govt intervention

[SK in CV]

[quote=patientrenter][quote=SK in CV]….
You think it’s all about the borrowers. It isn’t. It’s about the lenders.[/quote]

I like your reasoning: Repaying loans is not the borrowers’ responsibility, but doubtless you think lenders should keep lending.

So then you won’t mind sending me a cashier’s check for your net worth, as a loan that won’t be repaid. I am waiting.[/quote]

You’re misunderstanding what I’m saying. The problems in real estate began with the lenders, not with the borrowers. The borrowers were the last piece of the puzzle, not the first. They weren’t blameless, but nobody was. From the loan originators and every broker, lender, underwriter, packager and investor. For the most part, the lenders still hold the cards. I’m sure most borrowers fully intend to repay loans when they’re made and only stop paying when they simply can’t afford the payments. But I would make no judgement with regards to an underwater borrower who chooses to exercise their contractual option and stops paying. The loan contract has quite specific language on the recourse the lender has in that circumstance.

And yes, I think the lenders should keep lending. But only to qualified borrowers and carefully underwritten loans. If I sent you a check for my net worth, I’d be as dumb as many of the lenders that made bad loans over the last 5 years, except there would be little chance of me be being bailed out by the government when you failed to repay.

[Arraya]

[quote=patientrenter][quote=Arraya]Yes, PR the banks are responding to the will of the people. Just like with subprime. There was so many people that wanted loans the banks could not help themselves. See, the banks are super-trusting, pushovers in PRs eyes and evil strawberry picking Hummer drivers victimized the poor helpless banks.

Yeah, the banks benefit to loan modifications are not even considered. Right. It has nothing to do with trillions in bets they can’t pay as well as the easiest and quickest way to keep home prices high which their health depends on. Suurre…[/quote]

Like I say, Arraya, if you believe people with money should keep lending, and should also forgive loans, then just send me your check. When I don’t repay, I’d be happy to hear from you why that’s all for the best.[/quote]

Good grief. This is about driving motivations. Not what I believe should or shouldn’t be done. IMO, The motivations of the various bailout measures are to keep home prices high and transfer losses to the public, not erroneously, as you put it, some sort of misguided welfare driven by irresponsible citizen pressure.

The banks with their political enablers have created both situations. The bubble and the bailout.

With the bubble you either think:

A: The banks did it for immense profits with no regard for consequences due to their rapacious and addictive nature.

or

B: The banks did it because of immense pressure from irresponsible borrowers and politicians who took advantage of the banks naivety and good nature

With the bailouts

A: The banks wanted to stay in business and are using every trick in the book to transfer losses to the tax payer and keep RE values as high as possible for their own survival purposes and to keep the billion dollar bonuses flowing

Or

B: The banks, continuing down their naive and trusting path, are under considerable pressure from irresponsible citizens and politicians to continue lending and make underwriting as loose as possible.

I pick A on both. You seem to pick B

Of course, you have to account for the 10 million people that have lost their jobs over the past 24 months and the millions more who lost income. I would venture to bet this group of people contributed greatly to the loan mod programs and who also don’t fit your stereotype of people who bought and could not afford but were collateral damage.

In fact, I have not heard one story of a principle reduction of somebody that committed loan fraud on their first mortgage then turned around and had a principle reduction. Not saying it has not happened, but I have read a few loan mod stories and that is not the case.

Also, This does not necessarily mean I agree with any type of bailout or loan mod program, just that your stereotype is only small portion of the 7 million foreclosures, countless loan mods and the other few million people not paying in their homes now, from the past 2 years.

Last, the only entities that is lending is the government. There is virtually NO private mortgage money today. Ramsey did a good article on this where he said that the market would “collapse overnight” if the taxpayer stopped backing the mortgage market. And yes, I would like to stop my money being used to pay for overpriced homes in an entirely fragile economy, because it’s a gamble that is bound to lose. But that would stop the wall street windfall, collapse home prices and the top 10 financial institutions and we can’t have that.

[Arraya]

[quote=patientrenter][quote=Arraya]Yes, PR the banks are responding to the will of the people. Just like with subprime. There was so many people that wanted loans the banks could not help themselves. See, the banks are super-trusting, pushovers in PRs eyes and evil strawberry picking Hummer drivers victimized the poor helpless banks.

