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  • Alt-A Mortgage Delinquencies Are also Rising
    Wait until the serious litigation starts with these products. Lawyers are just down getting their arms around the smoke and mirrors of these arms! It was completely unreasonable to expect that people would be ok the payment shock of taking their payment from $1,500.00 per month to $3,000.00 per month in one month when the loans hit their cap. The securities will continue to perform poorly and the litigation will continue to rise from the back end by investors and on the front end from borrowers.
    May 23 09:52 am |Rating: 0 0 |Link to Comment |View article
  • Foreclosures Prove Loan Modification Isn't Working
    As much as it paints a gloomy picture, this article is right on. The Option ARM modifications give a 2% reduction in margin for a while and the borrower still has to make the higher payment with loan amounts exceeding 100% LTV. Makes no sense. Couple that with a very painful process as described above, and people just give up. Its just about showing regulators and legislators statistics that they are providing modifications to "help". Meanwhile... the housing market continues it spiral freefall to the ground. Corrections are always painful, this one will incur many dead patients.
    May 16 09:17 am |Rating: 0 0 |Link to Comment |View article
  • John Hussman: Home Price Erosion Will Continue
    I think too many are focused on the effects and not enough on resolution and then let it run. The market needs to hit a bottom and none of the proposals are going to take it to a bottom but make the bottom fall more.

    Recommendations:

    Government:

    * $10,000.00 tax credit for homeowners that purchase a home in the next year. Extend as needed.
    * $15,000.00 tax credit for homeowners that purchase a home in the next year in which the area has been defined as a declining market. Extend as needed.

    Finance Industry:

    Lower rates on all OPTION ARMS and Sub-prime loans to 2% for the next 5 years. While they will sustain a loss, that will almost instantly vaporize the numbers of people from walking from the homes which will stabilize the market by stopping new inventory competing with the old.

    Between these two things, you would see a different market in the next year.

    Reality... never going to happen... how will the lending industry tell all those bond holders that hold the traunches on the option arms and sub prime loans for the rates above 2% that just lost 100 cents on the dollar? The litigation will soar!

    So, any other ideas?
    May 13 19:35 pm |Rating: 0 0 |Link to Comment |View article
  • Dueling Views on Housing: Buffett's Expert Sees Rebound Underway, Jim Rogers Sees More Pain
    I guess we have to be careful who is giving the advice these days. If you have been buying real estate based assets as Buffet's group has, through its Clayton Financial, if they can talk to the economy and get it to improve based on an emotionally driven response, they are poised to profit.

    If one thing has been clear in this recession is that it has a mind of its own. No matter how much the fed lowers rates or the pundits come forth talking about a bottom, consumers are not buying homes and foreclosures are increasing. So, no matter what is said, all indicators are that home values will continue to decline.

    When we look at the price of food and energy soaring, that appears to be more of the same as to why the housing industry soared. Big money from the world shifted money from bonds secured by mortgages to commodities such as oil and food. With such large amounts of money being thrown at these commodities, it is driving the prices up. Once that bubble bursts, and it will, we can all chuckle at the huge losses the average joe will suffer by investing in them. We are all operating on a kind of global ponzi scheme... leaving the dumb last investor holding the bag with no coins in it.
    May 12 14:00 pm |Rating: 0 0 |Link to Comment |View article
  • Warren Buffett on the Dollar, the Recession, Subprime and Bear Stearns
    Recession? That is the problem, at every "recession" the government puts in controls that speak to the definition of "recession" but do not focus on the reality. User 190263, you are merely speaking to the definition. Who cares. Just like the word depression... who cares. I think all one needs to do is take off the blinders and broaden ones vision beyond the definition and you would realize that we are in a form of depression... one that has never been defined before due to the complexities that have been added to our economic system.
    May 07 19:30 pm |Rating: 0 0 |Link to Comment |View article
  • Warren Buffett on the Dollar, the Recession, Subprime and Bear Stearns
    Mr. Buffet is brilliant and I saw the other day that his finance arm, Clayton, bought some sub prime loans and immediately froze their rates and would not increase them to help borowers. However, I read this this morning:

