March New Loan Default Summary
- Total CA Foreclosures — At 1.5 Year Lows
- Total CA new Defaults – Surging
- Subprime -- Declining
- Alt-A — Constantly Rising
- Pay Option ARM – Surging, Despite Wachovia being on Moratorium
- Jumbo Prime – Relentless
- Super Jumbo – Surging
- Fannie – Freddie – Surging
CA House Prices are Bottoming – But for the Wrong Reasons
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With proprietary default and foreclosure data only available to a select number of firms in the nation and decades of mortgage and real estate experience, we are able to provide high-level and granular broad-market and company-specific insights never before available – sometimes months ahead of public news and events. Looking ahead of the mortgage and housing market and into bank’s residential mortgage portfolio and balance sheet is now much easier. Best, Mark Hanson
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The mortgage default and foreclosure news flow has been heavy over the past couple of weeks. But aggregated news is tough to make sense of or trade. At Field Check Group we can break down the default and foreclosure data hundreds of different ways including by originating and foreclosing lender, loan type, loan amount, present property value, MSA/City/State/Zip and more making it easy to understand.
Below are various looks at the default universe by loan type. When breaking it down this way, what has happened to date and going to happen in the future becomes much clearer. It also gives a clear picture of the task at hand the Administration has with respect to its new foreclosure prevention plans, as the loan default wave is a mile high and they are swimming into it with a canoe.
-Total CA Foreclosures — At 1.5 Year Lows
In March, new foreclosures were at 1.5 year lows. Actually in Q1 2009, foreclosures were much lower than in Q1 2008 due to broad market legislation and bank-specific moratoriums. This has kept distressed inventories at a low and allowed the low-end housing market — the only segment getting any action — time to consolidate a bit. But remember, supply is everywhere. Although foreclosure-related sales are 50%+ of the market in the bubble states it is only about 35-40% of total supply at this point in CA. The rest of the supply comes from Ma and Pa Organic homeowner who is being squeezed out or can’t sell due to epidemic negative equity. Of the 60-65% of supply that is organic, 50% are typically listed as a short-sale.
-Total CA new Defaults — Surging
New loan defaults – of which a large percentage will turn into foreclosures 5-7 months following the notice month — are surging. In the past that would be indicative of a major foreclosure wave coming. Now with aggressive moratoria and mortgage mod initiatives in place, the eminent wave may not break all at once. It will break, but could be stretched across more months than typical. One thing is for sure, there is a pig the size of Godzilla in the python right now that has worked its way to the lower intestine.
Subprime Defaults — Declining
New Monthly Subprime notice-of-defaults have eased off considerably. This is because the mortgage crisis started with Subprime, and mortgage mod initiatives and moratoriums are most targeted to Subprime loans.
Alt-A Defaults — Constantly Rising
New Monthly ALT-A notice-of-defaults have surged along with total defaults but not with such an aggressive rate of change. This is because mortgage mod initiatives and moratoriums are most targeted to Alt-A and Subprime loans.
Pay Option ARM Defaults — Surging
Pay Option ARM defaults are continuing to surge despite one of the nation’s largest Pay Option holders — Wachovia — remaining on near full moratorium.
Jumbo Prime Defaults — Relentless
The Jumbo Prime default chart is absolutely unique but increasing steadily along with total defaults. Within this category supply this high can’t be absorbed into the housing market because sales over $417k are so slow.
Over $750k Loan Amount Defaults — Surging
Defaults on original loan amounts over $750k are surging with total counts higher than total sales in this segment. Supply from foreclosure is about to hit hard in the mid-to-upper end housing market. And remember, foreclosure supply is only one form and account for only about 35% of total supply.
When we look back at 2009 on December 31st with Champagne bottles in hand, we will reflect upon 2009 as being the ‘year of the mid to upper end house price collapse’.
Fannie-Freddie Monthly Loan Defaults — Surging
This goes hand in hand with the FHFA report put out yesterday showing new GSE loan delinquencies and defaults are surging. This is what the low-to-mid end of the market can’t handle right now — it has finally reached a point of decent supply-demand with help from mortgage mod initiatives and foreclosure moratoriums kicking the can down the road.
