Home › Forums › Financial Markets/Economics › Bailout plan: hot off the press
- This topic has 60 replies, 13 voices, and was last updated 15 years, 3 months ago by
temeculaguy.
-
AuthorPosts
-
-
December 6, 2007 at 10:53 AM #11110
-
December 6, 2007 at 11:03 AM #110413
CMcG
ParticipantThanks for the link. What about the rumors that you don’t qualify if you owe more than your house is worth? I know two people in that situation. The article (or Bush) is kind of vague on the loan to value thing.
-
December 6, 2007 at 11:22 AM #110433
GoUSC
ParticipantLooks like the majority of people are thinking this thing is a bad idea…Not to say online polls are really valuable but regardless..
-
December 6, 2007 at 11:31 AM #110443
NeetaT
ParticipantI put my vote in.
-
December 6, 2007 at 12:46 PM #110533
Anonymous
GuestThis is just an insurance policy Dubyah is buying, so that he doesn’t get Katrinaized again. Perception is reality.
-
December 6, 2007 at 12:46 PM #110651
Anonymous
GuestThis is just an insurance policy Dubyah is buying, so that he doesn’t get Katrinaized again. Perception is reality.
-
December 6, 2007 at 12:46 PM #110680
Anonymous
GuestThis is just an insurance policy Dubyah is buying, so that he doesn’t get Katrinaized again. Perception is reality.
-
December 6, 2007 at 12:46 PM #110697
Anonymous
GuestThis is just an insurance policy Dubyah is buying, so that he doesn’t get Katrinaized again. Perception is reality.
-
December 6, 2007 at 12:46 PM #110699
Anonymous
GuestThis is just an insurance policy Dubyah is buying, so that he doesn’t get Katrinaized again. Perception is reality.
-
December 6, 2007 at 11:31 AM #110561
NeetaT
ParticipantI put my vote in.
-
December 6, 2007 at 11:31 AM #110591
NeetaT
ParticipantI put my vote in.
-
December 6, 2007 at 11:31 AM #110607
NeetaT
ParticipantI put my vote in.
-
December 6, 2007 at 11:31 AM #110609
NeetaT
ParticipantI put my vote in.
-
-
December 6, 2007 at 11:22 AM #110550
GoUSC
ParticipantLooks like the majority of people are thinking this thing is a bad idea…Not to say online polls are really valuable but regardless..
-
December 6, 2007 at 11:22 AM #110580
GoUSC
ParticipantLooks like the majority of people are thinking this thing is a bad idea…Not to say online polls are really valuable but regardless..
-
December 6, 2007 at 11:22 AM #110597
GoUSC
ParticipantLooks like the majority of people are thinking this thing is a bad idea…Not to say online polls are really valuable but regardless..
-
December 6, 2007 at 11:22 AM #110599
GoUSC
ParticipantLooks like the majority of people are thinking this thing is a bad idea…Not to say online polls are really valuable but regardless..
-
-
December 6, 2007 at 11:03 AM #110530
CMcG
ParticipantThanks for the link. What about the rumors that you don’t qualify if you owe more than your house is worth? I know two people in that situation. The article (or Bush) is kind of vague on the loan to value thing.
-
December 6, 2007 at 11:03 AM #110560
CMcG
ParticipantThanks for the link. What about the rumors that you don’t qualify if you owe more than your house is worth? I know two people in that situation. The article (or Bush) is kind of vague on the loan to value thing.
-
December 6, 2007 at 11:03 AM #110577
CMcG
ParticipantThanks for the link. What about the rumors that you don’t qualify if you owe more than your house is worth? I know two people in that situation. The article (or Bush) is kind of vague on the loan to value thing.
-
December 6, 2007 at 11:03 AM #110579
CMcG
ParticipantThanks for the link. What about the rumors that you don’t qualify if you owe more than your house is worth? I know two people in that situation. The article (or Bush) is kind of vague on the loan to value thing.
-
December 6, 2007 at 1:03 PM #110553
DWCAP
ParticipantThe perception is that the Republicans are gonna get creamed this coming election, so they can’t be seen as insensitive, like Katrina. They found a band-aid and put it on a shotgun wound. The Sub-prime hole may stop bleading for a time, but the Alt_A wounds and option arm hits are about to bleed this market out. Now itll just take more time.