Yeah, the banks benefit to loan modifications are not even considered. Right. It has nothing to do with trillions in bets they can’t pay as well as the easiest and quickest way to keep home prices high which their health depends on. Suurre…[/quote]

Like I say, Arraya, if you believe people with money should keep lending, and should also forgive loans, then just send me your check. When I don’t repay, I’d be happy to hear from you why that’s all for the best.[/quote]

Good grief. This is about driving motivations. Not what I believe should or shouldn’t be done. IMO, The motivations of the various bailout measures are to keep home prices high and transfer losses to the public, not erroneously, as you put it, some sort of misguided welfare driven by irresponsible citizen pressure.

The banks with their political enablers have created both situations. The bubble and the bailout.

With the bubble you either think:

A: The banks did it for immense profits with no regard for consequences due to their rapacious and addictive nature.

or

B: The banks did it because of immense pressure from irresponsible borrowers and politicians who took advantage of the banks naivety and good nature

With the bailouts

A: The banks wanted to stay in business and are using every trick in the book to transfer losses to the tax payer and keep RE values as high as possible for their own survival purposes and to keep the billion dollar bonuses flowing

Or

B: The banks, continuing down their naive and trusting path, are under considerable pressure from irresponsible citizens and politicians to continue lending and make underwriting as loose as possible.

I pick A on both. You seem to pick B

Of course, you have to account for the 10 million people that have lost their jobs over the past 24 months and the millions more who lost income. I would venture to bet this group of people contributed greatly to the loan mod programs and who also don’t fit your stereotype of people who bought and could not afford but were collateral damage.

In fact, I have not heard one story of a principle reduction of somebody that committed loan fraud on their first mortgage then turned around and had a principle reduction. Not saying it has not happened, but I have read a few loan mod stories and that is not the case.

Also, This does not necessarily mean I agree with any type of bailout or loan mod program, just that your stereotype is only small portion of the 7 million foreclosures, countless loan mods and the other few million people not paying in their homes now, from the past 2 years.

Last, the only entities that is lending is the government. There is virtually NO private mortgage money today. Ramsey did a good article on this where he said that the market would “collapse overnight” if the taxpayer stopped backing the mortgage market. And yes, I would like to stop my money being used to pay for overpriced homes in an entirely fragile economy, because it’s a gamble that is bound to lose. But that would stop the wall street windfall, collapse home prices and the top 10 financial institutions and we can’t have that.

[Arraya]

[quote=patientrenter][quote=Arraya]Yes, PR the banks are responding to the will of the people. Just like with subprime. There was so many people that wanted loans the banks could not help themselves. See, the banks are super-trusting, pushovers in PRs eyes and evil strawberry picking Hummer drivers victimized the poor helpless banks.

Yeah, the banks benefit to loan modifications are not even considered. Right. It has nothing to do with trillions in bets they can’t pay as well as the easiest and quickest way to keep home prices high which their health depends on. Suurre…[/quote]

Like I say, Arraya, if you believe people with money should keep lending, and should also forgive loans, then just send me your check. When I don’t repay, I’d be happy to hear from you why that’s all for the best.[/quote]

Good grief. This is about driving motivations. Not what I believe should or shouldn’t be done. IMO, The motivations of the various bailout measures are to keep home prices high and transfer losses to the public, not erroneously, as you put it, some sort of misguided welfare driven by irresponsible citizen pressure.

The banks with their political enablers have created both situations. The bubble and the bailout.

With the bubble you either think:

A: The banks did it for immense profits with no regard for consequences due to their rapacious and addictive nature.

or

B: The banks did it because of immense pressure from irresponsible borrowers and politicians who took advantage of the banks naivety and good nature

With the bailouts

A: The banks wanted to stay in business and are using every trick in the book to transfer losses to the tax payer and keep RE values as high as possible for their own survival purposes and to keep the billion dollar bonuses flowing

Or

B: The banks, continuing down their naive and trusting path, are under considerable pressure from irresponsible citizens and politicians to continue lending and make underwriting as loose as possible.

I pick A on both. You seem to pick B

Of course, you have to account for the 10 million people that have lost their jobs over the past 24 months and the millions more who lost income. I would venture to bet this group of people contributed greatly to the loan mod programs and who also don’t fit your stereotype of people who bought and could not afford but were collateral damage.

In fact, I have not heard one story of a principle reduction of somebody that committed loan fraud on their first mortgage then turned around and had a principle reduction. Not saying it has not happened, but I have read a few loan mod stories and that is not the case.