A surge in GSE defaults and foreclosures will bring around round 2 of the low-to-mid end house price fall. Many are hopeful that Obama’s new mortgage mod plan focused upon GSE loans will prevent this. But given that the GSE’s at present have 1.229 million delinquent and defaulted loans and were only able to pump out 9k mortgage mods in January, I believe that is wishful thinking.
House Prices Are Bottoming — But for the Wrong Reasons
Present values of properties at the notice-of-default stage are clearly rising due to the shift in the mix of loans/properties going into default from lower to higher. This ‘mix-shift’ effect may push up median house prices in 2009 creating the appearance that the market is improving when in reality it is because more higher-value properties are defaulting, being foreclosed upon and reselling through the Realtor network.
This is the last look at prop values before they become REO and are listed for resale. Present values of props at the actual foreclosure stage have stabilized but are not yet increasing as they are at the NOD phase shown previously. Given 60% of all resales are from this foreclosure stock, this does not indicate prop values in CA will rise in the near-term.
For any of you that play MSA based house price futures, this chart series nails the Case-Shiller.
**For more information in our default/foreclosure related research including real-time mortgage default, foreclosure and loss tracking across large-named publicly traded companies please email me at the address below. Looking ahead of the housing and mortgage market and into bank’s residential mortgage portfolios and balance sheets is now much clearer.
Best Regards,
Mark Hanson
Mark@TheFieldCheckGroup.com
Analysis by Mark Hanson, Field Check Group Real Estate & Finance
Data provided by ForeclosureRadar.com
April 30th, 2009 at 5:47 pm
Here is part of the problem is that they are doing a lot of “repayment plans” which is just kicking the can while the bank pretends to hold a valid asset…. Sure to drag out the housing crisis.
“March mortgage workout results announced on Thursday by Hope Now – a coalition of mortgage lenders, servicers, investors and community groups put together to fight the foreclosure plague – were a decidedly mixed bag.
Approximately 134,000 mortgages were rewritten by Hope Now members, which is nearly 20,000 more than the average since September. Another 115,000 at-risk borrowers were granted repayment plans, for a total of nearly a quarter of million troubled mortgages addressed for the month.
Repayment plans merely postpone payments for delinquent borrowers without making them any more affordable. Mortgage modifications are changes in the terms of loans that reduce or freeze interest rates, extend the life of the loan, reduce loan balances or any combination of those three, to, ideally, lower the amount borrowers pay monthly. Modifications are considered more effective that repayment plans.”
April 30th, 2009 at 8:28 pm
Partyboy – “Let’s assume that the taxpayer cost from the housing bust is one trillion dollars. Let’s also assume that there are 300 million people in the US. And let’s assume that the top 10% of incomes are paying 90% of the taxes. And I will assume that none of those top 10% read this blog. This means that the cost for the rest of us is around 3400 dollars. If this is taxed over the course of ten years, it will cost each of us around $28 a month. ”
There are roughly 150 million people working in this country. So multiply your number by 2. Furthmore, the loan losses will probably be closer to 2.5t-3T when all is said and done. Take the number you multiplied by 2 and multiply by 2.5-3. And lastly, yes there are people who read this blog who are in the top 10% of earners on this blog. Not real excited about being gravy trained more than I already am. Thanks though! We need more people pulling the wagon, and fewer people in the wagon.
As an aside, I would love for any of the liberals out there to explain why the current income tax system is so regressive. “The people at the top have gotten all the breaks.” Please review the tax tables and explain where I’m wrong. Don’t start with any b.s about payroll taxes, since half is paid by employers like me and the rest is going into a system that is going to pay you back (SS-forced pension & medicare). Furthermore, these benefits are skewed to the lower paid as well. Medicare is rediculous with no earnings cap. I love hearing Obama talk about taking the cap off earnings for determining ss. Sorry for the rant, as partyboy irked me by saying, “lets dump the tax bill for this on the top 10%”.
April 30th, 2009 at 8:53 pm
anyone here know why the MAKING HOME AFFORDABLE PROGRAM for MODIFICATIONS, still hasnt been released to the public , as its been almost 2 months since NOBAMA announced his grand plan of BS !