Besides, wont this make the NEXT reset even worse? If they havn’t been paying off capital, in 5 years the repayment part will be even higher. -
December 6, 2007 at 1:03 PM #110671
DWCAP
ParticipantThe perception is that the Republicans are gonna get creamed this coming election, so they can’t be seen as insensitive, like Katrina. They found a band-aid and put it on a shotgun wound. The Sub-prime hole may stop bleading for a time, but the Alt_A wounds and option arm hits are about to bleed this market out. Now itll just take more time.
Besides, wont this make the NEXT reset even worse? If they havn’t been paying off capital, in 5 years the repayment part will be even higher. -
December 6, 2007 at 1:03 PM #110701
DWCAP
ParticipantThe perception is that the Republicans are gonna get creamed this coming election, so they can’t be seen as insensitive, like Katrina. They found a band-aid and put it on a shotgun wound. The Sub-prime hole may stop bleading for a time, but the Alt_A wounds and option arm hits are about to bleed this market out. Now itll just take more time.
Besides, wont this make the NEXT reset even worse? If they havn’t been paying off capital, in 5 years the repayment part will be even higher. -
December 6, 2007 at 1:03 PM #110716
DWCAP
ParticipantThe perception is that the Republicans are gonna get creamed this coming election, so they can’t be seen as insensitive, like Katrina. They found a band-aid and put it on a shotgun wound. The Sub-prime hole may stop bleading for a time, but the Alt_A wounds and option arm hits are about to bleed this market out. Now itll just take more time.
Besides, wont this make the NEXT reset even worse? If they havn’t been paying off capital, in 5 years the repayment part will be even higher. -
December 6, 2007 at 1:03 PM #110719
DWCAP
ParticipantThe perception is that the Republicans are gonna get creamed this coming election, so they can’t be seen as insensitive, like Katrina. They found a band-aid and put it on a shotgun wound. The Sub-prime hole may stop bleading for a time, but the Alt_A wounds and option arm hits are about to bleed this market out. Now itll just take more time.
Besides, wont this make the NEXT reset even worse? If they havn’t been paying off capital, in 5 years the repayment part will be even higher. -
December 6, 2007 at 1:08 PM #110558
JPJones
ParticipantSo from reading several articles this morning, these are a few points about this “bail-out”:
-Minimum 660 FICO requirement
-No more than 60 days past due on payments
-Must have at least 3% equity
Please correct me if I’m wrong about any of them, but if accurate, that doesn’t sound like much of a bailout to me.
-
December 6, 2007 at 1:08 PM #110676
JPJones
ParticipantSo from reading several articles this morning, these are a few points about this “bail-out”:
-Minimum 660 FICO requirement
-No more than 60 days past due on payments
-Must have at least 3% equity
Please correct me if I’m wrong about any of them, but if accurate, that doesn’t sound like much of a bailout to me.
-
December 6, 2007 at 1:08 PM #110706
JPJones
ParticipantSo from reading several articles this morning, these are a few points about this “bail-out”:
-Minimum 660 FICO requirement
-No more than 60 days past due on payments
-Must have at least 3% equity
Please correct me if I’m wrong about any of them, but if accurate, that doesn’t sound like much of a bailout to me.
-
December 6, 2007 at 1:08 PM #110721
JPJones
ParticipantSo from reading several articles this morning, these are a few points about this “bail-out”:
-Minimum 660 FICO requirement
-No more than 60 days past due on payments
-Must have at least 3% equity
Please correct me if I’m wrong about any of them, but if accurate, that doesn’t sound like much of a bailout to me.
-
December 6, 2007 at 1:08 PM #110724
JPJones
ParticipantSo from reading several articles this morning, these are a few points about this “bail-out”:
-Minimum 660 FICO requirement
-No more than 60 days past due on payments
-Must have at least 3% equity
Please correct me if I’m wrong about any of them, but if accurate, that doesn’t sound like much of a bailout to me.
-
December 6, 2007 at 1:37 PM #110573
pbnative
ParticipantI’m curious what the people who hold all these loans think they should do. They don’t like this idea of a freeze, and put lots of requirements around it. Seems like they want to continue foreclosing if the borrower can’t pay as scheduled. Of course that’s the reasonable, legal thing to do, but how can that be in their own financial best interest in the current situation?
