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analyst
Participant[quote=temeculaguy]
On a serious note, the ups and downs of the distressed pipeline do happen, but the capacity of the system to process those properties takes the gyrations out of it and the inventory is delivered at a measured pace. I don’t think the system has the ability to flood anything, a steady stream is about all they can provide and that doesn’t cause huge fluxuations in prices unless the buyers stop. It’s the only conclusion I can come to as to why the holders of distressed properties wouldn’t have tried to get everything out on the market while it’s being snapped up in hours and while rates are low, who knows how long this little “short term sellers market within a longer term buyers market” will last.[/quote]
The amount of work to accomplish a foreclosure using the trustee sale method is minor, bordering on trivial. Most of the work is handled by the computer system, which produces the required action documents on a pre-programmed schedule when the payments don’t show up. Send the property to auction without price restrictions, and the auction buyers will take all the risk and do all the clean-up, moving the prices appropriately lower in the process.
The work becomes substantial only when the goal is to avoid foreclosing. This is the policy adopted by the federal government to avoid exposing the insolvency of the banking system, and to protect the people downstream from them who would suffer devastation to their retirement funds and other investments.
The federal government is carrying out the policy by greatly affecting both supply (downward due to suspension of mark-to-market, direct rescue money) and demand (upward due to artificially low interest rates, low down-payments, down-payment assistance).
Participant[quote=temeculaguy]
On a serious note, the ups and downs of the distressed pipeline do happen, but the capacity of the system to process those properties takes the gyrations out of it and the inventory is delivered at a measured pace. I don’t think the system has the ability to flood anything, a steady stream is about all they can provide and that doesn’t cause huge fluxuations in prices unless the buyers stop. It’s the only conclusion I can come to as to why the holders of distressed properties wouldn’t have tried to get everything out on the market while it’s being snapped up in hours and while rates are low, who knows how long this little “short term sellers market within a longer term buyers market” will last.[/quote]
The amount of work to accomplish a foreclosure using the trustee sale method is minor, bordering on trivial. Most of the work is handled by the computer system, which produces the required action documents on a pre-programmed schedule when the payments don’t show up. Send the property to auction without price restrictions, and the auction buyers will take all the risk and do all the clean-up, moving the prices appropriately lower in the process.
The work becomes substantial only when the goal is to avoid foreclosing. This is the policy adopted by the federal government to avoid exposing the insolvency of the banking system, and to protect the people downstream from them who would suffer devastation to their retirement funds and other investments.
The federal government is carrying out the policy by greatly affecting both supply (downward due to suspension of mark-to-market, direct rescue money) and demand (upward due to artificially low interest rates, low down-payments, down-payment assistance).
Participant[quote=temeculaguy]
On a serious note, the ups and downs of the distressed pipeline do happen, but the capacity of the system to process those properties takes the gyrations out of it and the inventory is delivered at a measured pace. I don’t think the system has the ability to flood anything, a steady stream is about all they can provide and that doesn’t cause huge fluxuations in prices unless the buyers stop. It’s the only conclusion I can come to as to why the holders of distressed properties wouldn’t have tried to get everything out on the market while it’s being snapped up in hours and while rates are low, who knows how long this little “short term sellers market within a longer term buyers market” will last.[/quote]
The amount of work to accomplish a foreclosure using the trustee sale method is minor, bordering on trivial. Most of the work is handled by the computer system, which produces the required action documents on a pre-programmed schedule when the payments don’t show up. Send the property to auction without price restrictions, and the auction buyers will take all the risk and do all the clean-up, moving the prices appropriately lower in the process.
The work becomes substantial only when the goal is to avoid foreclosing. This is the policy adopted by the federal government to avoid exposing the insolvency of the banking system, and to protect the people downstream from them who would suffer devastation to their retirement funds and other investments.
The federal government is carrying out the policy by greatly affecting both supply (downward due to suspension of mark-to-market, direct rescue money) and demand (upward due to artificially low interest rates, low down-payments, down-payment assistance).