Also, This does not necessarily mean I agree with any type of bailout or loan mod program, just that your stereotype is only small portion of the 7 million foreclosures, countless loan mods and the other few million people not paying in their homes now, from the past 2 years.

Last, the only entities that is lending is the government. There is virtually NO private mortgage money today. Ramsey did a good article on this where he said that the market would “collapse overnight” if the taxpayer stopped backing the mortgage market. And yes, I would like to stop my money being used to pay for overpriced homes in an entirely fragile economy, because it’s a gamble that is bound to lose. But that would stop the wall street windfall, collapse home prices and the top 10 financial institutions and we can’t have that.

[Arraya]

[quote=patientrenter][quote=Arraya]Yes, PR the banks are responding to the will of the people. Just like with subprime. There was so many people that wanted loans the banks could not help themselves. See, the banks are super-trusting, pushovers in PRs eyes and evil strawberry picking Hummer drivers victimized the poor helpless banks.

Yeah, the banks benefit to loan modifications are not even considered. Right. It has nothing to do with trillions in bets they can’t pay as well as the easiest and quickest way to keep home prices high which their health depends on. Suurre…[/quote]

Like I say, Arraya, if you believe people with money should keep lending, and should also forgive loans, then just send me your check. When I don’t repay, I’d be happy to hear from you why that’s all for the best.[/quote]

Good grief. This is about driving motivations. Not what I believe should or shouldn’t be done. IMO, The motivations of the various bailout measures are to keep home prices high and transfer losses to the public, not erroneously, as you put it, some sort of misguided welfare driven by irresponsible citizen pressure.

The banks with their political enablers have created both situations. The bubble and the bailout.

With the bubble you either think:

A: The banks did it for immense profits with no regard for consequences due to their rapacious and addictive nature.

or

B: The banks did it because of immense pressure from irresponsible borrowers and politicians who took advantage of the banks naivety and good nature

With the bailouts

A: The banks wanted to stay in business and are using every trick in the book to transfer losses to the tax payer and keep RE values as high as possible for their own survival purposes and to keep the billion dollar bonuses flowing

Or

B: The banks, continuing down their naive and trusting path, are under considerable pressure from irresponsible citizens and politicians to continue lending and make underwriting as loose as possible.

I pick A on both. You seem to pick B

Of course, you have to account for the 10 million people that have lost their jobs over the past 24 months and the millions more who lost income. I would venture to bet this group of people contributed greatly to the loan mod programs and who also don’t fit your stereotype of people who bought and could not afford but were collateral damage.

In fact, I have not heard one story of a principle reduction of somebody that committed loan fraud on their first mortgage then turned around and had a principle reduction. Not saying it has not happened, but I have read a few loan mod stories and that is not the case.

Also, This does not necessarily mean I agree with any type of bailout or loan mod program, just that your stereotype is only small portion of the 7 million foreclosures, countless loan mods and the other few million people not paying in their homes now, from the past 2 years.

Last, the only entities that is lending is the government. There is virtually NO private mortgage money today. Ramsey did a good article on this where he said that the market would “collapse overnight” if the taxpayer stopped backing the mortgage market. And yes, I would like to stop my money being used to pay for overpriced homes in an entirely fragile economy, because it’s a gamble that is bound to lose. But that would stop the wall street windfall, collapse home prices and the top 10 financial institutions and we can’t have that.

[Arraya]

[quote=patientrenter][quote=Arraya]Yes, PR the banks are responding to the will of the people. Just like with subprime. There was so many people that wanted loans the banks could not help themselves. See, the banks are super-trusting, pushovers in PRs eyes and evil strawberry picking Hummer drivers victimized the poor helpless banks.

Yeah, the banks benefit to loan modifications are not even considered. Right. It has nothing to do with trillions in bets they can’t pay as well as the easiest and quickest way to keep home prices high which their health depends on. Suurre…[/quote]

Like I say, Arraya, if you believe people with money should keep lending, and should also forgive loans, then just send me your check. When I don’t repay, I’d be happy to hear from you why that’s all for the best.[/quote]

Good grief. This is about driving motivations. Not what I believe should or shouldn’t be done. IMO, The motivations of the various bailout measures are to keep home prices high and transfer losses to the public, not erroneously, as you put it, some sort of misguided welfare driven by irresponsible citizen pressure.

The banks with their political enablers have created both situations. The bubble and the bailout.