Do they think people will start to magically make more money and pay their bill? Do they think the market is coming back any sec? Or do they want the whole situation to get so bad the govt has to truly bail them out?
-
December 6, 2007 at 1:37 PM #110691
pbnative
ParticipantI’m curious what the people who hold all these loans think they should do. They don’t like this idea of a freeze, and put lots of requirements around it. Seems like they want to continue foreclosing if the borrower can’t pay as scheduled. Of course that’s the reasonable, legal thing to do, but how can that be in their own financial best interest in the current situation?
Do they think people will start to magically make more money and pay their bill? Do they think the market is coming back any sec? Or do they want the whole situation to get so bad the govt has to truly bail them out?
-
December 6, 2007 at 1:37 PM #110720
pbnative
ParticipantI’m curious what the people who hold all these loans think they should do. They don’t like this idea of a freeze, and put lots of requirements around it. Seems like they want to continue foreclosing if the borrower can’t pay as scheduled. Of course that’s the reasonable, legal thing to do, but how can that be in their own financial best interest in the current situation?
Do they think people will start to magically make more money and pay their bill? Do they think the market is coming back any sec? Or do they want the whole situation to get so bad the govt has to truly bail them out?
-
December 6, 2007 at 1:37 PM #110735
pbnative
ParticipantI’m curious what the people who hold all these loans think they should do. They don’t like this idea of a freeze, and put lots of requirements around it. Seems like they want to continue foreclosing if the borrower can’t pay as scheduled. Of course that’s the reasonable, legal thing to do, but how can that be in their own financial best interest in the current situation?
Do they think people will start to magically make more money and pay their bill? Do they think the market is coming back any sec? Or do they want the whole situation to get so bad the govt has to truly bail them out?
-
December 6, 2007 at 1:37 PM #110739
pbnative
ParticipantI’m curious what the people who hold all these loans think they should do. They don’t like this idea of a freeze, and put lots of requirements around it. Seems like they want to continue foreclosing if the borrower can’t pay as scheduled. Of course that’s the reasonable, legal thing to do, but how can that be in their own financial best interest in the current situation?
Do they think people will start to magically make more money and pay their bill? Do they think the market is coming back any sec? Or do they want the whole situation to get so bad the govt has to truly bail them out?
-
December 6, 2007 at 2:37 PM #110618
SHILOH
ParticipantI don’t understand how they can change the terms of a loan…when these loans have been split up and sold as MBS with contracts….
Since when can you just start changing contracts? If both parties agree?What about all the other people who were foreclosed on under the contract? Will they have recourse if the contract has changed?
-
December 6, 2007 at 2:44 PM #110628
kev374
Participant
-Minimum 660 FICO requirement-No more than 60 days past due on payments
-Must have at least 3% equity
This bailout is an eyewash. If a buyer had an exotic loan or teaser rate ARM it’s almost certain they haven’t built any equity!!
And there is an additional requirement that the purchase must be post 2005. Since that time housing values have only gone down so almost 100% of these people are upside down. Any equity requirements rules them out completely!
-
December 6, 2007 at 4:28 PM #110693
drunkle
Participantit’s optional for the lenders to do this. this plan has no teeth.
the determination of whether or not a homeowner can afford to continue payments on a frozen basis will require documentation, ie., w2. how many “homeowners” bought using a w2?
the people who can afford it are not the people that need help, obviously. if anything, this plan is to get ignorant investors back into the financial stocks to prolong the life of the banks, allow hedgies to buy shorts, etc.
-
December 6, 2007 at 6:12 PM #110783
LA_Renter
ParticipantI found this on the KBH chatboard. The poster was heavily involved in S&L crisis in the 80’s. He found this quote on Calculated Risk, anyway I found this to be very interesting. The first paragraph is from the poster the following paragraphs are from the former FDIC examiner.
“From Calculated Risk comments, from former FDIC examiner:
A former FDIC employee sent these comments out today. I try to place value in comments from people like this who actually worked to clean up the S&L Bank crisis we felt in 1980s Texas.