Participant[quote=temeculaguy]
On a serious note, the ups and downs of the distressed pipeline do happen, but the capacity of the system to process those properties takes the gyrations out of it and the inventory is delivered at a measured pace. I don’t think the system has the ability to flood anything, a steady stream is about all they can provide and that doesn’t cause huge fluxuations in prices unless the buyers stop. It’s the only conclusion I can come to as to why the holders of distressed properties wouldn’t have tried to get everything out on the market while it’s being snapped up in hours and while rates are low, who knows how long this little “short term sellers market within a longer term buyers market” will last.[/quote]
The amount of work to accomplish a foreclosure using the trustee sale method is minor, bordering on trivial. Most of the work is handled by the computer system, which produces the required action documents on a pre-programmed schedule when the payments don’t show up. Send the property to auction without price restrictions, and the auction buyers will take all the risk and do all the clean-up, moving the prices appropriately lower in the process.
The work becomes substantial only when the goal is to avoid foreclosing. This is the policy adopted by the federal government to avoid exposing the insolvency of the banking system, and to protect the people downstream from them who would suffer devastation to their retirement funds and other investments.
The federal government is carrying out the policy by greatly affecting both supply (downward due to suspension of mark-to-market, direct rescue money) and demand (upward due to artificially low interest rates, low down-payments, down-payment assistance).
Participant[quote=Rich Toscano][quote=analyst]
The mortgage is $600K. While the mortgage owner sits idle, due to the suspension of mark-to-market rules, the mortgage owner is allowed to maintain the fiction that an asset worth $600K is owned.
[/quote]Analyst, according to a longtime pigg who is very knowledgeable about the banking industry, that isn’t how it works… see this comment for his explanation:
http://piggington.com/shadow_inventory_the_flood_that_may_never_come#comment-117626
Rich[/quote]
Check the dates.
FASB revised the mark-to-market rules in the first week of April, 2009, to be effective for accounting periods ending after June 15, 2009.
The comment by davelj is dated May 8, 2009.
He was describing the situation before suspension of mark-to-market, not the situation that exists today.
Participant[quote=Rich Toscano][quote=analyst]
The mortgage is $600K. While the mortgage owner sits idle, due to the suspension of mark-to-market rules, the mortgage owner is allowed to maintain the fiction that an asset worth $600K is owned.
[/quote]Analyst, according to a longtime pigg who is very knowledgeable about the banking industry, that isn’t how it works… see this comment for his explanation:
http://piggington.com/shadow_inventory_the_flood_that_may_never_come#comment-117626
Rich[/quote]
Check the dates.
FASB revised the mark-to-market rules in the first week of April, 2009, to be effective for accounting periods ending after June 15, 2009.
The comment by davelj is dated May 8, 2009.
He was describing the situation before suspension of mark-to-market, not the situation that exists today.
Participant[quote=Rich Toscano][quote=analyst]
The mortgage is $600K. While the mortgage owner sits idle, due to the suspension of mark-to-market rules, the mortgage owner is allowed to maintain the fiction that an asset worth $600K is owned.
[/quote]Analyst, according to a longtime pigg who is very knowledgeable about the banking industry, that isn’t how it works… see this comment for his explanation:
http://piggington.com/shadow_inventory_the_flood_that_may_never_come#comment-117626
Rich[/quote]
Check the dates.
FASB revised the mark-to-market rules in the first week of April, 2009, to be effective for accounting periods ending after June 15, 2009.
The comment by davelj is dated May 8, 2009.
He was describing the situation before suspension of mark-to-market, not the situation that exists today.
Participant[quote=Rich Toscano][quote=analyst]
The mortgage is $600K. While the mortgage owner sits idle, due to the suspension of mark-to-market rules, the mortgage owner is allowed to maintain the fiction that an asset worth $600K is owned.
