CNN — Rate freeze plan for ARMs gains traction. How will this affect the market if this goes thru?

[4plexowner]

“10+ months of inventory sitting around in SD”

rate of sales fell off a cliff in November – will months of inventory be over 20 as we head into 2008?

[Anonymous]

I think the investors will generally be happy to take the freeze. For the most part, it’s held by large institutional investors and their big interest right now is delaying the writedowns they will take. In many cases the writedowns will make them insolvent. Remember corporations are run for the benefit of their *management*, not shareholders. Delaying the day of reckoning means management keeps their jobs longer. Long term effects on shareholders/owners are secondary.

Besides that, they can’t liquidate now. Nobody, and I mean nobody, is currently willing to set prices low enough to sell out their inventory – all the bank and homebuilders are accumulating or holding inventory. IMO the reason is their desperate need to delay the day of reckoning but even if you disagree with my reasoning you have to admit they’re not currently willing to liquidate. Far better to have a home “owner” paying a mortgage (and rumor is the “frozen” mortgage rates will be bumped up to at least 30y fixed levels) than to have an empty house generating *no* cash at all and risking squatters/looters/damage typical of unoccupied houses.

[Anonymous]

I think the investors will generally be happy to take the freeze. For the most part, it’s held by large institutional investors and their big interest right now is delaying the writedowns they will take. In many cases the writedowns will make them insolvent. Remember corporations are run for the benefit of their *management*, not shareholders. Delaying the day of reckoning means management keeps their jobs longer. Long term effects on shareholders/owners are secondary.

Besides that, they can’t liquidate now. Nobody, and I mean nobody, is currently willing to set prices low enough to sell out their inventory – all the bank and homebuilders are accumulating or holding inventory. IMO the reason is their desperate need to delay the day of reckoning but even if you disagree with my reasoning you have to admit they’re not currently willing to liquidate. Far better to have a home “owner” paying a mortgage (and rumor is the “frozen” mortgage rates will be bumped up to at least 30y fixed levels) than to have an empty house generating *no* cash at all and risking squatters/looters/damage typical of unoccupied houses.

[Anonymous]

I think the investors will generally be happy to take the freeze. For the most part, it’s held by large institutional investors and their big interest right now is delaying the writedowns they will take. In many cases the writedowns will make them insolvent. Remember corporations are run for the benefit of their *management*, not shareholders. Delaying the day of reckoning means management keeps their jobs longer. Long term effects on shareholders/owners are secondary.

Besides that, they can’t liquidate now. Nobody, and I mean nobody, is currently willing to set prices low enough to sell out their inventory – all the bank and homebuilders are accumulating or holding inventory. IMO the reason is their desperate need to delay the day of reckoning but even if you disagree with my reasoning you have to admit they’re not currently willing to liquidate. Far better to have a home “owner” paying a mortgage (and rumor is the “frozen” mortgage rates will be bumped up to at least 30y fixed levels) than to have an empty house generating *no* cash at all and risking squatters/looters/damage typical of unoccupied houses.

[Anonymous]

I think the investors will generally be happy to take the freeze. For the most part, it’s held by large institutional investors and their big interest right now is delaying the writedowns they will take. In many cases the writedowns will make them insolvent. Remember corporations are run for the benefit of their *management*, not shareholders. Delaying the day of reckoning means management keeps their jobs longer. Long term effects on shareholders/owners are secondary.

Besides that, they can’t liquidate now. Nobody, and I mean nobody, is currently willing to set prices low enough to sell out their inventory – all the bank and homebuilders are accumulating or holding inventory. IMO the reason is their desperate need to delay the day of reckoning but even if you disagree with my reasoning you have to admit they’re not currently willing to liquidate. Far better to have a home “owner” paying a mortgage (and rumor is the “frozen” mortgage rates will be bumped up to at least 30y fixed levels) than to have an empty house generating *no* cash at all and risking squatters/looters/damage typical of unoccupied houses.