With the bubble you either think:

A: The banks did it for immense profits with no regard for consequences due to their rapacious and addictive nature.

or

B: The banks did it because of immense pressure from irresponsible borrowers and politicians who took advantage of the banks naivety and good nature

With the bailouts

A: The banks wanted to stay in business and are using every trick in the book to transfer losses to the tax payer and keep RE values as high as possible for their own survival purposes and to keep the billion dollar bonuses flowing

Or

B: The banks, continuing down their naive and trusting path, are under considerable pressure from irresponsible citizens and politicians to continue lending and make underwriting as loose as possible.

I pick A on both. You seem to pick B

Of course, you have to account for the 10 million people that have lost their jobs over the past 24 months and the millions more who lost income. I would venture to bet this group of people contributed greatly to the loan mod programs and who also don’t fit your stereotype of people who bought and could not afford but were collateral damage.

In fact, I have not heard one story of a principle reduction of somebody that committed loan fraud on their first mortgage then turned around and had a principle reduction. Not saying it has not happened, but I have read a few loan mod stories and that is not the case.

Also, This does not necessarily mean I agree with any type of bailout or loan mod program, just that your stereotype is only small portion of the 7 million foreclosures, countless loan mods and the other few million people not paying in their homes now, from the past 2 years.

Last, the only entities that is lending is the government. There is virtually NO private mortgage money today. Ramsey did a good article on this where he said that the market would “collapse overnight” if the taxpayer stopped backing the mortgage market. And yes, I would like to stop my money being used to pay for overpriced homes in an entirely fragile economy, because it’s a gamble that is bound to lose. But that would stop the wall street windfall, collapse home prices and the top 10 financial institutions and we can’t have that.

[4plexowner]

“Last, the only entities that is lending is the government.”

from my end-of-year letter to family and friends:

There must be a ray of sunshine somewhere, how’s the housing sector doing?

Most (over 70%) mortgage loans in 2009 came from Fannie Mae, Freddie Mac or FHA – banks, for the most part, are not originating mortgages that can’t be sold to one of these orgs – all of these agencies offer/guarantee govt subsidized mortgages with low down payments (3-5%) – with the $8000 federal tax credit, many people were able to purchase $250K and under houses with zero money coming out of their pockets – California added a $10K ($20K?) tax credit (http://www.sacbee.com/business/story/1641603.html ) on top of the $8K federal credit so residents of the Golden State could play the zero-down game at a much higher level

What? I thought we were making it harder for people to purchase homes they can’t afford …

Yes, hmmm, let’s move on

Fannie and Freddie have gone from being private corporations with an implicit govt guarantee to being, in essence if not fact, govt agencies with access to the govt’s unlimited checkbook (http://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac ) – the supposed bailout limit of $200 billion each for Fannie and Freddie was recently removed – this change was announced Christmas eve after the markets had closed (http://www.dailyfinance.com/story/fannie-and-freddie-get-a-huge-christmas-gift-from-uncle-sam/19295524 ) – ie, this change was so stinky they didn’t want the markets to react, knowing that by Monday the news cycle would have moved onto something else – Fannie and Freddie are now allowed to lose as much of the taxpayer’s money as they want in an effort to prop up the real estate market (http://www.reuters.com/article/idUSTRE5BN2ZI20091224) – they were already broke so all of their losses are now a taxpayer expense (http://www.newstatesman.com/society/2008/07/housing-market-fannie-freddie )

Fannie and Freddie are losing money hand over fist – Fannie alone lost over $60 billion in the first three quarters of 2009 – and the default rates are climbing on all of their mortgage products, even the supposed ‘prime’ ones so their losses will continue to climb (http://online.wsj.com/article/SB10001424052748703278604574624681873427574.html?mod=rss_Today%27s_Most_Popular )

How are Fannie and Freddie financing all these losses? Where is the money coming from?

In order to fund their operations, Fannie and Freddie sell bonds to investors – like US treasury debt, all the usual suspects have stopped buying Fannie and Freddie’s bonds – the only purchaser for this debt in 2009 was the US Federal Reserve

So, in a nutshell, you’re saying that over 70% of the mortgage issuance in 2009 occurred because of govt subsidized loans and tax credits? And the only financer for this government largesse was the US Federal Reserve?

Yep on both counts

But don’t worry about the CEOs of Fannie and Freddie – they will receive $6 mil per year plus bonuses to oversee the squandering of the taxpayer’s money (http://www.bloggingstocks.com/2009/12/26/its-6-million-each-for-fannie-and-freddie-chief-executives/ ) – and this compensation package was announced Christmas eve after the markets closed …

Just as an interesting question, how much do you think housing values would fall from here if the government subsidized mortgages and tax credits were removed?