[/quote]Analyst, according to a longtime pigg who is very knowledgeable about the banking industry, that isn’t how it works… see this comment for his explanation:
http://piggington.com/shadow_inventory_the_flood_that_may_never_come#comment-117626
Rich[/quote]
Check the dates.
FASB revised the mark-to-market rules in the first week of April, 2009, to be effective for accounting periods ending after June 15, 2009.
The comment by davelj is dated May 8, 2009.
He was describing the situation before suspension of mark-to-market, not the situation that exists today.
Participant[quote=Rich Toscano][quote=analyst]
The mortgage is $600K. While the mortgage owner sits idle, due to the suspension of mark-to-market rules, the mortgage owner is allowed to maintain the fiction that an asset worth $600K is owned.
[/quote]Analyst, according to a longtime pigg who is very knowledgeable about the banking industry, that isn’t how it works… see this comment for his explanation:
http://piggington.com/shadow_inventory_the_flood_that_may_never_come#comment-117626
Rich[/quote]
Check the dates.
FASB revised the mark-to-market rules in the first week of April, 2009, to be effective for accounting periods ending after June 15, 2009.
The comment by davelj is dated May 8, 2009.
He was describing the situation before suspension of mark-to-market, not the situation that exists today.
Participant[quote=AN]The real question is why they’re not letting some of it go? We all know that there’s a lot of demand out there right now in certain areas under certain price point. If they really are actively and purposely holding those back, would it make sense for them to release some of them now? There are plenty of multiple offers out there, so those unsuccessful other offers = real buyers that would gladly buy at today’s price. Why hold back the inventory?[/quote]
The mortgage is $600K. While the mortgage owner sits idle, due to the suspension of mark-to-market rules, the mortgage owner is allowed to maintain the fiction that an asset worth $600K is owned.
As soon as the property is sold for $400k, whether via short sale, auction, or REO, the deception is no longer possible, and the mortgage owner takes a $200K loss. Do this enough times, and owners’ equity in the mortgage owning organization is reduced to the point that they are declared to be the owners no longer (regulatory takeover or bankruptcy liquidation).
When members of congress threatened legislation to override the Financial Accounting Standards Board (FASB) if they did not reverse themselves and withdraw the mark-to-market rules, the leaders of the “independent” FASB “agreed” to go along.
So now mortgage owners have a choice:
1. Go fast, die today.
2. Go slow, remain “solvent” in the short run, hope for salvation in the longer run, either due to direct rescue assistance, the effect of government subsidies to buyers, or generalized inflation driving all prices higher (including the price of of the mortgaged houses).Participant[quote=AN]The real question is why they’re not letting some of it go? We all know that there’s a lot of demand out there right now in certain areas under certain price point. If they really are actively and purposely holding those back, would it make sense for them to release some of them now? There are plenty of multiple offers out there, so those unsuccessful other offers = real buyers that would gladly buy at today’s price. Why hold back the inventory?[/quote]
The mortgage is $600K. While the mortgage owner sits idle, due to the suspension of mark-to-market rules, the mortgage owner is allowed to maintain the fiction that an asset worth $600K is owned.
As soon as the property is sold for $400k, whether via short sale, auction, or REO, the deception is no longer possible, and the mortgage owner takes a $200K loss. Do this enough times, and owners’ equity in the mortgage owning organization is reduced to the point that they are declared to be the owners no longer (regulatory takeover or bankruptcy liquidation).
When members of congress threatened legislation to override the Financial Accounting Standards Board (FASB) if they did not reverse themselves and withdraw the mark-to-market rules, the leaders of the “independent” FASB “agreed” to go along.