____
One of the things they are leaving out of this story about the sub-prime rate freeze is that the owners of the debt (sub-prime mortgages or anything tainted by sub-prime such as mortgage backed securities) are NO LONGER required to re-price these assets on a monthly or quarterly basis as has been the case. The balance sheets in question will no longer reflect market value. This will allow institutions to hold securities of unknown value on their books without any valuation reserve or write-down (Regulations on the freeze action have not been released). This is exactly what the Japanese banks did in the 90’s when they did not quickly clean up their balance sheets and deal with the problem, and many of them still have bad debt from the late 80’s on their books. SO, the result of this is that there will be a ticking time bomb in the banking / financial system AGAIN.
This action is too late to make any real impact on the housing problem. Real estate prices everywhere have already fallen and will continue to do so until there is something of a more normal relationship between real estate prices and their historic place in the proverbial “basket of goods”. Again, the last time real estate markets peaked in the middle of the decade was in the 1920’s (1925 to be exact) and they did not begin to level out until 1934 and not rise until the early 1940’s. Today’s action only moves off the inevitable day of dealing with these underwater loans and thereby creates a longer-term problem than would otherwise be the case. This freeze requires homeowners to have 3% equity in their property in order to qualify, as prices continue to decline this will be fewer and fewer. Unfortunately, the ball has already gone over the edge of the building
This action is very similar to the actions taken in the early part of the S&L disaster when the sick institutions were allowed to keep “goodwill” on their balance sheets and classify it as core capital… and we all remember where that mess ended up. Not dealing with real problems in the financial and banking systems always ends in disaster eventually. However, it allows those in power a quick fix and allow them to pass the problem on the next administration to deal with… Regan did it to old Bush and now little Bush is doing it to whomever…
Earnings at the financial institutions will appear to be significantly improved soon as they will not have to make any of those HUGE (billions of dollars) write-downs on their portfolios any time soon, but they will come.”
-
December 6, 2007 at 6:24 PM #110808
temeculaguy
ParticipantI don’t see how this will help the liquidity problem, it’s new rims with old tires. Why would any investor in the future buy mortgage backed securities if they are going to get strongarmed out of their profit, more risk, no reward. Within those pooled assets are a chunk of borrowers who will continue to make the payments at higher rates to offset a little of what the foreclosures cost them. Based on the critera, 660 fico, no lates, equity, they are being told to not make any money off of the best borrowers in the pool while those who don’t qualify are really the ones who will be foreclosing.
Almost every attempt in history to trick the invisible hand of economics has backfired, this will be no different. Where did Laize faire go? This is akin to a casino changing the rules in blackjack after I’ve bet and the cards have been dealt, telling me that I lose on a tie. They will do nothing other than ensuring I stop betting because they can’t be trusted. They may save a few people but they will make sure that private equity steers clear of anyone without stellar credit and large downpayments, while that is not a bad thing, it will hurt the very market they are trying to manipulate.
-
December 6, 2007 at 6:24 PM #110922
temeculaguy
ParticipantI don’t see how this will help the liquidity problem, it’s new rims with old tires. Why would any investor in the future buy mortgage backed securities if they are going to get strongarmed out of their profit, more risk, no reward. Within those pooled assets are a chunk of borrowers who will continue to make the payments at higher rates to offset a little of what the foreclosures cost them. Based on the critera, 660 fico, no lates, equity, they are being told to not make any money off of the best borrowers in the pool while those who don’t qualify are really the ones who will be foreclosing.
Almost every attempt in history to trick the invisible hand of economics has backfired, this will be no different. Where did Laize faire go? This is akin to a casino changing the rules in blackjack after I’ve bet and the cards have been dealt, telling me that I lose on a tie. They will do nothing other than ensuring I stop betting because they can’t be trusted. They may save a few people but they will make sure that private equity steers clear of anyone without stellar credit and large downpayments, while that is not a bad thing, it will hurt the very market they are trying to manipulate.
-
December 6, 2007 at 6:24 PM #110957
temeculaguy
ParticipantI don’t see how this will help the liquidity problem, it’s new rims with old tires. Why would any investor in the future buy mortgage backed securities if they are going to get strongarmed out of their profit, more risk, no reward. Within those pooled assets are a chunk of borrowers who will continue to make the payments at higher rates to offset a little of what the foreclosures cost them. Based on the critera, 660 fico, no lates, equity, they are being told to not make any money off of the best borrowers in the pool while those who don’t qualify are really the ones who will be foreclosing.
