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LA_Renter
ParticipantI just saw this post on the LA times blog, Is this true??
“In regards to the bailout that Cramer is crying for, what do you think about this aspect of the mortgage bailout?
Hope Now Alliance = banks hoping for more money NOW?
Please let me know if I’m on the right track here. As I understand it, currently in California many borrowers who have not refinanced have NON-RECOURSE LOANS.
The FB’s with these loans have the right to walk away and mail the keys to the bank.
———————
Definition of non-recourse loan: A secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. If the borrower defaults, the lender/issuer can seize the collateral, but the lender’s recovery is limited to the collateral. If the property is insufficient to cover the outstanding loan balance (for example, if real estate prices have dropped), the lender is simply out the difference.
———————HOWEVER, IF the FB refinances, they LOSE their NON-RECOURSE status.
I would assume that if a FB takes the bail-out bait and calls the lender to get their interest rate increase frozen, then this revision in the contract would switch their mortgage from NON-RECOURSE to RECOURSE.
After their interest rate is frozen the FB cannot walk away from their home without losing everything: money in savings, 401k, cars… and having their wages garnished. Seems similar to the new BK laws. It’s the new indentured servitude (but didn’t the servant get their freedom after they paid for 7 years, rather than 30 years or more paying on an inflated mortgage?).
I am wondering if one reason that these bail-out plans have been announced with such vague language is to test the waters to see if the public catches on about the downside for the FB’s.
FB’S: Don’t take the bait! Preserve your right to walk away from an upside-down mortage. This right is the most valuable thing you have in this uncertain time. Be sceptical! When was the last time a bank just did you a favor without something in it for them??!!”
ParticipantI just saw this post on the LA times blog, Is this true??
“In regards to the bailout that Cramer is crying for, what do you think about this aspect of the mortgage bailout?
Hope Now Alliance = banks hoping for more money NOW?
Please let me know if I’m on the right track here. As I understand it, currently in California many borrowers who have not refinanced have NON-RECOURSE LOANS.
The FB’s with these loans have the right to walk away and mail the keys to the bank.
———————
Definition of non-recourse loan: A secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. If the borrower defaults, the lender/issuer can seize the collateral, but the lender’s recovery is limited to the collateral. If the property is insufficient to cover the outstanding loan balance (for example, if real estate prices have dropped), the lender is simply out the difference.
———————HOWEVER, IF the FB refinances, they LOSE their NON-RECOURSE status.
I would assume that if a FB takes the bail-out bait and calls the lender to get their interest rate increase frozen, then this revision in the contract would switch their mortgage from NON-RECOURSE to RECOURSE.
After their interest rate is frozen the FB cannot walk away from their home without losing everything: money in savings, 401k, cars… and having their wages garnished. Seems similar to the new BK laws. It’s the new indentured servitude (but didn’t the servant get their freedom after they paid for 7 years, rather than 30 years or more paying on an inflated mortgage?).
I am wondering if one reason that these bail-out plans have been announced with such vague language is to test the waters to see if the public catches on about the downside for the FB’s.
FB’S: Don’t take the bait! Preserve your right to walk away from an upside-down mortage. This right is the most valuable thing you have in this uncertain time. Be sceptical! When was the last time a bank just did you a favor without something in it for them??!!”
ParticipantI just saw this post on the LA times blog, Is this true??
“In regards to the bailout that Cramer is crying for, what do you think about this aspect of the mortgage bailout?
Hope Now Alliance = banks hoping for more money NOW?
Please let me know if I’m on the right track here. As I understand it, currently in California many borrowers who have not refinanced have NON-RECOURSE LOANS.
The FB’s with these loans have the right to walk away and mail the keys to the bank.
———————
Definition of non-recourse loan: A secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. If the borrower defaults, the lender/issuer can seize the collateral, but the lender’s recovery is limited to the collateral. If the property is insufficient to cover the outstanding loan balance (for example, if real estate prices have dropped), the lender is simply out the difference.
———————HOWEVER, IF the FB refinances, they LOSE their NON-RECOURSE status.
I would assume that if a FB takes the bail-out bait and calls the lender to get their interest rate increase frozen, then this revision in the contract would switch their mortgage from NON-RECOURSE to RECOURSE.
After their interest rate is frozen the FB cannot walk away from their home without losing everything: money in savings, 401k, cars… and having their wages garnished. Seems similar to the new BK laws. It’s the new indentured servitude (but didn’t the servant get their freedom after they paid for 7 years, rather than 30 years or more paying on an inflated mortgage?).
I am wondering if one reason that these bail-out plans have been announced with such vague language is to test the waters to see if the public catches on about the downside for the FB’s.