So now mortgage owners have a choice:
1. Go fast, die today.
2. Go slow, remain “solvent” in the short run, hope for salvation in the longer run, either due to direct rescue assistance, the effect of government subsidies to buyers, or generalized inflation driving all prices higher (including the price of of the mortgaged houses).Participant[quote=AN]The real question is why they’re not letting some of it go? We all know that there’s a lot of demand out there right now in certain areas under certain price point. If they really are actively and purposely holding those back, would it make sense for them to release some of them now? There are plenty of multiple offers out there, so those unsuccessful other offers = real buyers that would gladly buy at today’s price. Why hold back the inventory?[/quote]
The mortgage is $600K. While the mortgage owner sits idle, due to the suspension of mark-to-market rules, the mortgage owner is allowed to maintain the fiction that an asset worth $600K is owned.
As soon as the property is sold for $400k, whether via short sale, auction, or REO, the deception is no longer possible, and the mortgage owner takes a $200K loss. Do this enough times, and owners’ equity in the mortgage owning organization is reduced to the point that they are declared to be the owners no longer (regulatory takeover or bankruptcy liquidation).
When members of congress threatened legislation to override the Financial Accounting Standards Board (FASB) if they did not reverse themselves and withdraw the mark-to-market rules, the leaders of the “independent” FASB “agreed” to go along.
So now mortgage owners have a choice:
1. Go fast, die today.
2. Go slow, remain “solvent” in the short run, hope for salvation in the longer run, either due to direct rescue assistance, the effect of government subsidies to buyers, or generalized inflation driving all prices higher (including the price of of the mortgaged houses).Participant[quote=AN]The real question is why they’re not letting some of it go? We all know that there’s a lot of demand out there right now in certain areas under certain price point. If they really are actively and purposely holding those back, would it make sense for them to release some of them now? There are plenty of multiple offers out there, so those unsuccessful other offers = real buyers that would gladly buy at today’s price. Why hold back the inventory?[/quote]
The mortgage is $600K. While the mortgage owner sits idle, due to the suspension of mark-to-market rules, the mortgage owner is allowed to maintain the fiction that an asset worth $600K is owned.
As soon as the property is sold for $400k, whether via short sale, auction, or REO, the deception is no longer possible, and the mortgage owner takes a $200K loss. Do this enough times, and owners’ equity in the mortgage owning organization is reduced to the point that they are declared to be the owners no longer (regulatory takeover or bankruptcy liquidation).
When members of congress threatened legislation to override the Financial Accounting Standards Board (FASB) if they did not reverse themselves and withdraw the mark-to-market rules, the leaders of the “independent” FASB “agreed” to go along.
So now mortgage owners have a choice:
1. Go fast, die today.
2. Go slow, remain “solvent” in the short run, hope for salvation in the longer run, either due to direct rescue assistance, the effect of government subsidies to buyers, or generalized inflation driving all prices higher (including the price of of the mortgaged houses).Participant[quote=AN]The real question is why they’re not letting some of it go? We all know that there’s a lot of demand out there right now in certain areas under certain price point. If they really are actively and purposely holding those back, would it make sense for them to release some of them now? There are plenty of multiple offers out there, so those unsuccessful other offers = real buyers that would gladly buy at today’s price. Why hold back the inventory?[/quote]
The mortgage is $600K. While the mortgage owner sits idle, due to the suspension of mark-to-market rules, the mortgage owner is allowed to maintain the fiction that an asset worth $600K is owned.
As soon as the property is sold for $400k, whether via short sale, auction, or REO, the deception is no longer possible, and the mortgage owner takes a $200K loss. Do this enough times, and owners’ equity in the mortgage owning organization is reduced to the point that they are declared to be the owners no longer (regulatory takeover or bankruptcy liquidation).
When members of congress threatened legislation to override the Financial Accounting Standards Board (FASB) if they did not reverse themselves and withdraw the mark-to-market rules, the leaders of the “independent” FASB “agreed” to go along.
So now mortgage owners have a choice:
1. Go fast, die today.
2. Go slow, remain “solvent” in the short run, hope for salvation in the longer run, either due to direct rescue assistance, the effect of government subsidies to buyers, or generalized inflation driving all prices higher (including the price of of the mortgaged houses). -
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