I’d say 40% but I doubt we’ll get a chance to find out

Well, how about foreclosures, are people staying in their homes?

No, default rates are setting multi-decade records (http://blog.foreclosure.com/2009/05/mortgage-default-rates-set-another-record/ http://www.latimes.com/business/la-fi-foreclosures22-2009dec22,0,7969044.story?track=rss ) and loan workouts aren’t working out (http://www.housingwire.com/2010/01/08/redefault-rates-are-tragic-says-amherst-securities-1/ http://www.reuters.com/article/idUSN0815503520100108 )

[4plexowner]

“Last, the only entities that is lending is the government.”

from my end-of-year letter to family and friends:

There must be a ray of sunshine somewhere, how’s the housing sector doing?

Most (over 70%) mortgage loans in 2009 came from Fannie Mae, Freddie Mac or FHA – banks, for the most part, are not originating mortgages that can’t be sold to one of these orgs – all of these agencies offer/guarantee govt subsidized mortgages with low down payments (3-5%) – with the $8000 federal tax credit, many people were able to purchase $250K and under houses with zero money coming out of their pockets – California added a $10K ($20K?) tax credit (http://www.sacbee.com/business/story/1641603.html ) on top of the $8K federal credit so residents of the Golden State could play the zero-down game at a much higher level

What? I thought we were making it harder for people to purchase homes they can’t afford …

Yes, hmmm, let’s move on

Fannie and Freddie have gone from being private corporations with an implicit govt guarantee to being, in essence if not fact, govt agencies with access to the govt’s unlimited checkbook (http://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac ) – the supposed bailout limit of $200 billion each for Fannie and Freddie was recently removed – this change was announced Christmas eve after the markets had closed (http://www.dailyfinance.com/story/fannie-and-freddie-get-a-huge-christmas-gift-from-uncle-sam/19295524 ) – ie, this change was so stinky they didn’t want the markets to react, knowing that by Monday the news cycle would have moved onto something else – Fannie and Freddie are now allowed to lose as much of the taxpayer’s money as they want in an effort to prop up the real estate market (http://www.reuters.com/article/idUSTRE5BN2ZI20091224) – they were already broke so all of their losses are now a taxpayer expense (http://www.newstatesman.com/society/2008/07/housing-market-fannie-freddie )

Fannie and Freddie are losing money hand over fist – Fannie alone lost over $60 billion in the first three quarters of 2009 – and the default rates are climbing on all of their mortgage products, even the supposed ‘prime’ ones so their losses will continue to climb (http://online.wsj.com/article/SB10001424052748703278604574624681873427574.html?mod=rss_Today%27s_Most_Popular )

How are Fannie and Freddie financing all these losses? Where is the money coming from?

In order to fund their operations, Fannie and Freddie sell bonds to investors – like US treasury debt, all the usual suspects have stopped buying Fannie and Freddie’s bonds – the only purchaser for this debt in 2009 was the US Federal Reserve

So, in a nutshell, you’re saying that over 70% of the mortgage issuance in 2009 occurred because of govt subsidized loans and tax credits? And the only financer for this government largesse was the US Federal Reserve?

Yep on both counts

But don’t worry about the CEOs of Fannie and Freddie – they will receive $6 mil per year plus bonuses to oversee the squandering of the taxpayer’s money (http://www.bloggingstocks.com/2009/12/26/its-6-million-each-for-fannie-and-freddie-chief-executives/ ) – and this compensation package was announced Christmas eve after the markets closed …

Just as an interesting question, how much do you think housing values would fall from here if the government subsidized mortgages and tax credits were removed?

I’d say 40% but I doubt we’ll get a chance to find out

Well, how about foreclosures, are people staying in their homes?

No, default rates are setting multi-decade records (http://blog.foreclosure.com/2009/05/mortgage-default-rates-set-another-record/ http://www.latimes.com/business/la-fi-foreclosures22-2009dec22,0,7969044.story?track=rss ) and loan workouts aren’t working out (http://www.housingwire.com/2010/01/08/redefault-rates-are-tragic-says-amherst-securities-1/ http://www.reuters.com/article/idUSN0815503520100108 )

[4plexowner]

“Last, the only entities that is lending is the government.”

from my end-of-year letter to family and friends:

There must be a ray of sunshine somewhere, how’s the housing sector doing?

