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peterb.
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August 3, 2009 at 9:53 AM #441213August 3, 2009 at 11:03 AM #440458
peterb
ParticipantThe shadow has a few strong forces at work. The govt is now allowing the private sector to utilize it’s accounting style to appear solvent.
The lenders do not want to be forced to recognize true market value on their books and processing foreclosures would do this. So the really screwed ones are not even issuing NOD’s after many months of non payment.
Then the moratoriums are keeping any of them from processing foreclosures.
Then there’s the actual work load to process the bad loans as well as the logic that by flooding the market, they would destory the price.
CA currently has 9% of all mortgages at some level of deliquency and over 20% are underwater. Real unemployment/underemployment is in the 20% range and worsening.
Given that this seems to be the way things are evolving, we should have consistant negative pressure on house prices for some to time to come.
August 3, 2009 at 11:03 AM #440658ParticipantThe shadow has a few strong forces at work. The govt is now allowing the private sector to utilize it’s accounting style to appear solvent.
The lenders do not want to be forced to recognize true market value on their books and processing foreclosures would do this. So the really screwed ones are not even issuing NOD’s after many months of non payment.
Then the moratoriums are keeping any of them from processing foreclosures.
Then there’s the actual work load to process the bad loans as well as the logic that by flooding the market, they would destory the price.
CA currently has 9% of all mortgages at some level of deliquency and over 20% are underwater. Real unemployment/underemployment is in the 20% range and worsening.
Given that this seems to be the way things are evolving, we should have consistant negative pressure on house prices for some to time to come.
August 3, 2009 at 11:03 AM #440990ParticipantThe shadow has a few strong forces at work. The govt is now allowing the private sector to utilize it’s accounting style to appear solvent.
The lenders do not want to be forced to recognize true market value on their books and processing foreclosures would do this. So the really screwed ones are not even issuing NOD’s after many months of non payment.
Then the moratoriums are keeping any of them from processing foreclosures.
Then there’s the actual work load to process the bad loans as well as the logic that by flooding the market, they would destory the price.
CA currently has 9% of all mortgages at some level of deliquency and over 20% are underwater. Real unemployment/underemployment is in the 20% range and worsening.
Given that this seems to be the way things are evolving, we should have consistant negative pressure on house prices for some to time to come.
August 3, 2009 at 11:03 AM #441061ParticipantThe shadow has a few strong forces at work. The govt is now allowing the private sector to utilize it’s accounting style to appear solvent.
The lenders do not want to be forced to recognize true market value on their books and processing foreclosures would do this. So the really screwed ones are not even issuing NOD’s after many months of non payment.
Then the moratoriums are keeping any of them from processing foreclosures.
Then there’s the actual work load to process the bad loans as well as the logic that by flooding the market, they would destory the price.
CA currently has 9% of all mortgages at some level of deliquency and over 20% are underwater. Real unemployment/underemployment is in the 20% range and worsening.
Given that this seems to be the way things are evolving, we should have consistant negative pressure on house prices for some to time to come.
August 3, 2009 at 11:03 AM #441233ParticipantThe shadow has a few strong forces at work. The govt is now allowing the private sector to utilize it’s accounting style to appear solvent.
The lenders do not want to be forced to recognize true market value on their books and processing foreclosures would do this. So the really screwed ones are not even issuing NOD’s after many months of non payment.
Then the moratoriums are keeping any of them from processing foreclosures.
Then there’s the actual work load to process the bad loans as well as the logic that by flooding the market, they would destory the price.
CA currently has 9% of all mortgages at some level of deliquency and over 20% are underwater. Real unemployment/underemployment is in the 20% range and worsening.
Given that this seems to be the way things are evolving, we should have consistant negative pressure on house prices for some to time to come.
August 3, 2009 at 11:37 AM #44047334f3f3f
ParticipantGood post. I think your questions is: Is the FDIC to blame for the shadow inventory because they are broke? If “broke” means, insufficient funds to cover potential liabilities, new accounting rules notwithstanding, then the answer would most likely be an unequivocal “Yes!” But I’m not sure that collusion is as evident –given they are on record as having the treasuries backing– so much as expediency. I suppose the logic is that if pretending helps, then why not, but as you suggest it is a gamble, and nobody understands the odds or stakes. It just seems to me, in my limited understanding of these affairs, that willingness to print money has as yet to embrace the concept of finite.
August 3, 2009 at 11:37 AM #440673ParticipantGood post. I think your questions is: Is the FDIC to blame for the shadow inventory because they are broke? If “broke” means, insufficient funds to cover potential liabilities, new accounting rules notwithstanding, then the answer would most likely be an unequivocal “Yes!” But I’m not sure that collusion is as evident –given they are on record as having the treasuries backing– so much as expediency. I suppose the logic is that if pretending helps, then why not, but as you suggest it is a gamble, and nobody understands the odds or stakes. It just seems to me, in my limited understanding of these affairs, that willingness to print money has as yet to embrace the concept of finite.
