain is wrong, Obama is wrong and Bush is wrong on the entire situation. There are good reasons why some people just should not own homes.
They live week to week, paycheck to paycheck, save nothing and the slightest bump in the road, a furlough at work, a layoff, an illness, a surprise repair expense on the house or car, a child in trouble or some other fact of life hits them between the eyes and all of the sudden they can't pay their mortgage. Once they are behind they never catch up because they do not understand why someone isn't there to help them.
There are some people in life who should just rent because it is all they are capable of managing. Some can't even manage that and we see them on the street with their cardboard boxes. It is not my responsibility to bail them out because they made poor life choices and refused to sacrifice anything in order to get what they want or work hard to keep it. I see people every day who make more money than I do yet have so little to show for it. They spend as thought the flow of income will never be interrupted even for a moment.
Banks Should Forget the Moral Hazard for Now
This is not a solution but it will certainly be the largest and fastest redistribution of wealth in the history of the new USSA. The Uneducated Socialist States of America. A high percentage of these borrowers will never make their payments regardless of how low you make the payments. You are removing the only club which ever forced them to pay anything and that is the threat of being dumped out on the street. Remove that threat and you are penalizing every honest hardworking citizen who pays their bills and rewarding the deadbeats of society in the worst move in history.
I am a Republican but I recognize that the blind eye to this approaching storm was turned by my own Party with complicity from the Democrats as well. When John McCain came out in the 2nd debate talking about buying up votes, I mean bad mortgages, then modifying them so the homeowners could afford them. I walked out my front door, pulled up my McCain sign and threw it in the trash can. I had just listened to a "Republican" candidate for President propose the largest welfare program in history. If you think $300 Billion would cover it John, you are dreaming.
We need to get the government out of the way and let these deadbeats lose their homes so we can reach the bottom and start over.
Unintended Consequences - Fast Money Recap (10/6/08)
This morning on Bloomberg I listened to a few minutes of analysis on why BofA needed to raise capital. Not one of them mentioned the $8.4 Billion predatory lending settlement they just entered into to get out of the Countrywide lawsuits. They haven't impressed me much either lately.
Latest Mortgage Trends [Housing Tracker]
Some firms have completely stopped lending on Condos in Florida. Lenders have established very low benchmark credit scores (580) below which they will not lend. They are requiring a down payment. They are requiring documentation of income. They are, in short, going back to requiring applicants to prove they are qualified to handle homeownership. What a great idea.
An applicant with good credit, 3-5% down payment and verifiable income that supports the payment can buy a home (unless it is a condo in Florida) with a loan from any lender in the nation. Beazer and other builders were major contributors to our problems since they owned the mortgage company, contracted exclusively with the attorney's and title companies to handle settlement, and exerted extraordinary influence over the appraisers since the appraiser was hired by the lender who was owned by the builder.
We must strengthen RESPA, ban any kind of monetary agreements between builders, lenders, agents, appraisers, and settlement agents and enforce and reform TILA. We should require licensure of loan officers based on mandatory training and testing with continuing education requirements and hold employers 100% responsible for the actions ot their employees. This will force them to enact their own oversight procedures to identify and prevent fraud before the loan is made.
Housing prices will correct and level themselves at an appropriate level in communities as soon as the Government quits intervening and allows those who cannot afford their homes to be foreclosed on. The banks will sell their property as soon as they see fit. If they have the assets to hold them for a longer period of time that is a decision their Board and management will have to make. I work for a bank and we sell as quickly as we can get a viable buyer.
Mortgages and Lending In The Subprime Meltdown [Housing Tracker]
Mortgage lending is best completed on a local basis where the understanding of value is not derived simply from photos and data on a page. The main problem with the ecomomy today is that common sense and the human factor was increasingly diminished in the lending process over the last 12 years. If we do not reverse this trend we will return to where we are today without a doubt but we will get there faster the next time around.
Time Not for a Bailout, But for Nationalization