May 1st, 2009 at 12:16 am
Housingrealist
Rather than use the 300 million figure which would include kids who don’t pay taxes, try reworking the numbers using households which is around 113 million. Some of those households get welfare and would not pay taxes. Before the job losses, working stiffs numbered around 150 million or so. Might want to factor in the Obama blowout budgets too lol.
May 1st, 2009 at 12:49 pm
Bertdilbert, perhaps I misread your message. Ok, so lets get specific on an example. Suppose I’m the bank and you are a borrower, making $50,000 a year with clean credit. Now give me an example of how I could possibly fool you into a loan agreement that I KNOW you can’t pay back.
May 1st, 2009 at 6:07 pm
I know you misread my message lol. I am not saying that in every case that their is fault but is cases where there was wrongdoing on either the part of the buyer OR the lender, the government should pursue charges. If we do not enforce any laws then it is nothing but the wild west.
My view is this, the bank is the doctor and the buyer the patient. When the bank issues a loan that based on the buyers submitted documentation, that if the buyer cannot show that he can reasonably pay the loan then it is malpractice on the part of the bank.
One type of situation is where the buyer’s mortage payment and exsisting debt payments project a debt to income ratio that suggests that there is a very high probability of loan failure.
The other situation is where the bank qualified a buyer on a loan based on the begining loan payments and not the higher interest reset value which as we all know, eventually comes.
In those cases, the bank knowingly entered into a transaction that was in essence, designed to fail.
May 2nd, 2009 at 8:47 am
Bert, I think the fundamental difference between our views is that I think buyers are a lot smarter than you give them credit for. Just this thread alone, buyers/borrows are described as “kids”, “not really homeowners” and “patients”. I don’t they’re any of that.
I personally know quite a few people that have bought homes during the peak years 2005-2006, and every one knew exactly what they were doing. Even though I thought they had spent far above what they could afford, they evidently disagreed. They all had a similar plan, “work work work now, overtime overtime overtime to pay for the current payment. They knew in a couple years the loan will reset and payments will be much higher. But no worries for everyone knows our economy is hot and RE will go up forever. They can always refinance and actually put cash in their pockets…”
You know, those are same ones today claiming to be victims saying “I didn’t understand” and citing “The American Dream … and all I wanted was a home for my family”. And you know what, they would be happy to go along with the game and allow the government to call them “kids” or “patients” as long they get a bailout through various governmental plans.
May 3rd, 2009 at 9:28 am
The fundamental difference is the irreverence you have for people who had the nerve to think they were more “successful” than you. And you want them to pay.
This pseudo-philosophical argument about personal responsibility is totally out of context. 20 banks want their customers to cover the losses stemming from their strategy of leveraging overvalued assets 50 to 1, with the full backing and endorsement of the “prudent”.
Unless your finances are completely dissociated from consumer activity, a great deal of your profit during the past decade has stemmed from the phantom income injected into the economy from the housing bubble. And yes, this includes you “prudent” savers and angry renters, regardless of your involvement in the RE market.
Now the “prudent” want the financial world to crumble around them while their own balance sheets remain in tact, all because they feel special.
Like I said, it gives me a great deal of pleasure knowing that the “prudent” will have to pay a great deal for the bailout -even more than most homeowners since the “prudent” have few tax deductions!
It serves you right for having such a vindictive opinion of buyers while giving the banks a near free pass to defraud, abuse and overleverage our economy to the point of near decimation.
Pay up, “prudent”.
May 4th, 2009 at 1:33 pm
wonton, I am still ears to hear your views on the banks who almost dropped bags of money on people for a decade.
May 4th, 2009 at 2:17 pm
@ Housingrealist comment #135,
I did not say that the tax burden should be dropped on the to 10%, simply that the top 10% do in fact pay a ridiculous amount of the total taxes.
May 5th, 2009 at 7:23 am
5 articles in april…and none in the last two weeks? Is it getting better, or (MM) r u moving again?
May 5th, 2009 at 7:29 am
must be better.. nothing to write… Ben Bernanke..says we’re bottoming.. maybe this summer.. not even fall? stocks are up since march 09… gee… I guess this is not depression… just a recession… ok… now go spend some! because .. I won’t anymore… I need to go and save that 30% for my future down payment..when I buy in 10 years!