Almost every attempt in history to trick the invisible hand of economics has backfired, this will be no different. Where did Laize faire go? This is akin to a casino changing the rules in blackjack after I’ve bet and the cards have been dealt, telling me that I lose on a tie. They will do nothing other than ensuring I stop betting because they can’t be trusted. They may save a few people but they will make sure that private equity steers clear of anyone without stellar credit and large downpayments, while that is not a bad thing, it will hurt the very market they are trying to manipulate.
-
December 6, 2007 at 6:24 PM #110975
temeculaguy
ParticipantI don’t see how this will help the liquidity problem, it’s new rims with old tires. Why would any investor in the future buy mortgage backed securities if they are going to get strongarmed out of their profit, more risk, no reward. Within those pooled assets are a chunk of borrowers who will continue to make the payments at higher rates to offset a little of what the foreclosures cost them. Based on the critera, 660 fico, no lates, equity, they are being told to not make any money off of the best borrowers in the pool while those who don’t qualify are really the ones who will be foreclosing.
Almost every attempt in history to trick the invisible hand of economics has backfired, this will be no different. Where did Laize faire go? This is akin to a casino changing the rules in blackjack after I’ve bet and the cards have been dealt, telling me that I lose on a tie. They will do nothing other than ensuring I stop betting because they can’t be trusted. They may save a few people but they will make sure that private equity steers clear of anyone without stellar credit and large downpayments, while that is not a bad thing, it will hurt the very market they are trying to manipulate.
-
December 6, 2007 at 6:24 PM #110999
temeculaguy
ParticipantI don’t see how this will help the liquidity problem, it’s new rims with old tires. Why would any investor in the future buy mortgage backed securities if they are going to get strongarmed out of their profit, more risk, no reward. Within those pooled assets are a chunk of borrowers who will continue to make the payments at higher rates to offset a little of what the foreclosures cost them. Based on the critera, 660 fico, no lates, equity, they are being told to not make any money off of the best borrowers in the pool while those who don’t qualify are really the ones who will be foreclosing.
Almost every attempt in history to trick the invisible hand of economics has backfired, this will be no different. Where did Laize faire go? This is akin to a casino changing the rules in blackjack after I’ve bet and the cards have been dealt, telling me that I lose on a tie. They will do nothing other than ensuring I stop betting because they can’t be trusted. They may save a few people but they will make sure that private equity steers clear of anyone without stellar credit and large downpayments, while that is not a bad thing, it will hurt the very market they are trying to manipulate.
-
December 6, 2007 at 6:12 PM #110898
LA_Renter
ParticipantI found this on the KBH chatboard. The poster was heavily involved in S&L crisis in the 80’s. He found this quote on Calculated Risk, anyway I found this to be very interesting. The first paragraph is from the poster the following paragraphs are from the former FDIC examiner.
“From Calculated Risk comments, from former FDIC examiner:
A former FDIC employee sent these comments out today. I try to place value in comments from people like this who actually worked to clean up the S&L Bank crisis we felt in 1980s Texas.
____
One of the things they are leaving out of this story about the sub-prime rate freeze is that the owners of the debt (sub-prime mortgages or anything tainted by sub-prime such as mortgage backed securities) are NO LONGER required to re-price these assets on a monthly or quarterly basis as has been the case. The balance sheets in question will no longer reflect market value. This will allow institutions to hold securities of unknown value on their books without any valuation reserve or write-down (Regulations on the freeze action have not been released). This is exactly what the Japanese banks did in the 90’s when they did not quickly clean up their balance sheets and deal with the problem, and many of them still have bad debt from the late 80’s on their books. SO, the result of this is that there will be a ticking time bomb in the banking / financial system AGAIN.
This action is too late to make any real impact on the housing problem. Real estate prices everywhere have already fallen and will continue to do so until there is something of a more normal relationship between real estate prices and their historic place in the proverbial “basket of goods”. Again, the last time real estate markets peaked in the middle of the decade was in the 1920’s (1925 to be exact) and they did not begin to level out until 1934 and not rise until the early 1940’s. Today’s action only moves off the inevitable day of dealing with these underwater loans and thereby creates a longer-term problem than would otherwise be the case. This freeze requires homeowners to have 3% equity in their property in order to qualify, as prices continue to decline this will be fewer and fewer. Unfortunately, the ball has already gone over the edge of the building
This action is very similar to the actions taken in the early part of the S&L disaster when the sick institutions were allowed to keep “goodwill” on their balance sheets and classify it as core capital… and we all remember where that mess ended up. Not dealing with real problems in the financial and banking systems always ends in disaster eventually. However, it allows those in power a quick fix and allow them to pass the problem on the next administration to deal with… Regan did it to old Bush and now little Bush is doing it to whomever…
Earnings at the financial institutions will appear to be significantly improved soon as they will not have to make any of those HUGE (billions of dollars) write-downs on their portfolios any time soon, but they will come.”