[Anonymous]

I think the investors will generally be happy to take the freeze. For the most part, it’s held by large institutional investors and their big interest right now is delaying the writedowns they will take. In many cases the writedowns will make them insolvent. Remember corporations are run for the benefit of their *management*, not shareholders. Delaying the day of reckoning means management keeps their jobs longer. Long term effects on shareholders/owners are secondary.

Besides that, they can’t liquidate now. Nobody, and I mean nobody, is currently willing to set prices low enough to sell out their inventory – all the bank and homebuilders are accumulating or holding inventory. IMO the reason is their desperate need to delay the day of reckoning but even if you disagree with my reasoning you have to admit they’re not currently willing to liquidate. Far better to have a home “owner” paying a mortgage (and rumor is the “frozen” mortgage rates will be bumped up to at least 30y fixed levels) than to have an empty house generating *no* cash at all and risking squatters/looters/damage typical of unoccupied houses.

[ocrenter]

They’re not talking about locking at 4.5%. They said in the WSJ yesterday that the loans they’re considering would lock at between 7-9% instead of adjusting to 9-11%.

but then this would be purely for show! the very reason for these subprime loans was because normal folks can’t afford to buy homes with normal rates of 7-9%. but they could be squeezed into a home by dropping that rate to 4.5%.

by creating that ceiling of 7-9%, vast majority of folks would still foreclose away.

I actually thought if this thing goes thru the decline would slow down a bit. if this 7-9% thing is true, then the show will go on without any disruptions.

[ocrenter]

They’re not talking about locking at 4.5%. They said in the WSJ yesterday that the loans they’re considering would lock at between 7-9% instead of adjusting to 9-11%.

but then this would be purely for show! the very reason for these subprime loans was because normal folks can’t afford to buy homes with normal rates of 7-9%. but they could be squeezed into a home by dropping that rate to 4.5%.

by creating that ceiling of 7-9%, vast majority of folks would still foreclose away.

I actually thought if this thing goes thru the decline would slow down a bit. if this 7-9% thing is true, then the show will go on without any disruptions.

[ocrenter]

They’re not talking about locking at 4.5%. They said in the WSJ yesterday that the loans they’re considering would lock at between 7-9% instead of adjusting to 9-11%.

but then this would be purely for show! the very reason for these subprime loans was because normal folks can’t afford to buy homes with normal rates of 7-9%. but they could be squeezed into a home by dropping that rate to 4.5%.

by creating that ceiling of 7-9%, vast majority of folks would still foreclose away.

I actually thought if this thing goes thru the decline would slow down a bit. if this 7-9% thing is true, then the show will go on without any disruptions.

[ocrenter]

They’re not talking about locking at 4.5%. They said in the WSJ yesterday that the loans they’re considering would lock at between 7-9% instead of adjusting to 9-11%.

but then this would be purely for show! the very reason for these subprime loans was because normal folks can’t afford to buy homes with normal rates of 7-9%. but they could be squeezed into a home by dropping that rate to 4.5%.

by creating that ceiling of 7-9%, vast majority of folks would still foreclose away.

I actually thought if this thing goes thru the decline would slow down a bit. if this 7-9% thing is true, then the show will go on without any disruptions.

[ocrenter]

They’re not talking about locking at 4.5%. They said in the WSJ yesterday that the loans they’re considering would lock at between 7-9% instead of adjusting to 9-11%.

but then this would be purely for show! the very reason for these subprime loans was because normal folks can’t afford to buy homes with normal rates of 7-9%. but they could be squeezed into a home by dropping that rate to 4.5%.

by creating that ceiling of 7-9%, vast majority of folks would still foreclose away.

I actually thought if this thing goes thru the decline would slow down a bit. if this 7-9% thing is true, then the show will go on without any disruptions.