May 5th, 2009 at 7:41 am
buy new barbeque? nah! I live in an aparment!
buy new furniture? nah! no space.. cause I live in …apartment!
buy washer/dryer? nah!.. cause….
buy new car? nah!…cause…I’m next to work!
pay property taxes?..nah!…cause….
401k?..change it to 15,500$ contribution!
spend my 3.5% dowypayment saved so far? nah.. open a CD!
continue using credit card/pay it off at end of month? nah.. just leave it at 0$ balance/don’t use at all!
vacation planed? cancel that! just go to pool/beach! open another CD!
NOW DO YOUR PART AND SPEND! CAUSE MY HOPE TO BUY A HOME ANYTIME SOON HAS DISAPPEARED!
May 5th, 2009 at 7:51 am
AND YES.. I’M TELLING EVERYONE THAT CAN BUY TO GO BUY… HOMES!.. ESPECIALLLY THE FIRST TIME BUYER… GOVERNMENT WILL GIVE YOU 20% DOWNPAYMENT FREE! TO GO BUY A FORCLOSURE IN TARGET AREAS!
WE NEED A JAPAN STYLE DEFLATION! YES WE CAN!
May 5th, 2009 at 1:12 pm
Hello all:
In regards to debt ratio’s, 50% or higher was used to approve borrowers for the mortgage. Now the BANK not the borrower implemented the new higher qualifying ratio to close more loans. The borrowers technically would be able to pay the mortgage BUT at the expense of all other industries due to having less money available to spend on these other industries.(excellent reason for charge cards)
All mortgages issued over the historic proven economic substainable guidelines of 28/36%(conventional) or even the 29/41%(FHA) had a high probability of individual failure BUT they all had affected the overall general economy by giving Wall Street the lions share of the money supply regardless of possible foreclosures.
Now foreclosures affect the banks cash flow definately toxic, the solution is the banks have to sell their REO’s quickly. To sell quickly, the REO’s had to be priced under the going rate of the market especially since the potential QUALIFYING borrower pool had shrunk or was no longer eligible. The majority of homes being sold are the REO’s since they can be underpriced, shorted, discounted or ARE more affordable, regardless of how you wish to view the decline of values it is affecting all homeowners, the banks are in the drivers seat since they own or control not only the supply (houses) but the mortgages to obtain them.
A government mandate that recalls, reduces the principal to the TRUE appraised value, if necessary and replaces all defective mortgages at the banks loss.
The loss is 1.1 Trillion Dollars not the 11-13 TRILLION DOLLARS the taxpayers have already promised, spent,loaned or guaranteed to Wall Street.
May 5th, 2009 at 3:07 pm
“The borrowers technically would be able to pay the mortgage BUT at the expense of all other industries due to having less money available to spend on these other industries.(excellent reason for charge cards)
All mortgages issued over the historic proven economic substainable guidelines of 28/36%(conventional) or even the 29/41%(FHA) had a high probability of individual failure BUT they all had affected the overall general economy by giving Wall Street the lions share of the money supply regardless of possible foreclosures.”
Brilliant observation, Susan. High mortgage to income ratios are essentially a measure of how much wealth stays with main st vs wealth that’s funneled to Wall St.
Those morons who still think Johnny Homeowner should faithfully remit 50% of his income to the Bank should consider this when considering the stability of their own employment – i.e., can consumers support my company and be overleveraged at the same time?
May 5th, 2009 at 4:26 pm
We’re all going to have to agree to disagree, as the renters think homeowners are no different than us. We decided prices were too high, they did not. The owners on the other hand want help. I can appreciate that. Who wants to pay 1/3-1/2 more for something. It just makes me sick to pay for it!
May 5th, 2009 at 7:20 pm
Susan, if everyone used 30% down payment like some sugest here that it should be no problem…
what about this: (sounds better)
A government mandate that recalls, reduces/eliminates the downpayment to the TRUE ex-owners that lost in 2008,2009, if necessary and replaces all closing cost to new FHA mortgages at the government’s loss to balance supply.
