Looks like there won’t be a bailout

[DaCounselor]

here is the MBA position paper:

http://www.mortgagebankers.org/files/News/InternalResource/55315_MBAPositionPaperonFAS140Restructurtings.pdf

[DaCounselor]

here is the MBA position paper:

http://www.mortgagebankers.org/files/News/InternalResource/55315_MBAPositionPaperonFAS140Restructurtings.pdf

[patientrenter]

Thanks DaC,

I just read your papers after I returned from dinner… with someone from one of the key agencies, as it happens. I think there’s really substantive relief being readied as needed. Aggregate loan losses will probably be effectively limited. This will keep mortgage investors from cutting off new funds too severely. Looks like the great housing put lives on, and I’m beginning to think prices will rise after a pretty modest dip (of 20-30%?).

This is depressing. Why does anyone save and actually pay with their own money for things like houses? Oh, I forgot, the Chinese and Japanese do save enough to eventually actually pay for things with their own money. If they ever learn this game…

At this point, I think the only hope for a decrease of 50% or so (still way above real prices just 10 years ago) is an external global shock or a total screw-up by the regulators, and realistically those are long shots.

Patient renter in OC

[patientrenter]

Thanks DaC,

I just read your papers after I returned from dinner… with someone from one of the key agencies, as it happens. I think there’s really substantive relief being readied as needed. Aggregate loan losses will probably be effectively limited. This will keep mortgage investors from cutting off new funds too severely. Looks like the great housing put lives on, and I’m beginning to think prices will rise after a pretty modest dip (of 20-30%?).

This is depressing. Why does anyone save and actually pay with their own money for things like houses? Oh, I forgot, the Chinese and Japanese do save enough to eventually actually pay for things with their own money. If they ever learn this game…

At this point, I think the only hope for a decrease of 50% or so (still way above real prices just 10 years ago) is an external global shock or a total screw-up by the regulators, and realistically those are long shots.

Patient renter in OC

[SD Realtor]

Pretty interesting stuff dac… pretty interesting stuff…

SD Realtor

[SD Realtor]

Pretty interesting stuff dac… pretty interesting stuff…

SD Realtor

[patientrenter]

DaC,

Were you around for the 1988-1996 cycle? If so, do the banks/investors and regulatory bodies seem much better prepared and more effectively acting in concert this time?

Patient renter in OC

[patientrenter]

DaC,

Were you around for the 1988-1996 cycle? If so, do the banks/investors and regulatory bodies seem much better prepared and more effectively acting in concert this time?

Patient renter in OC

[DaCounselor]

PR,

I was in SD from ’85-87 and then ’91-present so I was here for the majority of that cycle. I actually worked in the finance industry at that time. The banks, regulatory agencies and interest groups were not mobilizing as they are now.

In the early ’90’s, SD lost about 60K jobs in a very short span of time. Unemployment was screaming upward toward 8%. The S&L crisis was in full effect. Things were pretty bad here. It wasn’t a matter of a homeowner not being able to afford a re-cast payment – alot of people couldn’t afford any payment at all because they were out of work.

I think what we are seeing now from almost all camps is just more reinforcement of the lending universe’s well-established position on owning homes – aka – they don’t want your house. They don’t want to foreclose. Particularly if you are upside down. They want to keep you in that house and keep those payments rolling in.

I believe there is an immense difference between someone who cannot pay their mortgage because they are unemployed and someone who is employed but cannot afford a higher re-cast payment. In the latter case, there is something there to work with. Re-casts can be postponed. Mods into a fixed rate can be made. There are options. As long as there is employment and income and some level of capability, there are going to be options.

[DaCounselor]

PR,

I was in SD from ’85-87 and then ’91-present so I was here for the majority of that cycle. I actually worked in the finance industry at that time. The banks, regulatory agencies and interest groups were not mobilizing as they are now.

In the early ’90’s, SD lost about 60K jobs in a very short span of time. Unemployment was screaming upward toward 8%. The S&L crisis was in full effect. Things were pretty bad here. It wasn’t a matter of a homeowner not being able to afford a re-cast payment – alot of people couldn’t afford any payment at all because they were out of work.

I think what we are seeing now from almost all camps is just more reinforcement of the lending universe’s well-established position on owning homes – aka – they don’t want your house. They don’t want to foreclose. Particularly if you are upside down. They want to keep you in that house and keep those payments rolling in.

I believe there is an immense difference between someone who cannot pay their mortgage because they are unemployed and someone who is employed but cannot afford a higher re-cast payment. In the latter case, there is something there to work with. Re-casts can be postponed. Mods into a fixed rate can be made. There are options. As long as there is employment and income and some level of capability, there are going to be options.

[NotCranky]

Patient and counselor you two are doing a great job with this thread.
Thanks

[NotCranky]

Patient and counselor you two are doing a great job with this thread.
Thanks

[drunkle]

someone(s) should sue their lender for not “reorganizing” their defaulted loan.

where are those temmurietta people…

[drunkle]

someone(s) should sue their lender for not “reorganizing” their defaulted loan.

where are those temmurietta people…

[patientrenter]

2 more interesting posts from Calculated Risk on stretching mortgages even more…

Contributed by Alternative Reality:

http://www.iht.com/articles/2007/07/05/business/rate.php

In this International Herald Tribune article, there’s a reference to mortgage servicers in England buying homes and renting them back to the original owner. Lenders take a bath on the loan amount, but probably get a better deal than if they sold it on the open market, and it keeps up the values of other properties that do have to be sold. Evidence that ingenuity and a willingness to take on more risk is not scarce yet.

Contributed by Jim:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/07/06/BUGHQQRLUC1.DTL

In this San Francisco Chronicle article, there’s a reference to the lender accepting a share of future home appreciation as payment. This form of loan was widely offered in England years ago. Yet more evidence that many lenders are ready to rely heavily on risky future appreciation, even from very high prices today, and that still enables the industry to use creative ways to “get you into the house” at any price, no matter how high.

Patient renter in OC

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