Gary A

After Fannie / Freddie Ultra-Bailout, Expect New Homeowner Program

People should absolutely say no to recourse loans.

Home for the Holidays: Fannie, Freddie Give Struggling Homeowners a Break

How are we going to get through the Fed no longer buying mortgages and the unwinding of Fannie and Freddie in the same year?

Who will buy the mortgages, especially after Morgan Stanley strategically defaulted, teaching millions that it is about economics and nothing more: seekingalpha.com/artic...

FDIC Keeping Mum About Real Estate Auction Results

Cramer said 7. I don't like the guy but he may be right.


On Nov 22 08:30 PM Andrew Butter wrote:

> Interesting article, that's a new take on a "public" auction, designed
> to attract the widest selection of buyers possible.
>
> By the way; according to Mark Hanson in 2007 and 2008 about 1.2 million
> homes went through final (third stage) foreclosure (that's the one
> they kick you out), to July 2009 there had been about 550,000. <br/>
>
> That's 1.75 million so far.
>
> They are running at about 80,000 a month now so lets say another
> 400,000 by the end of 2009 = 2.15 Million.
>
> You reckon 50% of 10% of 55 million will go all the way by the time
> this is over, that's 2.75 Million.
>
> I think you might be light.
>
> More like Six:
>
> seekingalpha.com/artic...

Isn't the Fed Monetizing Housing Debt?

Raising the value of underlying collateral was fine when gas was relatively cheap in the 70's and wages were rising. It won't work now because assets will explode in cost and the recovery will tank again. This time is truly different but that intellectually bankrupt Larry Summers doesn't get the difference. We are in a depression because we can't afford to raise the value of the underlying collateral.


On Nov 12 07:20 PM The Geoffster wrote:

> The FED can only hope that inflation will be sufficient to raise
> the value of the underlying collateral. Right now, it's pushing on
> a string.

Housing and Banking Woes to Continue

Clearly demand is the problem, not supply. Summers thinks you can just reflate, stock up the banks with supply of money and all will be well. I think it is more complicated than that.

Summers is relying on exports to replace the US consumer. That is FOLLY.

Moral to the story, we should have bailed out the consumers instead of the banks. The banks won't buy a new car.

Accounting for Losses at BofA and Fannie

What conspiracy are you talking about? How about the Robert Rubin, Fed conspiracy to bring off balance sheet banking to the shores of the United States? That is a conspiracy. How about the BIS looking the other way when off balance sheet banking was allowed? That is a conspiracy.

How about raiding the treasury of the United States, by Paulson, Geithner, the Fed and Barney Frank? That is a conspiracy.

How about not reigning in the too big to fail banks with regulation? That appears to be the newest conspiracy.

How about protecting the hedge fund crony bondholders of Larry Summers with Barney's weak bill that pays the creditors and stuffs the taxpayers? That is a conspiracy in progress.

So, please tell me what conspiracy don't you believe in here?


On Nov 06 08:24 PM 7footMoose wrote:

> Mr Hempton is a thoughtful analyst but misses the point. The historic
> loan losses experienced by the bank coupled with the historic loan
> losses experienced by the entire financial industry set the tone
> for expected loan losses. This in turn allows a bank to establish
> a loan loss reserve, which is then reviewed by management, the outside
> auditors and the federal examiners. The concurrence of these parties
> is essential to the process. Historically it has been the Feds who
> have insisted that the banks not salt away excess reserves for the
> future while understating current period taxable income. The idea
> that this is an arbitrary decision by the banks in an effort to hide
> potential losses only holds water if you are a hard core conspirascist
> convinced that all parties are complicit and involved. There are
> a lot of dumbbells out there but the conspiracy theory does not hold.

Accounting for Losses at BofA and Fannie

Yeah just wait till the new bank capital requirements hit. And hit they will. I would suggest that the banks are not lending that the big banks are not lending. So if they are so good for the economy, er, well, no, they are good for the bond market. They get bailouts, and they buy the sorry bonds of an over extended government. That is their only useful purpose right now.

They won't help main street. They don't have to.