    UBS Mortgage Sale a Cautionary Tale
    Wall Street Journal (05/07/08) P. C2; Shah, Neil; Gullapalli, Diya; Mollenkamp, Carrick
    Following on the heels of Deutsche Bank AG and Citigroup Inc., UBS AG has become the latest investment bank to sell off unwanted assets, which some observers believe indicates signs of recovery in the credit markets. UBS is unloading $15 billion in Alt-A and subprime mortgages to asset manager BlackRock Inc., reportedly for about 68 cents on the dollar. While that price represents a significant loss for UBS, Citigroup credit strategist Matt King says banks are willing to meet buyers' prices in order to shrink their portfolios and holding costs. There remain concerns that rising mortgage defaults will make it difficult for these banks to continue getting rid of troubled assets.

    -----------------

    As I see it, if an investor is able to buy troubled subprime loans at 68 cents on the dollar, the problem is over. Can you imagine the positive impact on the market if all of those borrowers immediately had their rates reduced to zero for 3 years and chopped their payments down to 1/3rd, all resulting in principal reductions for each payment, the consumer would save their home, the buyer of the loans would still be profitable assuming a 6% interest rate per year (discount of 32% would only lose 18%) and the principal reduction would build back equity. Of course, if that is not pallatable how about lower their rates to 3%.

    May 07 12:52 pm |Rating: 0 0 |Link to Comment |View article
  • Fast and Easy Fannie
    Its kind of funny when people look at blame... everyone seems to forget the golden rule... "he who has the gold rules". The banks had the gold... they were driving this ship.
    May 05 09:16 am |Rating: 0 0 |Link to Comment |View article
  • Housing Data: Crybabies and Deceivers
    mlambert890 said "Whats the point of the endless wave of articles like this really?" In my view, honesty. The public is being misled by severe disinformation about bottoms, recovery and the worst being behind us and this disinformation is coming from the same sources that got us into the trouble in the first place.

    Lets start with the real estate industry. Where were they at advising their clients that these hybrid mortgage products were bad for them? Nowhere! All they cared about was getting their commission. Where were they when they were purposely pocketing offers and delaying presenting them to sellers and starting a feeding frenzy to maximize the number of buyers and even higher prices in violation of their fiduciary duties? Again, all too happy to abuse buyers to fuel the market because they made more.

    And the mortgage lenders... hybrid mortgage products that so misled the public about their ability to afford their "dream home".

    Truth be said, we are in a housing nightmare and the last thing we need is a lot more BS about how good it is to buy right now. Is it gloom and doom, heck no. This market has more to decline and then there will be some great deals and the american dream will be back for many families.

