Foreclosures

[metta]

 

[ejbonk]

It's really hard to say if that's true or not. A bailout helping lenders keeps banks from failing while a bailout for homeowners keeps foreclosures down, which we can all agree are good things in and of themselves. However, a bailout is not free. Taxpayers have to foot the bill for that. Spending money on a housing bailout means less money that can be spent on other things. In a bailout, the government chooses to devote finite resources to a specific group of people, thereby limiting resources for others.

Moreover, there are many lenders and borrowers who were responsible--those who did not make or take out risky loans. A bailout rewards people who (in most cases knowingly) made poor decisions in assuming too much risk, while punishing those who did make sound decisions. For example, say somebody takes out a subprime loan they can't afford. As part of the bailout, they get their mortgage reduced to 85% of the value of the house. This allows them to now make their payments and stay in their house, which is a good thing. But what about the family next door who decided to cut back on expenses in order to pay their existing payment? What about the renter next door who decided it was better to live within their means rather than buying a house they couldn't afford? Where's their handout?

Conceivably, in the long term borrowers and lenders will behave in a riskier manner if they know the government will just step in and bail them out. In economics, this is known as a moral hazard. Sometimes you have to let banks or borrowers fail in order to restore balance to the system. Where to draw that line is difficult to determine. You want there to be enough pain that people will think twice about making the same bad choices in the future, but not enough that it destroys confidence in the financial system as a whole.

In the end though, there's only so much bailouts can really do. The government and the Federal Reserve cannot control the economy. They can only try to push it in certain directions.

The TaxPayers have been paying for Government Screw Ups since the Beginning of Time. Taxpayers have been paying for Banking Screw-Ups Since FDR. The last Major one was the S&L Failures in the late 1980's and Early 1990's. Come to think of it. There is a BUSHY Connection to one of the Largest S&L Failures in Colorado.

AND EVERY CONSUMER PAYS FOR ALL THE SCREW-UPS EVERY GOD D#%$ DAY.

Get use to Paying for the Government's Messes Kido. Nothing New There. But, Without the Bailouts of the Past,You would not have the comfortable life you have Today.

 

[metta]

http://bp0.blogger.com/_pMscxxELHEg/SDcBYq_dmbI/AAAAAAAACB4/Mr1ved0j5og/s1600-h/AnnualEHSApril08.jpg

The months of supply has risen to 11.2 months, and will probably be over 12 months sometime this summer.

http://bp2.blogger.com/_pMscxxELHEg/SDb_za_dmYI/AAAAAAAACBg/Pfx_L_TW8Vo/s1600-h/MOSApril2008.jpg

 

[ejbonk]

http://bp0.blogger.com/_pMscxxELHEg/SDcBYq_dmbI/AAAAAAAACB4/Mr1ved0j5og/s1600-h/AnnualEHSApril08.jpg

The months of supply has risen to 11.2 months, and will probably be over 12 months sometime this summer.

http://bp2.blogger.com/_pMscxxELHEg/SDb_za_dmYI/AAAAAAAACBg/Pfx_L_TW8Vo/s1600-h/MOSApril2008.jpg

INVENTORY COULD SURPASS SALES VERY SOON. LOOKS LIKE 1982 ALL OVER AGAIN OR WORST.

 

[tommyj]

But long overdue in my opinion

 

[metta]

The Fed's decreasing interest rates has not really resulted in a decrease in mortgage rates. Now the Fed's are talking about possibly increasing interest rates. How might that affect mortgage rates? For someone looking into possibly refinancing this year, is it better to do it now or wait a little bit more?


Inflation-wary Fed looks ahead to rate increases

http://news.yahoo.com/s/nm/20080529/bs_nm/usa_fed_dc

 

[ejbonk]

The Fed's decreasing interest rates has not really resulted in a decrease in mortgage rates. Now the Fed's are talking about possibly increasing interest rates. How might that affect mortgage rates? For someone looking into possibly refinancing this year, is it better to do it now or wait a little bit more?


Inflation-wary Fed looks ahead to rate increases

http://news.yahoo.com/s/nm/20080529/bs_nm/usa_fed_dc

Wait. This little Federal Reserve Drama is not over yet. The Underwriters are the Problem. Bush does not help with his....

Policies.

 

[metta]

Some of the analysts are starting to say that we have either hit bottom with real estate prices or are near bottom. They have said that the drop has been enough in regards to real estate being over priced but that there is a possibility that it may go down a little more due to inflation (energy, food, etc., is making things more difficult for people than normal).

In the city that I live in, some of the homes have dropped $400k. A new home that had a base price of $1.3 million is now under $900k. I'm sure that must upset some of the people that bought and put in upgrades that ended up costing over $2 million for them. A 4500 square foot brand new home with granite counters and tons of upgrades can be purchased for just under $900k.

My home has probably dropped around $200k from its peak value.

There are some excellent buys out there and some analysts are expecting to see major investments in real estate from foreign investors, which make it an even better buy for them with the dollar being valued so low. If this happens, more and more people will become renters and more foreigners will own more of the US. If the foreigners do invest, it will be interesting to see what areas of the country they will focus more on.

 

[ejbonk]

It not over till the Fat Lady Sings. I expect the Drop to Continue for the Next 6 to 18 Months for most of the Country. Just at a Slower Pace than it has recently.

 

[tommyj]

Agreed ..In fact I will state it will be a slog for the next THREE years. Mark my words friends!

 

[ejbonk]

Agreed ..In fact I will state it will be a slog for the next THREE years. Mark my words friends!

You could be correct. See no Fat Lady,Just a skinny Bitch with a great pair of Lungs.