[4plexowner]

From The Big Picture (http://bigpicture.typepad.com/comments/)

Fed, Treasury, FDIC Stymied By Lack of Data on Subprime Loans
(http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a49Os9FYyqX0)
Federal regulators, who met with bankers today at the Treasury Department in Washington, still lack reliable estimates on the extent of the subprime mortgage crisis. Three months after they asked banks to modify loans for borrowers at risk of default, agencies have little data on what lenders and loan servicers have done, officials say. (Bloomberg)

~

And yet this same group of federal regulators and bankers is going to save the day somehow?

This whole “Hope Now” Alliance is sheer desperation – the very name makes it clear – these are the supposed financial leaders of the world and they come up with a name like “Hope Now” Alliance?

The United States has a GDP of $13 trillion (or so) – and the key players in this economic gorilla are now relying on hope – that doesn’t give me a warm fuzzy feeling

History shows that all of these bailout attempts will ultimately fail and will make matters worse at great expense to the taxpayer

[4plexowner]

From The Big Picture (http://bigpicture.typepad.com/comments/)

Fed, Treasury, FDIC Stymied By Lack of Data on Subprime Loans
(http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a49Os9FYyqX0)
Federal regulators, who met with bankers today at the Treasury Department in Washington, still lack reliable estimates on the extent of the subprime mortgage crisis. Three months after they asked banks to modify loans for borrowers at risk of default, agencies have little data on what lenders and loan servicers have done, officials say. (Bloomberg)

~

And yet this same group of federal regulators and bankers is going to save the day somehow?

This whole “Hope Now” Alliance is sheer desperation – the very name makes it clear – these are the supposed financial leaders of the world and they come up with a name like “Hope Now” Alliance?

The United States has a GDP of $13 trillion (or so) – and the key players in this economic gorilla are now relying on hope – that doesn’t give me a warm fuzzy feeling

History shows that all of these bailout attempts will ultimately fail and will make matters worse at great expense to the taxpayer

[4plexowner]

From The Big Picture (http://bigpicture.typepad.com/comments/)

Fed, Treasury, FDIC Stymied By Lack of Data on Subprime Loans
(http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a49Os9FYyqX0)
Federal regulators, who met with bankers today at the Treasury Department in Washington, still lack reliable estimates on the extent of the subprime mortgage crisis. Three months after they asked banks to modify loans for borrowers at risk of default, agencies have little data on what lenders and loan servicers have done, officials say. (Bloomberg)

~

And yet this same group of federal regulators and bankers is going to save the day somehow?

This whole “Hope Now” Alliance is sheer desperation – the very name makes it clear – these are the supposed financial leaders of the world and they come up with a name like “Hope Now” Alliance?

The United States has a GDP of $13 trillion (or so) – and the key players in this economic gorilla are now relying on hope – that doesn’t give me a warm fuzzy feeling

History shows that all of these bailout attempts will ultimately fail and will make matters worse at great expense to the taxpayer

[4plexowner]

From The Big Picture (http://bigpicture.typepad.com/comments/)

Fed, Treasury, FDIC Stymied By Lack of Data on Subprime Loans
(http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a49Os9FYyqX0)
Federal regulators, who met with bankers today at the Treasury Department in Washington, still lack reliable estimates on the extent of the subprime mortgage crisis. Three months after they asked banks to modify loans for borrowers at risk of default, agencies have little data on what lenders and loan servicers have done, officials say. (Bloomberg)

~

And yet this same group of federal regulators and bankers is going to save the day somehow?

This whole “Hope Now” Alliance is sheer desperation – the very name makes it clear – these are the supposed financial leaders of the world and they come up with a name like “Hope Now” Alliance?

The United States has a GDP of $13 trillion (or so) – and the key players in this economic gorilla are now relying on hope – that doesn’t give me a warm fuzzy feeling

History shows that all of these bailout attempts will ultimately fail and will make matters worse at great expense to the taxpayer

[Author]

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