Most (over 70%) mortgage loans in 2009 came from Fannie Mae, Freddie Mac or FHA – banks, for the most part, are not originating mortgages that can’t be sold to one of these orgs – all of these agencies offer/guarantee govt subsidized mortgages with low down payments (3-5%) – with the $8000 federal tax credit, many people were able to purchase $250K and under houses with zero money coming out of their pockets – California added a $10K ($20K?) tax credit (http://www.sacbee.com/business/story/1641603.html ) on top of the $8K federal credit so residents of the Golden State could play the zero-down game at a much higher level

What? I thought we were making it harder for people to purchase homes they can’t afford …

Yes, hmmm, let’s move on

Fannie and Freddie have gone from being private corporations with an implicit govt guarantee to being, in essence if not fact, govt agencies with access to the govt’s unlimited checkbook (http://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac ) – the supposed bailout limit of $200 billion each for Fannie and Freddie was recently removed – this change was announced Christmas eve after the markets had closed (http://www.dailyfinance.com/story/fannie-and-freddie-get-a-huge-christmas-gift-from-uncle-sam/19295524 ) – ie, this change was so stinky they didn’t want the markets to react, knowing that by Monday the news cycle would have moved onto something else – Fannie and Freddie are now allowed to lose as much of the taxpayer’s money as they want in an effort to prop up the real estate market (http://www.reuters.com/article/idUSTRE5BN2ZI20091224) – they were already broke so all of their losses are now a taxpayer expense (http://www.newstatesman.com/society/2008/07/housing-market-fannie-freddie )

Fannie and Freddie are losing money hand over fist – Fannie alone lost over $60 billion in the first three quarters of 2009 – and the default rates are climbing on all of their mortgage products, even the supposed ‘prime’ ones so their losses will continue to climb (http://online.wsj.com/article/SB10001424052748703278604574624681873427574.html?mod=rss_Today%27s_Most_Popular )

How are Fannie and Freddie financing all these losses? Where is the money coming from?

In order to fund their operations, Fannie and Freddie sell bonds to investors – like US treasury debt, all the usual suspects have stopped buying Fannie and Freddie’s bonds – the only purchaser for this debt in 2009 was the US Federal Reserve

So, in a nutshell, you’re saying that over 70% of the mortgage issuance in 2009 occurred because of govt subsidized loans and tax credits? And the only financer for this government largesse was the US Federal Reserve?

Yep on both counts

But don’t worry about the CEOs of Fannie and Freddie – they will receive $6 mil per year plus bonuses to oversee the squandering of the taxpayer’s money (http://www.bloggingstocks.com/2009/12/26/its-6-million-each-for-fannie-and-freddie-chief-executives/ ) – and this compensation package was announced Christmas eve after the markets closed …

Just as an interesting question, how much do you think housing values would fall from here if the government subsidized mortgages and tax credits were removed?

I’d say 40% but I doubt we’ll get a chance to find out

Well, how about foreclosures, are people staying in their homes?

No, default rates are setting multi-decade records (http://blog.foreclosure.com/2009/05/mortgage-default-rates-set-another-record/ http://www.latimes.com/business/la-fi-foreclosures22-2009dec22,0,7969044.story?track=rss ) and loan workouts aren’t working out (http://www.housingwire.com/2010/01/08/redefault-rates-are-tragic-says-amherst-securities-1/ http://www.reuters.com/article/idUSN0815503520100108 )

[4plexowner]

“Last, the only entities that is lending is the government.”

from my end-of-year letter to family and friends:

There must be a ray of sunshine somewhere, how’s the housing sector doing?

Most (over 70%) mortgage loans in 2009 came from Fannie Mae, Freddie Mac or FHA – banks, for the most part, are not originating mortgages that can’t be sold to one of these orgs – all of these agencies offer/guarantee govt subsidized mortgages with low down payments (3-5%) – with the $8000 federal tax credit, many people were able to purchase $250K and under houses with zero money coming out of their pockets – California added a $10K ($20K?) tax credit (http://www.sacbee.com/business/story/1641603.html ) on top of the $8K federal credit so residents of the Golden State could play the zero-down game at a much higher level

What? I thought we were making it harder for people to purchase homes they can’t afford …