August 3, 2009 at 11:37 AM #441005ParticipantGood post. I think your questions is: Is the FDIC to blame for the shadow inventory because they are broke? If “broke” means, insufficient funds to cover potential liabilities, new accounting rules notwithstanding, then the answer would most likely be an unequivocal “Yes!” But I’m not sure that collusion is as evident –given they are on record as having the treasuries backing– so much as expediency. I suppose the logic is that if pretending helps, then why not, but as you suggest it is a gamble, and nobody understands the odds or stakes. It just seems to me, in my limited understanding of these affairs, that willingness to print money has as yet to embrace the concept of finite.
August 3, 2009 at 11:37 AM #441076ParticipantGood post. I think your questions is: Is the FDIC to blame for the shadow inventory because they are broke? If “broke” means, insufficient funds to cover potential liabilities, new accounting rules notwithstanding, then the answer would most likely be an unequivocal “Yes!” But I’m not sure that collusion is as evident –given they are on record as having the treasuries backing– so much as expediency. I suppose the logic is that if pretending helps, then why not, but as you suggest it is a gamble, and nobody understands the odds or stakes. It just seems to me, in my limited understanding of these affairs, that willingness to print money has as yet to embrace the concept of finite.
August 3, 2009 at 11:37 AM #441248ParticipantGood post. I think your questions is: Is the FDIC to blame for the shadow inventory because they are broke? If “broke” means, insufficient funds to cover potential liabilities, new accounting rules notwithstanding, then the answer would most likely be an unequivocal “Yes!” But I’m not sure that collusion is as evident –given they are on record as having the treasuries backing– so much as expediency. I suppose the logic is that if pretending helps, then why not, but as you suggest it is a gamble, and nobody understands the odds or stakes. It just seems to me, in my limited understanding of these affairs, that willingness to print money has as yet to embrace the concept of finite.
August 3, 2009 at 12:34 PM #440503CricketOnTheHearth
ParticipantQuerty007, I agree– it looks more like “trying to fly through the storm on a lie and a prayer” hoping to not utterly crash the economy.
It seems to me what we need is a one-time “special” legislation that allows the banks to mark all the assets on their books to market, then take the differenct and “evaporate” it w/o having to show it as a loss on their books… thus staying “solvent”. Pure chicanery, I know, but the alternative looks like a bomb crater where the economy used to be.
This marking-to-market might have the salutary side effect of resulting in houses being valuated at prices that buyers can actually pay with sane mortgages, thereby unlocking the housing market too.
Great post, thanks for putting this up.
August 3, 2009 at 12:34 PM #440703ParticipantQuerty007, I agree– it looks more like “trying to fly through the storm on a lie and a prayer” hoping to not utterly crash the economy.
It seems to me what we need is a one-time “special” legislation that allows the banks to mark all the assets on their books to market, then take the differenct and “evaporate” it w/o having to show it as a loss on their books… thus staying “solvent”. Pure chicanery, I know, but the alternative looks like a bomb crater where the economy used to be.
This marking-to-market might have the salutary side effect of resulting in houses being valuated at prices that buyers can actually pay with sane mortgages, thereby unlocking the housing market too.
Great post, thanks for putting this up.
August 3, 2009 at 12:34 PM #441035ParticipantQuerty007, I agree– it looks more like “trying to fly through the storm on a lie and a prayer” hoping to not utterly crash the economy.
It seems to me what we need is a one-time “special” legislation that allows the banks to mark all the assets on their books to market, then take the differenct and “evaporate” it w/o having to show it as a loss on their books… thus staying “solvent”. Pure chicanery, I know, but the alternative looks like a bomb crater where the economy used to be.
This marking-to-market might have the salutary side effect of resulting in houses being valuated at prices that buyers can actually pay with sane mortgages, thereby unlocking the housing market too.
Great post, thanks for putting this up.
August 3, 2009 at 12:34 PM #441106ParticipantQuerty007, I agree– it looks more like “trying to fly through the storm on a lie and a prayer” hoping to not utterly crash the economy.
It seems to me what we need is a one-time “special” legislation that allows the banks to mark all the assets on their books to market, then take the differenct and “evaporate” it w/o having to show it as a loss on their books… thus staying “solvent”. Pure chicanery, I know, but the alternative looks like a bomb crater where the economy used to be.
This marking-to-market might have the salutary side effect of resulting in houses being valuated at prices that buyers can actually pay with sane mortgages, thereby unlocking the housing market too.
Great post, thanks for putting this up.
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