FB’S: Don’t take the bait! Preserve your right to walk away from an upside-down mortage. This right is the most valuable thing you have in this uncertain time. Be sceptical! When was the last time a bank just did you a favor without something in it for them??!!”
ParticipantI just saw this post on the LA times blog, Is this true??
“In regards to the bailout that Cramer is crying for, what do you think about this aspect of the mortgage bailout?
Hope Now Alliance = banks hoping for more money NOW?
Please let me know if I’m on the right track here. As I understand it, currently in California many borrowers who have not refinanced have NON-RECOURSE LOANS.
The FB’s with these loans have the right to walk away and mail the keys to the bank.
———————
Definition of non-recourse loan: A secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. If the borrower defaults, the lender/issuer can seize the collateral, but the lender’s recovery is limited to the collateral. If the property is insufficient to cover the outstanding loan balance (for example, if real estate prices have dropped), the lender is simply out the difference.
———————HOWEVER, IF the FB refinances, they LOSE their NON-RECOURSE status.
I would assume that if a FB takes the bail-out bait and calls the lender to get their interest rate increase frozen, then this revision in the contract would switch their mortgage from NON-RECOURSE to RECOURSE.
After their interest rate is frozen the FB cannot walk away from their home without losing everything: money in savings, 401k, cars… and having their wages garnished. Seems similar to the new BK laws. It’s the new indentured servitude (but didn’t the servant get their freedom after they paid for 7 years, rather than 30 years or more paying on an inflated mortgage?).
I am wondering if one reason that these bail-out plans have been announced with such vague language is to test the waters to see if the public catches on about the downside for the FB’s.
FB’S: Don’t take the bait! Preserve your right to walk away from an upside-down mortage. This right is the most valuable thing you have in this uncertain time. Be sceptical! When was the last time a bank just did you a favor without something in it for them??!!”
Participant” If paychecks increase”
I don’t see that inflation going into paychecks. Look the housing bubble popped as in past tense. We are way past the point of propping this up. Japan, which is looking like a good comparison with each passing day is a classic example. Their property market has fallen for 20 years with a ZIRP policy. The housing correction is going to play out, even the blow hards on wall street acknowledge that.
Participant” If paychecks increase”
I don’t see that inflation going into paychecks. Look the housing bubble popped as in past tense. We are way past the point of propping this up. Japan, which is looking like a good comparison with each passing day is a classic example. Their property market has fallen for 20 years with a ZIRP policy. The housing correction is going to play out, even the blow hards on wall street acknowledge that.
Participant” If paychecks increase”
I don’t see that inflation going into paychecks. Look the housing bubble popped as in past tense. We are way past the point of propping this up. Japan, which is looking like a good comparison with each passing day is a classic example. Their property market has fallen for 20 years with a ZIRP policy. The housing correction is going to play out, even the blow hards on wall street acknowledge that.
Participant” If paychecks increase”
I don’t see that inflation going into paychecks. Look the housing bubble popped as in past tense. We are way past the point of propping this up. Japan, which is looking like a good comparison with each passing day is a classic example. Their property market has fallen for 20 years with a ZIRP policy. The housing correction is going to play out, even the blow hards on wall street acknowledge that.
Participant” If paychecks increase”
I don’t see that inflation going into paychecks. Look the housing bubble popped as in past tense. We are way past the point of propping this up. Japan, which is looking like a good comparison with each passing day is a classic example. Their property market has fallen for 20 years with a ZIRP policy. The housing correction is going to play out, even the blow hards on wall street acknowledge that.
ParticipantHere is some interesting commentary as to the source of the anxiety on wall street. Doug Noland is very reasonable in most of his commentary he explains the scale of this credit crisis.
“Re: CREDIT BUBBLE BULLETIN
Road to ruin
By Doug NolandCOMMENTARY
The gentlemen at Pimco are, once again, the leading cheerleaders for another round of easier “money.” Calling for the Fed to cut rates to 3.5%, Bill Gross commented Wednesday on Bloomberg television: “The nominal [third quarter] GDP number was 4.7%. Any time you get a nominal GDP growth less than 5% the economy is basically struggling. The U.S. needs at least 5% nominal growth in order to pay its bills on a longer term basis.”
The Credit meltdown is now moving too fast and furious. Importantly, confidence is faltering for the entire Credit insurance industry, including the mortgage insurers and the financial guarantors. This is a devastating blow for the securitization marketplace, already reeling from pricing, liquidity and trust issues. The Credit system has lurched to the edge of meltdown, while the economy hasn’t even as yet succumbed to recession. It’s absolutely scary. Last week I wrote that subprime and the SIVs were “peanuts” in comparison to the CDO market. Well, the CDO marketplace is chump change compared to Credit Default Swaps and other over-the-counter (OTC) Credit derivatives that, by the way, have never been tested in a Credit or economic downturn.