-
December 6, 2007 at 6:12 PM #110933
LA_Renter
ParticipantI found this on the KBH chatboard. The poster was heavily involved in S&L crisis in the 80’s. He found this quote on Calculated Risk, anyway I found this to be very interesting. The first paragraph is from the poster the following paragraphs are from the former FDIC examiner.
“From Calculated Risk comments, from former FDIC examiner:
A former FDIC employee sent these comments out today. I try to place value in comments from people like this who actually worked to clean up the S&L Bank crisis we felt in 1980s Texas.
____
One of the things they are leaving out of this story about the sub-prime rate freeze is that the owners of the debt (sub-prime mortgages or anything tainted by sub-prime such as mortgage backed securities) are NO LONGER required to re-price these assets on a monthly or quarterly basis as has been the case. The balance sheets in question will no longer reflect market value. This will allow institutions to hold securities of unknown value on their books without any valuation reserve or write-down (Regulations on the freeze action have not been released). This is exactly what the Japanese banks did in the 90’s when they did not quickly clean up their balance sheets and deal with the problem, and many of them still have bad debt from the late 80’s on their books. SO, the result of this is that there will be a ticking time bomb in the banking / financial system AGAIN.
This action is too late to make any real impact on the housing problem. Real estate prices everywhere have already fallen and will continue to do so until there is something of a more normal relationship between real estate prices and their historic place in the proverbial “basket of goods”. Again, the last time real estate markets peaked in the middle of the decade was in the 1920’s (1925 to be exact) and they did not begin to level out until 1934 and not rise until the early 1940’s. Today’s action only moves off the inevitable day of dealing with these underwater loans and thereby creates a longer-term problem than would otherwise be the case. This freeze requires homeowners to have 3% equity in their property in order to qualify, as prices continue to decline this will be fewer and fewer. Unfortunately, the ball has already gone over the edge of the building
This action is very similar to the actions taken in the early part of the S&L disaster when the sick institutions were allowed to keep “goodwill” on their balance sheets and classify it as core capital… and we all remember where that mess ended up. Not dealing with real problems in the financial and banking systems always ends in disaster eventually. However, it allows those in power a quick fix and allow them to pass the problem on the next administration to deal with… Regan did it to old Bush and now little Bush is doing it to whomever…
Earnings at the financial institutions will appear to be significantly improved soon as they will not have to make any of those HUGE (billions of dollars) write-downs on their portfolios any time soon, but they will come.”
-
December 6, 2007 at 6:12 PM #110950
LA_Renter
ParticipantI found this on the KBH chatboard. The poster was heavily involved in S&L crisis in the 80’s. He found this quote on Calculated Risk, anyway I found this to be very interesting. The first paragraph is from the poster the following paragraphs are from the former FDIC examiner.
“From Calculated Risk comments, from former FDIC examiner:
A former FDIC employee sent these comments out today. I try to place value in comments from people like this who actually worked to clean up the S&L Bank crisis we felt in 1980s Texas.
____
One of the things they are leaving out of this story about the sub-prime rate freeze is that the owners of the debt (sub-prime mortgages or anything tainted by sub-prime such as mortgage backed securities) are NO LONGER required to re-price these assets on a monthly or quarterly basis as has been the case. The balance sheets in question will no longer reflect market value. This will allow institutions to hold securities of unknown value on their books without any valuation reserve or write-down (Regulations on the freeze action have not been released). This is exactly what the Japanese banks did in the 90’s when they did not quickly clean up their balance sheets and deal with the problem, and many of them still have bad debt from the late 80’s on their books. SO, the result of this is that there will be a ticking time bomb in the banking / financial system AGAIN.