On Nov 06 02:50 PM bbro wrote:

> this is garbage...BAC has 914 billion in loans....50 to 80 billion
> quarterly
> loss rate is absurd...No facts to substantiate...This fans the ignorance
> that prevails on some blogs regarding accrual accounting
> versus fair value accounting..BAC is nowhere nears like a zombie
>
> bank.There are dozens out and they are populated in the small banks
>
> undercapitalized,low loan loss reserves,too high chargeoff rate,
> and
> most importantly too low preprovision earnings....

Richmond Fed: GSEs Encourage Mortgage Defaults

Recourse loans are a sure way to slavery. If the bank can't make a loan that is sound, considering the possibility of credit and economic booms and busts, then they shouldn't make loans. I would rather see the 30 year loan go away than the institution of an evil, and I mean evil, recourse era.


On Nov 06 02:38 PM woollyB wrote:

> I've been waiting for more coverage/recognition of this issue. The
> crisis will be at fever pitch when millions of people decide they
> are so far underwater that they don't care about the moral obligation
> to repay and don't care if their credit scores are ruined. The deed/rent
> plan Fannie just announced (as well as Wells Fargo's new "plans")
> indicates that the reckoning is drawing ever nearer.

The Fed and Fannie Mae: Throwing Money Down a Black Hole

This realization that "safe" loans are defaulting should make investors, who were burned by MBS before, doubly nervous to ever get into that market again. We have the possibility of much higher interest rates. And if we are irresponsible enough the 30 year mortgage could go away. We are stuffing them under the rug now as it is.

Property Values Set to Fall from Bubble Peak to Long-Run Average

The only reason this is not declining faster is because of the no money down loans that are being made. I would suggest that this is making houses too expensive compared to historical average.

Face it people, without tax credits and no money down there is no housing market.

Economic Crisis 2008-9: Ignore Friedman's Lessons at Your Peril

You Friedman worshippers obviously think that Bernanke's reflation has worked. You don't really know that it has worked because the game isn't over. Pimco's Gross says assets are inflated by 15 trillion dollars.

As this bubble gets farther and farther from earth what do you suppose could happen?

Housing Prices Up Again

I hope this housing asset bubble is not sustained. So I disagree with the author. There will be no true understanding of house values with all this interference by government in the markets. Just as people no longer trust banks, so to do they not trust the manipulation of supply and demand.

That is why there is only real demand on the very bottom of the housing food chain. And according to Goldman Sachs, the unsavory characters who are usually right about everything, housing will indeed decline again.

I agree with those who say that they cannot keep a lid on the shadow housing inventory forever. They are not De Beers!

The 'Own Your Own Home' Policy: A Relatively New Thing

Wow, if FHA bombs and Fannie and Freddie mortgages are being purchased by the Federal Reserve at 100 percent, what does that say about the possibility that America will no longer be able to afford the 30 year mortgage. Then what for house prices, piggy bank equity, and economic recovery?

Analyzing Larry Summers

Alan, both parties are at fault. IMO the Bank of International Settlements allowed shadow banking and the Fed looked the other way as this system was imported to the US in the form of liar loans.

This was a ponzi SCAM. And it happened under the watch of the BIS, the home bank of the central banks.

Making the Fed the financial watchdog king is putting the fox in charge of the hen house. Just remember, Rubin, Greenspan, Frank, Gramm, etc all had something to do with making Wall Street into a casino. Both parties were in the pockets of the rich banks. And now the consumer, the engine of the world, is broke. Yet no one is prosecuted for this fraud.

They may get around to prosecuting the foot soldiers like Mozillo, but what about Geithner, Greenspan, Summers, Rubin, Frank, Graham, Dodd, etc. etc? If you commit a crime that is high up enough, no one gets prosecuted. I think Voltaire said something like that.

Analyzing Larry Summers

And one more thing. A true nationalization would NOT have had the government putting all the money in. That is a LIE. The bondholders, who Summers protected as they are levered by hedge funds, would have had to take a hit.

The cronies would not allow that and they rule the financial world. But the crisis is not over. Until the consumer delevers, which may be years and years, there will be no real recovery. Banks are still in danger and our credit system is threatened by lack of demand.