May 5th, 2009 at 7:21 pm
I meant… to balance demand (for the big supply)
May 5th, 2009 at 9:45 pm
BAC need ANOTHER $34 BILLION after the stress test results have been announced….i am sure they will need many more BILLIONS after the next wave of residential readjustments hit the next 2 years and the commercial market collapses once and for all this year…..MR MORTGAGE its time for another POST…things are looking bad and the perfect storm may be on the horizon….wednesday could be an ugly day for wall street AND main street
May 6th, 2009 at 7:34 am
Ex owner:
Under the mandate, you would be eligible to purchase a new home subject to veriable income with ratio’s of 31/41% at the lowest prevailing interest rate, suggested 4.5% ,after 2 years of a previous foreclosure that did not involve a principal reduction.
The mortgage would be FHA insured, so the down payment would be 3.5%, of course, eligiblity would be based on if you could prove it was directly related to the economy(loss of employment / income) and not overleveraging yourself (purchased a home which you could have never afforded) I know based on reading your post,that your misfortune in life was due to loss of income which you and your wife have overcome. Congratulations and I wish you well.
May 6th, 2009 at 7:46 am
Housing Realist:
The cost of the bailouts at the 9 TRILLION DOLLAR mark was $29,400 for EVERY MAN, WOMAN and CHILD in the United States, regardless of their age or who works or doesn’t work.
Of course, it would be over 10 times higher if children and the elderly were deleted from the equation, that is why the bailouts will not only cost our children but our grandchildren, not including interest of course.
May 6th, 2009 at 7:47 am
Java – The time to be as negative as you are, is not now, but back in 2003/2004/2005/06/07. Saying we have a perfect storm brewing after CA has fallen by 40-50%+ is a bit late. We just went through most of the storm. We have more to go in the more affluent areas. Where POAs & Jumbos were more prevalent. For those people looking to buy 150K homes, its a good time to buy. Not more material downside for the “median” priced homes in suburbs. Be careful not to be Nouriel Roubini getting back from his around the world trip of doom and gloom saying the S&P was due to fall another 30% when the S&P was at 670. It’s very touch for those like Roubini who have been bears, to change at any point until the recovery is hitting them in the face. The best investor that I’ve seen change from bearish to bullish, and not have a emotional tie to one perspective is Jeremy Gratham of GMO. Statistically, the more an asset class falls, the better the outlook for that asset class. As for BAC, the market’s already discoounting much of what you’re saying. The CMBS market spreads have blown out, even though banks have not taken back the “lion’s share” of what they will take back.
May 6th, 2009 at 8:20 am
ex-owner, ironically you’re the only one on this forum who wants a handout from the government.
May 6th, 2009 at 8:56 am
“The fundamental difference is the irreverence you have for people who had the nerve to think they were more “successful” than you. And you want them to pay.”
I have no problem at all with people who think they are more successful than I. If you and I have the same income, I drive a Toyota and you drive a top of the line Lexus, that’s perfectly fine with me. But when the repo man comes for your car, it would annoy me if you’re screaming and yelling that they’re taking YOUR car, and that it’s was the bank’s fault for lending you money they knew you couldn’t afford.
May 6th, 2009 at 9:02 am
“Those morons who still think Johnny Homeowner should faithfully remit 50% of his income to the Bank should consider this when considering the stability of their own employment – i.e., ”
Benzy, if you are broke and can no longer pay your mortgage, then you should walk. But are you suggesting that one should walk even if he’s able to pay, just because the mortgage payment is a large percentage of his income?
May 6th, 2009 at 9:09 am
“wonton, I am still ears to hear your views on the banks who almost dropped bags of money on people for a decade.”
Jag, once again I’m not making excuses for banks. But I put larger resonsibility on borrowers.
Banks dropping bags on money on people wasn’t so bad years ago when your Average Joe was bragging about his half a million dollar home, and politicians, from the President to local politicians, were touting the record breaking rate of homeownership. Now that things don’t go their way (as predicted), all in the sudden it’s all the banks fault and lets do what we can to help those poor victim homeowners.
May 6th, 2009 at 1:48 pm
Why is a bartender to blame for a person who drinks too much and gets a DUI but a bank is not blamed for a person who borrows too much and declares bankruptcy? Aren’t the lender and the bartender held to a standard in which they should be able to recognize when some is borrowing or drinking more than they can handle? Seems a bit odd to me.
May 6th, 2009 at 1:50 pm
Of course in both examples, I would personally blame the customer. Just saying, this is not how the law views these situations.