This action is too late to make any real impact on the housing problem. Real estate prices everywhere have already fallen and will continue to do so until there is something of a more normal relationship between real estate prices and their historic place in the proverbial “basket of goods”. Again, the last time real estate markets peaked in the middle of the decade was in the 1920’s (1925 to be exact) and they did not begin to level out until 1934 and not rise until the early 1940’s. Today’s action only moves off the inevitable day of dealing with these underwater loans and thereby creates a longer-term problem than would otherwise be the case. This freeze requires homeowners to have 3% equity in their property in order to qualify, as prices continue to decline this will be fewer and fewer. Unfortunately, the ball has already gone over the edge of the building
This action is very similar to the actions taken in the early part of the S&L disaster when the sick institutions were allowed to keep “goodwill” on their balance sheets and classify it as core capital… and we all remember where that mess ended up. Not dealing with real problems in the financial and banking systems always ends in disaster eventually. However, it allows those in power a quick fix and allow them to pass the problem on the next administration to deal with… Regan did it to old Bush and now little Bush is doing it to whomever…
Earnings at the financial institutions will appear to be significantly improved soon as they will not have to make any of those HUGE (billions of dollars) write-downs on their portfolios any time soon, but they will come.”
-
December 6, 2007 at 6:12 PM #110974
LA_Renter
ParticipantI found this on the KBH chatboard. The poster was heavily involved in S&L crisis in the 80’s. He found this quote on Calculated Risk, anyway I found this to be very interesting. The first paragraph is from the poster the following paragraphs are from the former FDIC examiner.
“From Calculated Risk comments, from former FDIC examiner:
A former FDIC employee sent these comments out today. I try to place value in comments from people like this who actually worked to clean up the S&L Bank crisis we felt in 1980s Texas.
____
One of the things they are leaving out of this story about the sub-prime rate freeze is that the owners of the debt (sub-prime mortgages or anything tainted by sub-prime such as mortgage backed securities) are NO LONGER required to re-price these assets on a monthly or quarterly basis as has been the case. The balance sheets in question will no longer reflect market value. This will allow institutions to hold securities of unknown value on their books without any valuation reserve or write-down (Regulations on the freeze action have not been released). This is exactly what the Japanese banks did in the 90’s when they did not quickly clean up their balance sheets and deal with the problem, and many of them still have bad debt from the late 80’s on their books. SO, the result of this is that there will be a ticking time bomb in the banking / financial system AGAIN.
This action is too late to make any real impact on the housing problem. Real estate prices everywhere have already fallen and will continue to do so until there is something of a more normal relationship between real estate prices and their historic place in the proverbial “basket of goods”. Again, the last time real estate markets peaked in the middle of the decade was in the 1920’s (1925 to be exact) and they did not begin to level out until 1934 and not rise until the early 1940’s. Today’s action only moves off the inevitable day of dealing with these underwater loans and thereby creates a longer-term problem than would otherwise be the case. This freeze requires homeowners to have 3% equity in their property in order to qualify, as prices continue to decline this will be fewer and fewer. Unfortunately, the ball has already gone over the edge of the building
This action is very similar to the actions taken in the early part of the S&L disaster when the sick institutions were allowed to keep “goodwill” on their balance sheets and classify it as core capital… and we all remember where that mess ended up. Not dealing with real problems in the financial and banking systems always ends in disaster eventually. However, it allows those in power a quick fix and allow them to pass the problem on the next administration to deal with… Regan did it to old Bush and now little Bush is doing it to whomever…
Earnings at the financial institutions will appear to be significantly improved soon as they will not have to make any of those HUGE (billions of dollars) write-downs on their portfolios any time soon, but they will come.”
-
December 6, 2007 at 4:28 PM #110810
drunkle
Participantit’s optional for the lenders to do this. this plan has no teeth.
the determination of whether or not a homeowner can afford to continue payments on a frozen basis will require documentation, ie., w2. how many “homeowners” bought using a w2?
the people who can afford it are not the people that need help, obviously. if anything, this plan is to get ignorant investors back into the financial stocks to prolong the life of the banks, allow hedgies to buy shorts, etc.
-
December 6, 2007 at 4:28 PM #110841
drunkle
Participantit’s optional for the lenders to do this. this plan has no teeth.
the determination of whether or not a homeowner can afford to continue payments on a frozen basis will require documentation, ie., w2. how many “homeowners” bought using a w2?
the people who can afford it are not the people that need help, obviously. if anything, this plan is to get ignorant investors back into the financial stocks to prolong the life of the banks, allow hedgies to buy shorts, etc.