    Reality bites and today is not the day to buy.
    May 04 09:35 am |Rating: 0 0 |Link to Comment |View article
  • Fast and Easy Fannie
    qualifiedbuyer... more truth to what you say then people realize. If the government were to truly step up and say that the banks did a poor job of making these loans available and tell the public that it makes no sense to keep paying on these awful loans that will take them 10 years to recover from anyway (their houses are still going down in value, when it hits bottom it will stay there for a while and when it increases it will be slow, hence the 10 years). If they were to say the best thing is to give the keys to the lender, the prices would plummet even more, even though that is what is best for the consumer with those bad loans. So, welcome to being snookered by your government! Add onto that the fact that FNMA/FHLMC will punish you for 3-5 years if you dare try to walk away (ahem, isnt FNMA/FHLMC really owned and sponsored by we the people), the ones really giving those consumer the screwing is the good ole USA.
    May 03 19:36 pm |Rating: 0 0 |Link to Comment |View article
  • Fast and Easy Fannie
    But you forgot the most important part... "you mean those consumers were lying when they said they could afford those loans?" Right... dangle a beautiful big home in front of them and give them a payment on an pay option arm they can afford and they will sign anywhere! These guys would make Houdini proud.
    May 02 14:37 pm |Rating: 0 0 |Link to Comment |View article
  • "Pick-a-Pay" Defaults Deepen - Housing Tracker
    Pick a payment loans will most likely be worse. I have seen persons have a 460k loan with payments going along for 2 years at 1800.00/month all of sudden hit the 115% cap, recast and the new amortized payment jumps to 3600.00/month. Net income for the family is 4600.00/month. That leaves them $1,000.00 per month to pay utilities, cars, gas, food, etc. Cannot be done. Many families with these loans go one day from comfortably living in their homes to instant bankruptcy and having to make real choices about living. The lenders merely send them a notice saying here is your new payment next month. Its shameful that lenders expect that consumers can afford that type of payment shock. As these hit, given many of those some homeowners are under water on their values in the home already, the only decision will be to walk. Especially since there are plenty of rentals available in most markets for half their payment. Some lenders are being "generous" and lowering their rates by 2% for a couple of years but the payment still recasts and that savings is only a couple hundred per month at best. This type of shock is well beyond the shock experienced by many sub-prime borrowers.
    May 02 12:07 pm |Rating: 0 0 |Link to Comment |View article
  • The Impending Mortgage Crisis: Part Two
    All of this talk of bailouts and write downs makes me ill. The government needs to make this market hit a bottom. They need to give people incentives to buy. All this bailout talk is just perpetuating the problem. A tax incentive to buy is needed. I have said it before, this is a complicated mess. What is clear, no buyers, no one is qualifying and prices are in a free fall. Dont throw good money after bad, give tax incentives to buy, make easier money to borrower for those transaction only and start to eat up inventory. Outside of that, why take your bailout? In 6 months the place is going to be worth less again and will need another bail out.
    May 02 00:12 am |Rating: 0 0 |Link to Comment |View article
  • Keep On Watching for Signs of a Market Bottom
    If nothing else, one thing will be clear about this "recession" it will go down in the history books as one that has broken all the traditional "rules". An average recession??? Not on your life! The complexity of the "systems" in place are causing difficulty for everyone to see that damn forest because the trees are in the way.
    Apr 30 11:34 am |Rating: 0 0 |Link to Comment |View article
  • The Housing Bubble Goes Pop
    I too believe that "house prices must be tied to incomes". Another very important point. The recovery could be even more difficult down the road considering guidelines. Many of the persons who have been impacted and have had no choice but to walk away will be ineligible for borrowing from the current sources, the GSA's, for 3-5 years under their latest guidelines. That will limit your pool of buyers in the future who were traditionally in the pool before. On one hand the GSA's are punishing consumers who have sub-prime or Option ARM products that choked them to death by not lending to them in the future but expecting that someone will be there to buy to pull this housing slump out. Talk about shooting yourself in the foot! At this point, a prediction of a turn around in 08' is madness. Not even the serious litigation has started yet.
    Apr 30 11:25 am |Rating: 0 0 |Link to Comment |View article
  • How Housing Finance Actually Works
    On the surface this makes sense from a historical perspective. However, I think it has many simplified flaws. The issue is more complext. Traditionally the average life of a loan is somewhere around 4.3 years, could be different for a sub-prime loan but overall that is the number thrown around for years. What is different is, depending on the market, how much value has been lost. Take some parts of California, values have declined by 30% and still declining. That sub-prime or prime mortgage that was done at 80% or more, is done. The lender would have to take a short sale for the consumer to sell it. I would say that your analysis is good on values that orginated in 2006 and 2007 on sub-prime loans that were less than 70% LTV in those areas (similar analysis is similar areas at higher LTV). Adding another wrinkle is the decline in values does not appear to be done. So loss mitigation efforts to give some relief to buy time could blow up again if consumers see that they have lost even more value a year from now. I guess, I find your analysis risky. No one can look to the future at the moment and say that things will be ok. 9 months ago many people did and they were wrong. The historical persepective of markets has a different animal before it and this downturn will profile many future lessons. I guess I am just not as optimistic as this article presents. Consumers/Sellers who move or need to sell that normally do statistically are just unable to sell without huge losses is way too many cases.
    Apr 27 10:35 am |Rating: 0 0 |Link to Comment |View article

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