May 6th, 2009 at 6:49 pm
I guess I am lost-
Weren’t the banks in charge of making sure the financial stability of a nation was sound?
Didn’t they fail at that- knowingly handing out 400k, 500k or 1 mil out to people who they knew couldn’t pay it off in the long run?
I cannot believe that the home buyers should carry most of the burden- considering they shouldn’t have been home buyers to begin with.
I hate all the analogies but here’s one for you wonton- if the banks were selling drugs and these people got hooked- can’t they get sober by choice, “because the drugs are a large part of his income” or should they just keep paying for drugs.
Everyone knows there were scammers and took out money , flipped house, had an uncle appraise, bought crap, bragged in your face etc.
But, I dont think they are the ones left here.
Just sayin-
May 6th, 2009 at 7:32 pm
What did I ask for Benzi? Did I get anything? What do you think / how do you think the government is going to bail me out? I’m ALL EARS!
So far, I’ve lost a lot, and didn’t get anything.. nor do I expect..as I’ve mentioned many times.. I’ve made decisions based on circumstances, that I’m not proud of, but I think are best for my family.
May 6th, 2009 at 7:37 pm
Did H4H bail me out?
Did I get my down payment back?
Did I get back my investment in landscape?
Is my forclosure removed out of my credit?
Is government giving me a loan today so I can buy again?
Did they help me refy my old mortgage of 400K from 7.5 % fixed (I’ve paid it for 2 years!) to a 4.5%?
HOW DID I GET BAILED OUT??? WHAT AM I ASKING FOR??? HELP ME UNDERSTAND BENZI.. or r u spilling wiskey all over your granite again?
May 6th, 2009 at 7:45 pm
Susan,
Thank you. While I’m not familiar with the details of the mandate, I understood that from FHA’s site. Considering I’ve forclosed at end of 2008 … the soonest that would be it’s end of 2010.
I think there are a lot of ex-owners or soon to be ex-owners that lost to forclosure in 2008 and 2009 due to loss of income(still hapening). Majority of us will return at the earliest 2011-2012.. and that’s not garanteed..
May 6th, 2009 at 7:53 pm
Some of you want your home appraised at today value (and bank reduce the balance to all owners that bought in 2003-2007)… not going to happen
Some of us, want to buy again, right after forclosure with a government loan..not going to happen (must wait 2-3 years minimum)
Don’t you all see, that the choices are:
- refi to lower interest (Personally I would have taken a 3% lower interest..I would have save $1000 a month)
- forclose
the government is focused on helping first time owner in target areas!
The investors and foreigners are buying forclosure at low prices
and of course more pain to come.. with this next reset wave coming, unless some take the refi option.. if one exists..
but the bigger pain is UNEMPLOYMENT! time will tell..
May 6th, 2009 at 9:15 pm
“Benzy, if you are broke and can no longer pay your mortgage, then you should walk. But are you suggesting that one should walk even if he’s able to pay, just because the mortgage payment is a large percentage of his income?”
The fed considers you as only a consumer subject that spends, the banks consider you a liability. We’re all players in the same game. I’m saying that nobody is looking out for your future except yourself.
May 6th, 2009 at 9:50 pm
ex-owner, I am just dumbfounded by your obsession with owning a home, especially after having been through the ringer.
Do you not see the irony in the FHA requiring only a 3.5% down payment for their new subprime loans? And, you’ve gone as far as to expect the Gov to loan you a down payment at 1%?
I have had a hard enough time negating the losses to my home equity by the first wave of no-down subprimers, I don’t think I can withstand a whole new storm.
One think is for certain, that if you reincarnated defaulters have another go, there will still be those who will have a problem with me entertaining the idea of having the bank eat some of my losses.
May 7th, 2009 at 6:38 am
“Some of you want your home appraised at today value (and bank reduce the balance to all owners that bought in 2003-2007)… not going to happen”
It is going to happen. All banks who own mortgages that are underwater are going to reduce the principal. It’s just not going to happen until the house get short sold or sold at auction.
May 7th, 2009 at 3:15 pm
Partyboy,
You’re correct… but that would be for the new onwer (old owner becomes an ex-owner.. like moi!)