The scale of the Credit “insurance” problem is astounding. According to the Bank of International Settlements, the OTC market for Credit default swaps (CDS) jumped from $4.7 TN at the end of 2004 to $22.6 TN to end 2006. From the International Swaps and Derivatives Association we know that the total notional volume of credit derivatives jumped about 30% during the first half to $45.5 TN. And from the Comptroller of the Currency, total U.S. commercial bank Credit derivative positions ballooned from $492bn to begin 2003 to $11.8 TN as of this past June. It today goes without saying that this explosion of Credit insurance occurred concurrently with the expansion of the riskiest mortgage (and other) lending imaginable. It’s got “counter-party fiasco” written all over it.”
Bugs, I think you are right, this is too big to bail out.
ParticipantHere is some interesting commentary as to the source of the anxiety on wall street. Doug Noland is very reasonable in most of his commentary he explains the scale of this credit crisis.
“Re: CREDIT BUBBLE BULLETIN
Road to ruin
By Doug NolandCOMMENTARY
The gentlemen at Pimco are, once again, the leading cheerleaders for another round of easier “money.” Calling for the Fed to cut rates to 3.5%, Bill Gross commented Wednesday on Bloomberg television: “The nominal [third quarter] GDP number was 4.7%. Any time you get a nominal GDP growth less than 5% the economy is basically struggling. The U.S. needs at least 5% nominal growth in order to pay its bills on a longer term basis.”
The Credit meltdown is now moving too fast and furious. Importantly, confidence is faltering for the entire Credit insurance industry, including the mortgage insurers and the financial guarantors. This is a devastating blow for the securitization marketplace, already reeling from pricing, liquidity and trust issues. The Credit system has lurched to the edge of meltdown, while the economy hasn’t even as yet succumbed to recession. It’s absolutely scary. Last week I wrote that subprime and the SIVs were “peanuts” in comparison to the CDO market. Well, the CDO marketplace is chump change compared to Credit Default Swaps and other over-the-counter (OTC) Credit derivatives that, by the way, have never been tested in a Credit or economic downturn.
The scale of the Credit “insurance” problem is astounding. According to the Bank of International Settlements, the OTC market for Credit default swaps (CDS) jumped from $4.7 TN at the end of 2004 to $22.6 TN to end 2006. From the International Swaps and Derivatives Association we know that the total notional volume of credit derivatives jumped about 30% during the first half to $45.5 TN. And from the Comptroller of the Currency, total U.S. commercial bank Credit derivative positions ballooned from $492bn to begin 2003 to $11.8 TN as of this past June. It today goes without saying that this explosion of Credit insurance occurred concurrently with the expansion of the riskiest mortgage (and other) lending imaginable. It’s got “counter-party fiasco” written all over it.”
Bugs, I think you are right, this is too big to bail out.
ParticipantHere is some interesting commentary as to the source of the anxiety on wall street. Doug Noland is very reasonable in most of his commentary he explains the scale of this credit crisis.
“Re: CREDIT BUBBLE BULLETIN
Road to ruin
By Doug NolandCOMMENTARY
The gentlemen at Pimco are, once again, the leading cheerleaders for another round of easier “money.” Calling for the Fed to cut rates to 3.5%, Bill Gross commented Wednesday on Bloomberg television: “The nominal [third quarter] GDP number was 4.7%. Any time you get a nominal GDP growth less than 5% the economy is basically struggling. The U.S. needs at least 5% nominal growth in order to pay its bills on a longer term basis.”
The Credit meltdown is now moving too fast and furious. Importantly, confidence is faltering for the entire Credit insurance industry, including the mortgage insurers and the financial guarantors. This is a devastating blow for the securitization marketplace, already reeling from pricing, liquidity and trust issues. The Credit system has lurched to the edge of meltdown, while the economy hasn’t even as yet succumbed to recession. It’s absolutely scary. Last week I wrote that subprime and the SIVs were “peanuts” in comparison to the CDO market. Well, the CDO marketplace is chump change compared to Credit Default Swaps and other over-the-counter (OTC) Credit derivatives that, by the way, have never been tested in a Credit or economic downturn.