Yes, hmmm, let’s move on

Fannie and Freddie have gone from being private corporations with an implicit govt guarantee to being, in essence if not fact, govt agencies with access to the govt’s unlimited checkbook (http://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac ) – the supposed bailout limit of $200 billion each for Fannie and Freddie was recently removed – this change was announced Christmas eve after the markets had closed (http://www.dailyfinance.com/story/fannie-and-freddie-get-a-huge-christmas-gift-from-uncle-sam/19295524 ) – ie, this change was so stinky they didn’t want the markets to react, knowing that by Monday the news cycle would have moved onto something else – Fannie and Freddie are now allowed to lose as much of the taxpayer’s money as they want in an effort to prop up the real estate market (http://www.reuters.com/article/idUSTRE5BN2ZI20091224) – they were already broke so all of their losses are now a taxpayer expense (http://www.newstatesman.com/society/2008/07/housing-market-fannie-freddie )

Fannie and Freddie are losing money hand over fist – Fannie alone lost over $60 billion in the first three quarters of 2009 – and the default rates are climbing on all of their mortgage products, even the supposed ‘prime’ ones so their losses will continue to climb (http://online.wsj.com/article/SB10001424052748703278604574624681873427574.html?mod=rss_Today%27s_Most_Popular )

How are Fannie and Freddie financing all these losses? Where is the money coming from?

In order to fund their operations, Fannie and Freddie sell bonds to investors – like US treasury debt, all the usual suspects have stopped buying Fannie and Freddie’s bonds – the only purchaser for this debt in 2009 was the US Federal Reserve

So, in a nutshell, you’re saying that over 70% of the mortgage issuance in 2009 occurred because of govt subsidized loans and tax credits? And the only financer for this government largesse was the US Federal Reserve?

Yep on both counts

But don’t worry about the CEOs of Fannie and Freddie – they will receive $6 mil per year plus bonuses to oversee the squandering of the taxpayer’s money (http://www.bloggingstocks.com/2009/12/26/its-6-million-each-for-fannie-and-freddie-chief-executives/ ) – and this compensation package was announced Christmas eve after the markets closed …

Just as an interesting question, how much do you think housing values would fall from here if the government subsidized mortgages and tax credits were removed?

I’d say 40% but I doubt we’ll get a chance to find out

Well, how about foreclosures, are people staying in their homes?

No, default rates are setting multi-decade records (http://blog.foreclosure.com/2009/05/mortgage-default-rates-set-another-record/ http://www.latimes.com/business/la-fi-foreclosures22-2009dec22,0,7969044.story?track=rss ) and loan workouts aren’t working out (http://www.housingwire.com/2010/01/08/redefault-rates-are-tragic-says-amherst-securities-1/ http://www.reuters.com/article/idUSN0815503520100108 )

[4plexowner]

“Last, the only entities that is lending is the government.”

from my end-of-year letter to family and friends:

There must be a ray of sunshine somewhere, how’s the housing sector doing?

Most (over 70%) mortgage loans in 2009 came from Fannie Mae, Freddie Mac or FHA – banks, for the most part, are not originating mortgages that can’t be sold to one of these orgs – all of these agencies offer/guarantee govt subsidized mortgages with low down payments (3-5%) – with the $8000 federal tax credit, many people were able to purchase $250K and under houses with zero money coming out of their pockets – California added a $10K ($20K?) tax credit (http://www.sacbee.com/business/story/1641603.html ) on top of the $8K federal credit so residents of the Golden State could play the zero-down game at a much higher level

What? I thought we were making it harder for people to purchase homes they can’t afford …

Yes, hmmm, let’s move on

Fannie and Freddie have gone from being private corporations with an implicit govt guarantee to being, in essence if not fact, govt agencies with access to the govt’s unlimited checkbook (http://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac ) – the supposed bailout limit of $200 billion each for Fannie and Freddie was recently removed – this change was announced Christmas eve after the markets had closed (http://www.dailyfinance.com/story/fannie-and-freddie-get-a-huge-christmas-gift-from-uncle-sam/19295524 ) – ie, this change was so stinky they didn’t want the markets to react, knowing that by Monday the news cycle would have moved onto something else – Fannie and Freddie are now allowed to lose as much of the taxpayer’s money as they want in an effort to prop up the real estate market (http://www.reuters.com/article/idUSTRE5BN2ZI20091224) – they were already broke so all of their losses are now a taxpayer expense (http://www.newstatesman.com/society/2008/07/housing-market-fannie-freddie )

Fannie and Freddie are losing money hand over fist – Fannie alone lost over $60 billion in the first three quarters of 2009 – and the default rates are climbing on all of their mortgage products, even the supposed ‘prime’ ones so their losses will continue to climb (http://online.wsj.com/article/SB10001424052748703278604574624681873427574.html?mod=rss_Today%27s_Most_Popular )

How are Fannie and Freddie financing all these losses? Where is the money coming from?