May 7th, 2009 at 3:23 pm
Benzi,
Anothe storm? from defaulted/additional buyers coming in? You may want to worry about the next wave on the horizon.. those that defaulted are not back in now
I don’t want a downpayment at %1 interest.. I’ve got my own right now!
(a 3.5%)…
Partyboy..small correction.. not all of the homes bought during 2003-2007..will be sold – there are enough pp like Benzi…that will/can wait it out…
May 7th, 2009 at 3:27 pm
“I don’t want a downpayment at %1 interest.. I’ve got my own right now!
(a 3.5%)…”
God help us.
May 7th, 2009 at 8:12 pm
Benzi..don’t worry.. I’m not buying anytime soon… what I’m saying is that if I were/and could get a loan right now.. I’ve already saved up already 3.5% that could be used for a downpayment.. that FHA allows so many to get in with! The new new buyers sure have lots of skin in the game!
Yes god help us!
May 7th, 2009 at 9:34 pm
Yeah, I realized that after I posted. Not everyone will walk or get foreclosed on. But those who do will see someone else benefit from the principal reduction. And it makes sense that the banks don’t do it for current owners because once they do one, it will be a free for all. It’s an impossible situation to address with a one size fits all solution so it makes the seemingly nonsensical decisions some of the lenders are making a bit more understandable. There are countless stories of lenders refusing a short sale offer for 70% of the balance only to accept 50% of the balance a year later after the foreclosure. There has to be a reason…oh well, learn your lessons and move on. Just learn from the past and plan for the future. What else can you do?
May 8th, 2009 at 10:27 am
“We’re all players in the same game. I’m saying that nobody is looking out for your future except yourself.”
Benzy, THAT we can agree on!!
May 8th, 2009 at 2:18 pm
You guys are crazy — good to see all of you again. Mark
May 12th, 2009 at 12:28 pm
I see some people talking about moral, and some say better for family; some even blame the bank or people obviouse cannot afford. PEOPLE, it is the fault in the system. If AIG is not “almost dead”, all this foreclosure would not be a problem to anybody. Yes, not a problem to underwater homeowner, bank nor bailout taxpayer or government.
When the Fed lend 10K to a bank at 2%. Bank use 10x leverage to lend 100K to homeowner at 5%. Bank pay AIG 0.5% for credit default protection (hence bank don’t care if the homeowner cannot pay their rent; that 0.5% is cheaper than their due-deligent and make their marking cheaper). Bank pay 1% for their marketing effort. Now the bank makes 3.5% profit.
If AIG is “healthy”, I beg the credit is still plentiful and housing price is firm and nobody is underwater. Nobody will walkaway as asset is appreciated and we are not in this discussion of moral or greed.
The main problem is the systematic fault of factional reserve. Bank & Wall Street will find way to explore their legal leverage ratio to maximize profit. As government allow such fault in the system, any less oversight on it will sure cause crisis – like this one. Anything can be de-regulated, financial oversignt cannot be de-regulated under capitalism. Conclusion: blame de-regulation under Bush.
May 12th, 2009 at 12:32 pm
– sorry, update 2 typo –
I see some people talking about moral, and some say better for family; some even blame the bank or people obviouse cannot afford. PEOPLE, it is the fault in the system. If AIG is not “almost dead”, all this foreclosure would not be a problem to anybody. Yes, not a problem to underwater homeowner, bank nor bailout taxpayer or government.
When the Fed lend 10K to a bank at 2%. Bank use 10x leverage to lend 100K to homeowner at 5%. Bank pay AIG 0.5% for credit default protection (hence bank don’t care if the homeowner cannot pay their rent; that 0.5% is in lieu of their due-deligent and make their marketing cheaper). Bank pay 1% for their marketing effort. Now the bank makes 3.3% (5 – 2/10 – 0.5 -1) profit.
If AIG is “healthy”, I beg the credit is still plentiful and housing price is firm and nobody is underwater. Nobody will walkaway as asset is appreciated and we are not in this discussion of moral or greed.
The main problem is the systematic fault of factional reserve. Bank & Wall Street will find way to explore their legal leverage ratio to maximize profit. As government allow such fault in the system, any less oversight on it will sure cause crisis – like this one. Anything can be de-regulated, financial oversignt cannot be de-regulated under capitalism. Conclusion: blame de-regulation under Bush.
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