My Economic Plan-in a perfect world would be…

[moneymaker]

Announce that everybody can access their 401K plan with no penalty for 1 year to refi,install solar,pay off credit cards,…Then at the same time signal that the fed would be raising rates in 1 year(if economic conditions permit of course).This way if there was a dip in the market people with money could pick up stocks cheap knowing that inflation is coming in the near future.
Anyone that has a 401k plan and a high interest rate that fails to refi under this plan has whatever is coming due to them.I would actually implement this free 401k plan for 2 years with the option to purchase stocks with the money as well as the above things, what the hell just give everybody unfettered access to their 401k’s the second year.
If I were the fed I would signal a .25% raise per quarter after the first year.

[livinincali]

I fail to see how this would help anything. The only way you would need money to refi is if you’re underwater. Why wouldn’t you just declare BK if you had a bunch of debts and keep your 401K money. The 401K money is shielded from bankruptcy.

[scaredyclassic]

I need money to refi to get out of jumbo loan.

[no_such_reality]

Just keep it simple.

Make the banks market to market on the delinquent loans.

Force them to foreclose or forgive the loan when it’s 180 days past due.

Problem solved as we liquidate all the pretenders, including several big bank.

[SK in CV]

[quote=no_such_reality]Just keep it simple.

Make the banks market to market on the delinquent loans.

Force them to foreclose or forgive the loan when it’s 180 days past due.

Problem solved as we liquidate all the pretenders, including several big bank.[/quote]

What does that mean? “Market to market”?

[moneymaker]

[quote=no_such_reality]Just keep it simple.

Make the banks market to market on the delinquent loans.

Force them to foreclose or forgive the loan when it’s 180 days past due.

Problem solved as we liquidate all the pretenders, including several big bank.[/quote]

Believe it or not, even though banks are reporting profits I suspect they are not all that well off. Most all of them are rated BBB on their preferred stock offerings. That should tell you something.

[moneymaker]

[quote=SK in CV][quote=no_such_reality]Just keep it simple.

Make the banks market to market on the delinquent loans.

Force them to foreclose or forgive the loan when it’s 180 days past due.

Problem solved as we liquidate all the pretenders, including several big bank.[/quote]

What does that mean? “Market to market”?[/quote]

I think it should have been “mark to market”, my probelm with that is you are telling them what to do, with my plan people have choices. Ultimately people’s lives are affected by their choices.

[SK in CV]

[quote=moneymaker][quote=SK in CV][quote=no_such_reality]Just keep it simple.

Make the banks market to market on the delinquent loans.

Force them to foreclose or forgive the loan when it’s 180 days past due.

Problem solved as we liquidate all the pretenders, including several big bank.[/quote]

What does that mean? “Market to market”?[/quote]

I think it should have been “mark to market”, my probelm with that is you are telling them what to do, with my plan people have choices. Ultimately people’s lives are affected by their choices.[/quote]

“Mark to market” makes some sense. Thank you. It’s something banks have been required to do for decades. Banks not foreclosing on homes is not a drag on the economy. Forcing them to be more efficient won’t make the economy any better.

[moneymaker]

Me personally I would love to do the solar thing. Leasing and/or going into debt just don’t make sense to me right now.

[no_such_reality]

Actually, banks currently aren’t marking to market.

Unless that’s changed, that was the dirty part of the bail-out. The banks got to pretend that their bad loans were good loans.

Efficiency in the foreclosure process, squeezing out the upside down delinquents will improve the economy, by driving the housing market to a real bottom.

Real bottom, real growth as the economy absorbs the housing then puts housing back into productive use and regains construction.

We do that at the expense of a bunch of artificial paper and people pretending that junk bond equivalent of a mortgage is AAA. And continuing to pretend that the squatter is a home owner.

No sustainable economic growth is possible to be built of the house of cards we have today.

[SK in CV]

[quote=no_such_reality]Actually, banks currently aren’t marking to market.

Unless that’s changed, that was the dirty part of the bail-out. The banks got to pretend that their bad loans were good loans.

Efficiency in the foreclosure process, squeezing out the upside down delinquents will improve the economy, by driving the housing market to a real bottom.

Real bottom, real growth as the economy absorbs the housing then puts housing back into productive use and regains construction.

We do that at the expense of a bunch of artificial paper and people pretending that junk bond equivalent of a mortgage is AAA. And continuing to pretend that the squatter is a home owner.

No sustainable economic growth is possible to be built of the house of cards we have today.[/quote]

Nope. Banks have been required to reclassify debt as soon as it’s delinquent. Including taking reasonable impairment charges. That hasn’t changed for decades. Keep in mind that the vast majority of mortgages are not owned by banks.

You’ll have to explain in detail how driving the housing market to a real bottom (whatever that means) will help things. It’s one of those things that has been repeated by idealogues for so long that some take it as absolute fact, despite no evidence nor logic that make it so.

Builders are building. For the first time in 4 (maybe 5?), new home construction is adding to GDP growth.

That whole “house of cards” is another buzz phrase that idealogues like to throw around. The economy is made up of dozens of different segments. Some of them have been built on bubbles in the past, and are sure to be again in the future. Housing was one of them. We went through a steep correction. The aftershock of that correction is still with is. But housing is no longer a “house of cards”. Price to rent ratios and inflation adjusted values are back to within historical norms.

Assigning neither credit nor blame for how we got here, the resolution of the mortgage crisis has worked itself out, almost to perfection. The softest landing that could have occurred. It’s not over, and a lot could still go wrong. But housing prices are now back to a very delicate normal.

[livinincali]

[quote=SK in CV]
Nope. Banks have been required to reclassify debt as soon as it’s delinquent. Including taking reasonable impairment charges. That hasn’t changed for decades. Keep in mind that the vast majority of mortgages are not owned by banks.
[/quote]

This was true until the FASB changes in April of 2009. Now there’s a lot more leeway into how you want to treat asset prices. In essence it’s easier to classify something as temporary now.

http://www.fasb.org/sbd040209.shtml

[quote]
The Board decided to replace the existing requirement that the entity’s management assert it has both the intent and ability to hold an impaired security until recovery with a requirement that management assert

It does not have the intent to sell the security; and

It is more likely than not it will not have to sell the security before recovery of its costs basis.
[/quote]

[desmond]

“Bank of America Corp. has amassed $64 billion of mortgages that are at least six months delinquent and have yet to enter foreclosure, more than twice the amount held by its four largest competitors combined”

http://www.bloomberg.com/news/2012-12-19/bank-of-america-delinquent-loans-mean-losses-mortgages.html

[enron_by_the_sea]

Some times people confuse “servicer” and the “bank”

Citibank might be servicing your mortgage which could be held by Fannie Mae. In that hypothetical case, if you default on the loan, the loss largely goes to Fannie Mae. If you are not aware of it, you may think that Citibank is somehow not marking to the market …

It can even be more complicated. Fannie Mae might have packaged your loan into an MBS that the bond fund in your 401K might be holding. In that case, your bond fund needs to “mark to market” – not Citibank.

[CA renter]

How much of the $1.25 trillion in MBS on the Federal Reserve balance sheet is marked to market?

http://www.newyorkfed.org/markets/mbs_faq.html

edit: According to the most recent information I could find, it is just below a trillion at the moment, though recent trend changes are up.

http://research.stlouisfed.org/fred2/series/WMBSEC

http://timeline.stlouisfed.org/index.cfm?p=data&rd_id=39

[Author]

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