The scale of the Credit “insurance” problem is astounding. According to the Bank of International Settlements, the OTC market for Credit default swaps (CDS) jumped from $4.7 TN at the end of 2004 to $22.6 TN to end 2006. From the International Swaps and Derivatives Association we know that the total notional volume of credit derivatives jumped about 30% during the first half to $45.5 TN. And from the Comptroller of the Currency, total U.S. commercial bank Credit derivative positions ballooned from $492bn to begin 2003 to $11.8 TN as of this past June. It today goes without saying that this explosion of Credit insurance occurred concurrently with the expansion of the riskiest mortgage (and other) lending imaginable. It’s got “counter-party fiasco” written all over it.”
Bugs, I think you are right, this is too big to bail out.
ParticipantHere is some interesting commentary as to the source of the anxiety on wall street. Doug Noland is very reasonable in most of his commentary he explains the scale of this credit crisis.
“Re: CREDIT BUBBLE BULLETIN
Road to ruin
By Doug NolandCOMMENTARY
The gentlemen at Pimco are, once again, the leading cheerleaders for another round of easier “money.” Calling for the Fed to cut rates to 3.5%, Bill Gross commented Wednesday on Bloomberg television: “The nominal [third quarter] GDP number was 4.7%. Any time you get a nominal GDP growth less than 5% the economy is basically struggling. The U.S. needs at least 5% nominal growth in order to pay its bills on a longer term basis.”
The Credit meltdown is now moving too fast and furious. Importantly, confidence is faltering for the entire Credit insurance industry, including the mortgage insurers and the financial guarantors. This is a devastating blow for the securitization marketplace, already reeling from pricing, liquidity and trust issues. The Credit system has lurched to the edge of meltdown, while the economy hasn’t even as yet succumbed to recession. It’s absolutely scary. Last week I wrote that subprime and the SIVs were “peanuts” in comparison to the CDO market. Well, the CDO marketplace is chump change compared to Credit Default Swaps and other over-the-counter (OTC) Credit derivatives that, by the way, have never been tested in a Credit or economic downturn.
The scale of the Credit “insurance” problem is astounding. According to the Bank of International Settlements, the OTC market for Credit default swaps (CDS) jumped from $4.7 TN at the end of 2004 to $22.6 TN to end 2006. From the International Swaps and Derivatives Association we know that the total notional volume of credit derivatives jumped about 30% during the first half to $45.5 TN. And from the Comptroller of the Currency, total U.S. commercial bank Credit derivative positions ballooned from $492bn to begin 2003 to $11.8 TN as of this past June. It today goes without saying that this explosion of Credit insurance occurred concurrently with the expansion of the riskiest mortgage (and other) lending imaginable. It’s got “counter-party fiasco” written all over it.”
Bugs, I think you are right, this is too big to bail out.
ParticipantHere is some interesting commentary as to the source of the anxiety on wall street. Doug Noland is very reasonable in most of his commentary he explains the scale of this credit crisis.
“Re: CREDIT BUBBLE BULLETIN
Road to ruin
By Doug NolandCOMMENTARY
The gentlemen at Pimco are, once again, the leading cheerleaders for another round of easier “money.” Calling for the Fed to cut rates to 3.5%, Bill Gross commented Wednesday on Bloomberg television: “The nominal [third quarter] GDP number was 4.7%. Any time you get a nominal GDP growth less than 5% the economy is basically struggling. The U.S. needs at least 5% nominal growth in order to pay its bills on a longer term basis.”
The Credit meltdown is now moving too fast and furious. Importantly, confidence is faltering for the entire Credit insurance industry, including the mortgage insurers and the financial guarantors. This is a devastating blow for the securitization marketplace, already reeling from pricing, liquidity and trust issues. The Credit system has lurched to the edge of meltdown, while the economy hasn’t even as yet succumbed to recession. It’s absolutely scary. Last week I wrote that subprime and the SIVs were “peanuts” in comparison to the CDO market. Well, the CDO marketplace is chump change compared to Credit Default Swaps and other over-the-counter (OTC) Credit derivatives that, by the way, have never been tested in a Credit or economic downturn.
The scale of the Credit “insurance” problem is astounding. According to the Bank of International Settlements, the OTC market for Credit default swaps (CDS) jumped from $4.7 TN at the end of 2004 to $22.6 TN to end 2006. From the International Swaps and Derivatives Association we know that the total notional volume of credit derivatives jumped about 30% during the first half to $45.5 TN. And from the Comptroller of the Currency, total U.S. commercial bank Credit derivative positions ballooned from $492bn to begin 2003 to $11.8 TN as of this past June. It today goes without saying that this explosion of Credit insurance occurred concurrently with the expansion of the riskiest mortgage (and other) lending imaginable. It’s got “counter-party fiasco” written all over it.”
Bugs, I think you are right, this is too big to bail out.
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