In order to fund their operations, Fannie and Freddie sell bonds to investors – like US treasury debt, all the usual suspects have stopped buying Fannie and Freddie’s bonds – the only purchaser for this debt in 2009 was the US Federal Reserve

So, in a nutshell, you’re saying that over 70% of the mortgage issuance in 2009 occurred because of govt subsidized loans and tax credits? And the only financer for this government largesse was the US Federal Reserve?

Yep on both counts

But don’t worry about the CEOs of Fannie and Freddie – they will receive $6 mil per year plus bonuses to oversee the squandering of the taxpayer’s money (http://www.bloggingstocks.com/2009/12/26/its-6-million-each-for-fannie-and-freddie-chief-executives/ ) – and this compensation package was announced Christmas eve after the markets closed …

Just as an interesting question, how much do you think housing values would fall from here if the government subsidized mortgages and tax credits were removed?

I’d say 40% but I doubt we’ll get a chance to find out

Well, how about foreclosures, are people staying in their homes?

No, default rates are setting multi-decade records (http://blog.foreclosure.com/2009/05/mortgage-default-rates-set-another-record/ http://www.latimes.com/business/la-fi-foreclosures22-2009dec22,0,7969044.story?track=rss ) and loan workouts aren’t working out (http://www.housingwire.com/2010/01/08/redefault-rates-are-tragic-says-amherst-securities-1/ http://www.reuters.com/article/idUSN0815503520100108 )

[4plexowner]

Amherst Securities has done some research on the Option ARM resets and updated the mortgage reset chart to show that they are mostly a California problem

I have seen other articles suggesting that these Option ARMs are part of the reason Fannie and Freddie can now lose as much money as they want – dealing with the Option ARM resets over the next three years is going to be EXPENSIVE

[img_assist|nid=12621|title=Option ARM resets a CA issue|desc=|link=node|align=left|width=400|height=348]

California Housing Forecast for 2010: 5 Reasons why you Shouldn’t Buy a Home in California in 2010. 22 Percent unemployment and underemployment, home owned’ership, California Budget, Option ARMs, and Consumer Psychology.

[4plexowner]

Amherst Securities has done some research on the Option ARM resets and updated the mortgage reset chart to show that they are mostly a California problem

I have seen other articles suggesting that these Option ARMs are part of the reason Fannie and Freddie can now lose as much money as they want – dealing with the Option ARM resets over the next three years is going to be EXPENSIVE

[img_assist|nid=12621|title=Option ARM resets a CA issue|desc=|link=node|align=left|width=400|height=348]

California Housing Forecast for 2010: 5 Reasons why you Shouldn’t Buy a Home in California in 2010. 22 Percent unemployment and underemployment, home owned’ership, California Budget, Option ARMs, and Consumer Psychology.

[4plexowner]

Amherst Securities has done some research on the Option ARM resets and updated the mortgage reset chart to show that they are mostly a California problem

I have seen other articles suggesting that these Option ARMs are part of the reason Fannie and Freddie can now lose as much money as they want – dealing with the Option ARM resets over the next three years is going to be EXPENSIVE

[img_assist|nid=12621|title=Option ARM resets a CA issue|desc=|link=node|align=left|width=400|height=348]

California Housing Forecast for 2010: 5 Reasons why you Shouldn’t Buy a Home in California in 2010. 22 Percent unemployment and underemployment, home owned’ership, California Budget, Option ARMs, and Consumer Psychology.

[4plexowner]

Amherst Securities has done some research on the Option ARM resets and updated the mortgage reset chart to show that they are mostly a California problem

I have seen other articles suggesting that these Option ARMs are part of the reason Fannie and Freddie can now lose as much money as they want – dealing with the Option ARM resets over the next three years is going to be EXPENSIVE

[img_assist|nid=12621|title=Option ARM resets a CA issue|desc=|link=node|align=left|width=400|height=348]

California Housing Forecast for 2010: 5 Reasons why you Shouldn’t Buy a Home in California in 2010. 22 Percent unemployment and underemployment, home owned’ership, California Budget, Option ARMs, and Consumer Psychology.

[Author]

Posts