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The Obama administration apparently heeds the pleas of groups who call a potential foreclosure...

The Obama administration apparently heeds the pleas of groups who call a potential foreclosure moratorium "catastrophic," and Yves Smith laments that Obama has thrown his weight behind banks rather than borrowers. But with Goldman Sachs (GS) the latest to freeze foreclosures, there may be nothing he can do to stop the train wreck.
Comments (20)
  • If you 'heed the plea' of the squatter, you ignore the plea of the responsible mortgage payer.

     

    Pandering to one comes at the expense of the other.

     

    Which one will the community organizer choose?

     

    Which demographic is larger or can provide him with more votes?
    11 Oct 2010, 06:36 PM Reply Like
  • I must live in a cynical part of town but I see CA$H = votes , no matter any other inclinations.
    11 Oct 2010, 06:45 PM Reply Like
  • heads the pleas because he has no ideas of his won...he is totally lost...and a complete failure....I donĀ“t know if we can survive two more years...
    11 Oct 2010, 06:50 PM Reply Like
  • Obama for the first time in a long stretch made a sensible decision to protect taxpayers and economy first (ever forget who owns Citi??). I am not sure that it's entirely sincere just before the election, but, nevertheless, it's a true pro-business decision in a long time and should be applauded as such.

     

    I have just a few questions for you Yves:

     

    Have you ever thought what will happen to people who bought a house in a foreclosure only to have it taken away because some signature was notarized in a wrong state? Have you ever thought of the fact that about 1/3 of the foreclosed houses sit empty before the foreclosure because they were bought by investors? Have you ever though of the fact that a large portions of foreclosures are "strategic defaults" and people perfectly capable of paying are living rent-free? Have you ever thought why retirees in a pension funds that invested in real estate should take a hit ahead of irresponsible home-owners? Finally, have you ever thought why it takes on average over 400 days in CA and FL (???) to kick someone out of the house for mortgage non-payment while it takes just about 60 days to kick out a usually much needier person for not paying rent?

     

    I realize that Yves now making a career of attacking a hand that fed her so well for 25 years (Goldman Sachs). But from the rest of us, who are not part of your limousine-liberal crowd: Go away!
    11 Oct 2010, 06:51 PM Reply Like
  • You make many very good points. Regrettably most of the people posting on this site will ignore the facts and gravitate to the position that all bankers and everyone on Wall Street along with most others either directly or tangentially involved in the mortgage business are criminals. Criminals who have profited handsomely from taking advantage of poor, helpless or others otherwise incapable of taking personal responsibility for their actions. Indirectly you will become one of them. Sorry but the venom is thick.
    11 Oct 2010, 07:34 PM Reply Like
  • Unfortunately a whole lot of people are getting hurt by this, including legitimate buyers of foreclosed properties and pensioners. But that just adds to the criminal behavior of some banks and some mortgage originators that not only did not follow any due diligence when lending their money (which is basically a bank's job: identify and lend to whoever will pay you back, and not to whoever walks by) but did not even follow the law.

     

    My credit union has very few foreclosures and definitely no issues proving they are the original lenders and therefore have the right to foreclose.
    11 Oct 2010, 09:09 PM Reply Like
  • Good move by the Administration.

     

    They are starting to listen to business and not the lunatics on the fringe. Comrade Pelosi must be ticked off. She will be crying about this to all of her trust fund baby supporters
    11 Oct 2010, 07:04 PM Reply Like
  • You are right. But hey what the heck, violating IRS rules is standard operating procedure for this administration. I actually think this is more of a bankster move on the part of the Obama admin and just more crony capitalism. Break up the banks!
    11 Oct 2010, 10:21 PM Reply Like
  • I don't think that the administration nor Congress should be involved.

     

    If we had followed the law from the beginning we wouldn't have these problems in the first place.

     

    I'm not sympathetic to banks quandry. There is a legal process to be followed. They knew the process when they originated the mortgage. Claiming problems now is their own tough luck. If it takes them longer to find and correctly process the paperwork correctly then that is what should have to happen.

     

    Just as I didn't support the administration's housing modification efforts, I don't support foreclosure process modification efforts either. If it takes 2 years for a bank to foreclose then thats what it takes.
    11 Oct 2010, 07:30 PM Reply Like
  • Damn right. This is not a political issue, it is a legal one. Obama should not come out in support of anything or anyone but the law. (Obviously, this did not happen with GM or Chrysler, but that's another issue) The professionals working for the lenders need to damn well do their jobs, and not use the excuse that the process is ineffective. The stories of people who have stopped paying the mortgage on rental properties, even though they still collect rent or who have taken numerous equity releases and intent to stay rent free until they get kicked out disgust me, but the mortgage originators lent the money without a care whether the borrowers were good, because they knew they could sell the risk to someone else and in many cases were seriously deficient in processing the deals after closing.