 

[drhladnjak]

A lot of so-called "experts" said for a long time that there was no bubble and that houses were not overpriced. Then as soon as things started to slide, they changed their tune to claim prices would only fall in extra bubbly places like Las Vegas or Miami. Then since the pain started to spread and prices started to drop in most places, they've always said the bottom is near.

The truth is nobody really knows how far prices will slide. If they did, prices would fall to that level tomorrow. Looking at statistics like monthly rent to price ratio and the percentage of income an owner spends for a mortgage, prices would have to go down by about half (excluding inflation) before we're back to historically normal prices. That hasn't happened yet.

 

[ejbonk]

What alot of people tend to forget that this is about FAMILIES.



Foreclosures are not about Banks,Investors,or Flippers. It's about the American Home Owner being Screwed by the Sub-Prime Wall Street Investment Machine.

 

[metta]

Subprime debacle may spark 2-year credit recession

http://news.yahoo.com/s/nm/20080604...ecession_dc;_ylt=Ao21K5oFBIEaGeIKQUGadeQDW7oF

A "credit recession" sparked by the U.S. housing market downturn and excesses in structured finance may last more than two years, and the financial sector will undergo "massive consolidation,"

 

[ejbonk]

Subprime debacle may spark 2-year credit recession

http://news.yahoo.com/s/nm/20080604...ecession_dc;_ylt=Ao21K5oFBIEaGeIKQUGadeQDW7oF

Does not surprise me at all. Washington needs to reform lending,re-finance these poor bastards with sub-prime mortages and work on Job Creation and Stopping the Export of Jobs overseas by enforcement of existing trade agreements and start working on getting the USA out of these Damn Free Trade Accords and switch to a Fair Trade Policy. Fir Trade is where Wages,Epa,Workers Comp,and othe Cost are = or greater than our own. Thus the only free trade partners would be the EU,Canada,and Japan. The other countries would be force to raise their standards and enforcement levels,just to earn the rigth to have free trade with the largest Economy in the World.

Yes,this would throw China and other 3rd world nations into recession,but the USA would be saved from Joining the ranks of the 3rd World.

AMERICA FIRST!!! SCREW EVERYONE ELSE!!!!!


My Rant is over.

 

[metta]

Housing Wire: Primed for Trouble

PJ at Housing Wire has more on the rise in delinquencies for prime loans: Primed for Trouble: Pace of Mortgage Distress Shifts to Prime Borrowers

[A]n alarming shift of the mortgage mess towards prime borrowers appears to be taking place ... signaling that the credit crunch that began among those with less-than-perfect credit is now marching onward towards borrowers usually deemed better credit risks.

... the Q4 to Q1 change in severe delinquencies strongly favors prime borrowers, for example, with severe DQs increasing by 19.2 percent for prime and 13.7 percent for subprime borrowers.​

See the entire article - the problems are accelerating rapidly for prime loans.

http://calculatedrisk.blogspot.com/2008/06/housing-wire-primed-for-trouble.html

 

[metta]

http://news.yahoo.com/s/ap/20080605...countrywide;_ylt=Avuyt9IMt4ujOCjbOsix88QDW7oF




hmmm...one of my friends told me that BofA backed out of the deal a long time ago. Obviously, he heard wrong. I'm gald that it looks like Countrywide will survive this. It is such a huge company with so many employees.

http://news.yahoo.com/s/ap/20080605...countrywide;_ylt=Avuyt9IMt4ujOCjbOsix88QDW7oF


Bank of America wins approval to buy Countrywide

In its order, the Fed board said that after the proposed deal Bank of America would remain the largest depository institution in the country, controlling approximately $773.4 billion in deposits, which represent 10.9 percent of total insured bank deposits in the country.

When the deal was first announced in January, Bank of America said it would pay about $4 billion in an all-stock deal for Countrywide, exchanging 0.1822 shares of Bank of America for each share of Countrywide outstanding.

Lets hope that over the long term that this will be a good step to help bring things into stability.

 

[metta]

Blue bars on the chart represent the recast schedule if all the loans were to recast five years after origination date. Gray bars represent the expected schedule of option ARM resets, which show loans recasting sooner after hitting the principal cap. Credit Suisse

And, finally, the blue bars tell us when these homeowners obtained their loans - usually 5 years before the scheduled recast. Since the peak is in 2011, we know that most of these homeowners bought or refinanced from 2005 through early 2007. Therefore, with falling house prices, most of these homeowners are underwater (owe more than their homes are worth), and selling or refinancing will not be a viable alternatives.

http://calculatedrisk.blogspot.com/2008/06/option-arms-moving-from-negam-to-fully.html

which probably means that many of these people will just walk away from their properties.

So does this mean that we probably will not see the worst of it until 2011? I'm guessing that would mean we may not really see improvement until at least 2 years after that in order to clear out the inventory of properties. That is a long time.


Eeekkk...It makes me angry that we all have to suffer because of mortgage companies wanting to make a quick buck at any expense: neg am loans

How dumb it was for investment companies to purchase loans that are more than the value of the property. I guess that greed has no boundries.

 

[drhladnjak]

For all the greed, fear, lack of due diligence, predatory lending practices, manipulation, coercion and the other bad aspects of this mortgage mess, in the end the entire thing comes back to one assumption--that house prices always go up. As soon as people accepted that as fact, the next logical step was to lend money to anybody for anything. If they couldn't pay to payments for whatever reason, ever increasing prices would guarantee that the owner could still sell for more than they paid.

Of course, we've now seen that this assumption was not only bogus, but dangerous. The US has not seen substantial, protracted housing price declines since the Great Depression. When the majority of our population had never seen a price decline, it became very easy for us to collectively believe that they just weren't possible.

 

[ejbonk]

Those who fail to learn from the past are doomed to repeat it. Just a little bit of History repeating.