-
December 6, 2007 at 4:28 PM #110859
drunkle
Participantit’s optional for the lenders to do this. this plan has no teeth.
the determination of whether or not a homeowner can afford to continue payments on a frozen basis will require documentation, ie., w2. how many “homeowners” bought using a w2?
the people who can afford it are not the people that need help, obviously. if anything, this plan is to get ignorant investors back into the financial stocks to prolong the life of the banks, allow hedgies to buy shorts, etc.
-
December 6, 2007 at 4:28 PM #110860
drunkle
Participantit’s optional for the lenders to do this. this plan has no teeth.
the determination of whether or not a homeowner can afford to continue payments on a frozen basis will require documentation, ie., w2. how many “homeowners” bought using a w2?
the people who can afford it are not the people that need help, obviously. if anything, this plan is to get ignorant investors back into the financial stocks to prolong the life of the banks, allow hedgies to buy shorts, etc.
-
-
December 6, 2007 at 2:44 PM #110746
kev374
Participant
-Minimum 660 FICO requirement-No more than 60 days past due on payments
-Must have at least 3% equity
This bailout is an eyewash. If a buyer had an exotic loan or teaser rate ARM it’s almost certain they haven’t built any equity!!
And there is an additional requirement that the purchase must be post 2005. Since that time housing values have only gone down so almost 100% of these people are upside down. Any equity requirements rules them out completely!
-
December 6, 2007 at 2:44 PM #110777
kev374
Participant
-Minimum 660 FICO requirement-No more than 60 days past due on payments
-Must have at least 3% equity
This bailout is an eyewash. If a buyer had an exotic loan or teaser rate ARM it’s almost certain they haven’t built any equity!!
And there is an additional requirement that the purchase must be post 2005. Since that time housing values have only gone down so almost 100% of these people are upside down. Any equity requirements rules them out completely!
-
December 6, 2007 at 2:44 PM #110790
kev374
Participant
-Minimum 660 FICO requirement-No more than 60 days past due on payments
-Must have at least 3% equity
This bailout is an eyewash. If a buyer had an exotic loan or teaser rate ARM it’s almost certain they haven’t built any equity!!
And there is an additional requirement that the purchase must be post 2005. Since that time housing values have only gone down so almost 100% of these people are upside down. Any equity requirements rules them out completely!
-
December 6, 2007 at 2:44 PM #110794
kev374
Participant
-Minimum 660 FICO requirement-No more than 60 days past due on payments
-Must have at least 3% equity
This bailout is an eyewash. If a buyer had an exotic loan or teaser rate ARM it’s almost certain they haven’t built any equity!!
And there is an additional requirement that the purchase must be post 2005. Since that time housing values have only gone down so almost 100% of these people are upside down. Any equity requirements rules them out completely!
-
-
December 6, 2007 at 2:37 PM #110736
SHILOH
ParticipantI don’t understand how they can change the terms of a loan…when these loans have been split up and sold as MBS with contracts….
Since when can you just start changing contracts? If both parties agree?What about all the other people who were foreclosed on under the contract? Will they have recourse if the contract has changed?
-
December 6, 2007 at 2:37 PM #110767
SHILOH
ParticipantI don’t understand how they can change the terms of a loan…when these loans have been split up and sold as MBS with contracts….
Since when can you just start changing contracts? If both parties agree?What about all the other people who were foreclosed on under the contract? Will they have recourse if the contract has changed?
-
December 6, 2007 at 2:37 PM #110780
SHILOH
ParticipantI don’t understand how they can change the terms of a loan…when these loans have been split up and sold as MBS with contracts….
Since when can you just start changing contracts? If both parties agree?What about all the other people who were foreclosed on under the contract? Will they have recourse if the contract has changed?
-
December 6, 2007 at 2:37 PM #110784
SHILOH
ParticipantI don’t understand how they can change the terms of a loan…when these loans have been split up and sold as MBS with contracts….
Since when can you just start changing contracts? If both parties agree?What about all the other people who were foreclosed on under the contract? Will they have recourse if the contract has changed?
-
-
AuthorPosts
- You must be logged in to reply to this topic.