     

    The banks are halting foreclosures because they failed to perform due diligence. Those professionals who have committed fraud or perjury need to be brought to task. Those organizations need to take the economic cost of their mistakes, and this means the shareholders and bondholders if it gets that bad. There should be no bailouts for malfeasance.
    12 Oct 2010, 03:28 AM Reply Like
  • It seems like the frauds perpetrated by the banks all start with one phrase..."This will just be temporary." Adjustable-rate mortgages, TARP, the rescue of Fannie and Freddie...

     

    Right now it seems that any "fix" that congress can be talked into are converted into cash immediately by the banks until 3 months later when they need a new "fix".
    11 Oct 2010, 08:31 PM Reply Like
  • And I still think this is the silliest politically-motivated non-scandal in a very long time. The general public has no particular interest in it, nor do even professionals really understand it.

     

    The only way the Permabears might generate some actual heat from it is if it were proven that all these errors were actually the work of a devious computer worm emanating from North Korea - or possibly the Iranians taking revenge for Stuxnet.

     

    Otherwise, this entire Shocking Scandal is one big Yawn. (Yes, I really think so.)
    11 Oct 2010, 09:49 PM Reply Like
  • Whether it's one big yawn or one gigantic continuing fraud, it is now obvious that the class action suits are already out there, the politicians, regardless of party, will seek some advantage, and the housing market is now effectively stalled, perhaps for many years.

     

    The bottom line is that, in the majority of foreclosures cases, both already adjudicated and those in the pipeline, a majority of the lenders/owners can not prove title, and the title companies are now backpedaling at the speed of light.
    11 Oct 2010, 10:29 PM Reply Like
  • I am one of those "professionals", I have worked in securitization and securities at one of the biggest TBTFs for 15 years, though not this specific area. I have seen the banks save their butts so many times that I have almost come to believe they will always escape. Let me tell you, this is the worse problem I think the banks have had in my time. The extent of the failings and the timing could not be worse. They will face challenges from borrowers for failings to manage their mortgages, states for avoiding taxes and from lenders for securities fraud. There are no quick and easy solutions and it is going to cost them a huge amount of money.

     

    Remember, Americans have seen trillions wiped off the value of their homes, they are very angry and they are looking for someone to blame. The banks have just offered themselves up....
    12 Oct 2010, 03:41 AM Reply Like
  • Well, you may not find it of interest, but the laws about the conduct of notaries public, chain of title, and forclosure are pretty clear, and they were clearly systematically violated in a lot of cases. It is a significant problem with long ranging consequences. And whichever side you happen to be on -- bear or bull -- in America there is a due process of law relating to the seizure of private property. It's one of the fundamentals to our constitutional system of democracy and private property. But, by all means, yawn away.
    11 Oct 2010, 10:31 PM Reply Like
  • yawn
    12 Oct 2010, 11:55 AM Reply Like
  • Due to so much Big Media being controlled by Big Government, there is not much attention being paid to this, when you compare it to Lindsey Lohan coverage entering rehab.
    I mean, the people dont care about news, unless it annoys them!! Unless they have it on their tubes 24/7.....then they talk about it. Then they care.
    So this is a coverup, this is a bank/realestate takeover, by the Big Banks...I dont know...but for sure, a comb over job.
    Or...Obama is going to do a major switch of sides at the last minute.
    11 Oct 2010, 11:29 PM Reply Like
  • The housing market will not 'clear' until the bank-owned (and government-owned) houses are moved into the market. After they suspended mark-to-market at the beginning of the crisis, the banks have held a bunch of non-performing mortgage loans on their books. Hence they have been slow to foreclose - I'm guessing - because they then have to recognize the loss when they do.

     

    Either way the delay is still 'falsely' propping up the housing market in many localities. Smart people won't buy homes until these homes wash through (kills your value if the house next door goes for bottom-basement after you just bought yours). Hence the savvy will wait. Builders are also concerned about the same issue; so the slow down will leave builders on the sidelines until it sorts out.

     

    We do have laws, and the banks need to follow them. People who lost their homes because of a legitimate (inaccurate) foreclosure on the part of the bank - like being tossed out of their homes when the foreclose is in error - would be entitled to just compensation.

     

    However: if the home owner stopped paying their mortgage - and the issue is a paper-work issue or screw up on the part of the bank, then how would the home-owner show 'damages?' They probably got to live in their house rent-free for some period, usually a minimum of 90-120 days. What would the homeowner's damages be? That they didn't get to stay for free for an extra few months?

