California lenders agree to freeze rates

[DaCounselor]

“Mish says rate freeze will fail

http://globaleconomicanalysis.blogspot.com/2007/11/freezing-mortgage-rat…”
___________________________

Is it really black and white, succeed or fail? If failure means that a freeze will not stop home values from dropping a penny more, then I agree that this measure will fail. I would disagree with anyone who thinks that freeze’s, modifications and the like will have no impact on housing values if they are accomplished in significant numbers.

Where I get confused with Mish on this one is that he advocates a “free market” scenario and implies that the Governator’s “plan” is decidedly not free market. Correct me if I misunderstand, but this freeze is not a mandate. The lenders merely agreed to freeze, and upon their own terms. The insinuation is that anything other than abiding by the original terms of the loan and a fast-track to foreclosure is not “free market”. I couldn’t disagree more. If, at the end of the day, the lenders are permitted to foreclose, short sell, modify, freeze, etc etc., then it’s free market as far as I’m concerned. And I think that’s where we still are today.

[Raybyrnes]

DaCounselor

Seems to me you analysis in on the money. The lenders can do what they want. Nothing to prevent them from staying with their original terms and conditions. But and this is a big one, if a hard line is taken not to modify and this means hurting future chances of doing business in California than this could be considered a form of silent intervention.

Implied intervention in this case is almost the same as Direct interevention.

[Raybyrnes]

DaCounselor

Seems to me you analysis in on the money. The lenders can do what they want. Nothing to prevent them from staying with their original terms and conditions. But and this is a big one, if a hard line is taken not to modify and this means hurting future chances of doing business in California than this could be considered a form of silent intervention.

Implied intervention in this case is almost the same as Direct interevention.

[Raybyrnes]

DaCounselor

Seems to me you analysis in on the money. The lenders can do what they want. Nothing to prevent them from staying with their original terms and conditions. But and this is a big one, if a hard line is taken not to modify and this means hurting future chances of doing business in California than this could be considered a form of silent intervention.

Implied intervention in this case is almost the same as Direct interevention.

[Raybyrnes]

DaCounselor

Seems to me you analysis in on the money. The lenders can do what they want. Nothing to prevent them from staying with their original terms and conditions. But and this is a big one, if a hard line is taken not to modify and this means hurting future chances of doing business in California than this could be considered a form of silent intervention.

Implied intervention in this case is almost the same as Direct interevention.

[Raybyrnes]

DaCounselor

Seems to me you analysis in on the money. The lenders can do what they want. Nothing to prevent them from staying with their original terms and conditions. But and this is a big one, if a hard line is taken not to modify and this means hurting future chances of doing business in California than this could be considered a form of silent intervention.

Implied intervention in this case is almost the same as Direct interevention.

[stansd]

I’m thinking this may just be cash management by lenders facing liquidity problems. If the loan is one their books, foreclosing means 6 months or so of no payment followed by a cash inflow upon sale of the house (complicated by lower assets on their books, but that’s more of an accounting issue). In the end, it’s more cash than is probably available now based on what they could sell the loans for in the secondary market, but their liquidity problems are short and not long term.

I’m starting to think those folks who have been saying these guys are all going bk are right. I can’t imagine a lot of economic logic in doing this, but I can imagine a lot of accounting shenanigens/trying to get better treatment when you go bk.

I’d be interested to hear the insights of others who are more knowledgeable about the industry.

Stan

[stansd]

I’m thinking this may just be cash management by lenders facing liquidity problems. If the loan is one their books, foreclosing means 6 months or so of no payment followed by a cash inflow upon sale of the house (complicated by lower assets on their books, but that’s more of an accounting issue). In the end, it’s more cash than is probably available now based on what they could sell the loans for in the secondary market, but their liquidity problems are short and not long term.

I’m starting to think those folks who have been saying these guys are all going bk are right. I can’t imagine a lot of economic logic in doing this, but I can imagine a lot of accounting shenanigens/trying to get better treatment when you go bk.

I’d be interested to hear the insights of others who are more knowledgeable about the industry.

Stan

[stansd]

I’m thinking this may just be cash management by lenders facing liquidity problems. If the loan is one their books, foreclosing means 6 months or so of no payment followed by a cash inflow upon sale of the house (complicated by lower assets on their books, but that’s more of an accounting issue). In the end, it’s more cash than is probably available now based on what they could sell the loans for in the secondary market, but their liquidity problems are short and not long term.

I’m starting to think those folks who have been saying these guys are all going bk are right. I can’t imagine a lot of economic logic in doing this, but I can imagine a lot of accounting shenanigens/trying to get better treatment when you go bk.

I’d be interested to hear the insights of others who are more knowledgeable about the industry.

Stan

[stansd]

I’m thinking this may just be cash management by lenders facing liquidity problems. If the loan is one their books, foreclosing means 6 months or so of no payment followed by a cash inflow upon sale of the house (complicated by lower assets on their books, but that’s more of an accounting issue). In the end, it’s more cash than is probably available now based on what they could sell the loans for in the secondary market, but their liquidity problems are short and not long term.

I’m starting to think those folks who have been saying these guys are all going bk are right. I can’t imagine a lot of economic logic in doing this, but I can imagine a lot of accounting shenanigens/trying to get better treatment when you go bk.

I’d be interested to hear the insights of others who are more knowledgeable about the industry.

Stan

[stansd]

I’m thinking this may just be cash management by lenders facing liquidity problems. If the loan is one their books, foreclosing means 6 months or so of no payment followed by a cash inflow upon sale of the house (complicated by lower assets on their books, but that’s more of an accounting issue). In the end, it’s more cash than is probably available now based on what they could sell the loans for in the secondary market, but their liquidity problems are short and not long term.

I’m starting to think those folks who have been saying these guys are all going bk are right. I can’t imagine a lot of economic logic in doing this, but I can imagine a lot of accounting shenanigens/trying to get better treatment when you go bk.

I’d be interested to hear the insights of others who are more knowledgeable about the industry.

Stan

[bobby]

the bank will either hurt now or hurt later. no difference.
freezing the rate will not do anything to the housing price free fall.
due to credit crunch, people still can’t get loans unless have good fico & down payment. people wont rush head first into buying.
the transaction price will reflect what they can realistically pay/borrow.

[bobby]

the bank will either hurt now or hurt later. no difference.
freezing the rate will not do anything to the housing price free fall.
due to credit crunch, people still can’t get loans unless have good fico & down payment. people wont rush head first into buying.
the transaction price will reflect what they can realistically pay/borrow.

[bobby]

the bank will either hurt now or hurt later. no difference.
freezing the rate will not do anything to the housing price free fall.
due to credit crunch, people still can’t get loans unless have good fico & down payment. people wont rush head first into buying.
the transaction price will reflect what they can realistically pay/borrow.

[bobby]

the bank will either hurt now or hurt later. no difference.
freezing the rate will not do anything to the housing price free fall.
due to credit crunch, people still can’t get loans unless have good fico & down payment. people wont rush head first into buying.
the transaction price will reflect what they can realistically pay/borrow.

[Author]

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