     

    Since we are all 'tied in' with the banking system, the unforeclosed homes have the potential to be the problem of the US taxpayer - especially if we have to bail out the bank (and many continue to fail) that is now losing more money by sitting on these homes.

     

    Hence the action by the government appears to me to be an over-reaction; but it does follow the 'banks are evil' script that Obama has been pushing for the past 20 months. Creates a perfect populist position for the administration to supposedly stand up for the little guy and declare the banks 'evil.'

     

    I am, for one, skeptical of the administration's motives; and I think the delay hurts the taxpayers in the long run.
    12 Oct 2010, 12:19 AM Reply Like
  • There are many differing scenarios being put forth about which is the culpable party.The banks or other lending instituions,the purchasers of real estate,or the government for enacting laws facilitating an increase in home ownership.
    The laws enacted to increase home ownership were enacted under the Clinton administration.Congress is very culpable in this matter.So if the former President as he signed the bill into law to increase home ownership.
    While on the subject of the Clinton Presidency,wasn't he also the President who balanced the budget and created surpluses by Borrowing from the Social Security Trust fund? Ignoring future obligations for the populace until a later date by keeping everything off budget.That's another story for another discussion.
    The banks then followed that lead and started advertising low mortgage rates AND 125% home equity loans,adding fuel to the housing industry.
    In the Phoenix and Las Vegas markets the home builders then got into the game even more so and were building 40-50,000 homes per year when a normal market would be about 25,000 units.I am sure that this same scenario played out in Ca. and Fla. as well.Most of these homes went to speculators first when they saw the opportunity to make a buck.After all, real estate ONLY goes up.Or so everyone is lead to believe.
    Builders were raising prices weekly and sometimes charging $100,000 premiums if you were an investor.Also adding into contracts that you were not able to sell the property that you purchased for 12-18 months or pay THEM a heavy penalty.
    When the market hit its crescendo,anyone with a pulse could buy a home as the banks adapted to the frenzy by adding more esoteric mtg. instruments such as pay option arms,5-1,3-1 buydowns,no docs.,low docs.,etc
    Congress gets raises,Bank execs. get huge bonuses,Wall street execs. get HUGE bonuses for their ingenuity with writing CDO'S,CDMO'S,MBS's along with other esoteric financial instruments,slicing into TRANCHES and selling these securities worlwide and NO ONE goes to jail yet?
    I'm closing in on 60 and I can remember when I was 18 saying to friends then that we in America have the best Justice system here that MONEY CAN BUY!
    Now we get to the people being foreclosed upon.Either they bought to much house to begin with and shouldn't have or people are making STRATEGIC defaults as a purely business decision.
    People making $12 per hour feeling ENTITLED to buy a 2000-2500sf. home as they feel they are MIDDLE CLASS.Sorry to disillusion these people but they are NOT middle class.They should still be renting.
    Homeowners who used their homes like a piggy bank taking out every bit of equity and buying vehicles and other things and then strategically stop paying their mortgage as they got overextended.
    Banks may not be able to show title YET but these "homeowners"
    did NOT live up to their end of a contract they entered into and should be foreclosed or move out of the property on their own.They are shortsighted.The sooner they move on with their lives,the sooner the bad credit reporting will fall off their credit bureau report.Is 1-1/2 years of free living expenses such a strategic manuever when they know the inevitable is coming?
    This whole GREED scenario,entitlement scenario and D.C. power scenario makes me ill. Everyone seems hellbent on ruining this country.
    What will put this country back on the right track(maybe) is ACCOUNTABILITY for obligations.If we have to go through a depression,then so be it.We need a TOTAL change in D.C. If CAPITALISM is so strong an operating system it will survive.If not,well we better learn from our mistakes or we are doomed to repeat .
    I feel this way and I don't even own a home.I was busy paying my $1500 monthly child support obligations at the time.At least I lived up to my commitments.
    12 Oct 2010, 03:30 AM Reply Like
  • the problem here is really simple. This kind of stuff happens over and over in cycles precisely because the people who do wrong and violate laws are never held accountable. If society wants this to stop, all we have to do is identify the people who violated laws and lock them up for awhile and fine them everything they gained and then some. The message will get out.

     

    What is is NOT is a political issue. Other than the views on regulatory policy that differ between the parties, it's simply not political. there were laws on the books at the time the crimes and misdeeds were committed. If they were violated people should be prosecuted. It simply does not matter if this party or that party liked the laws on the books at the time. The only thing that matters is that there WERE laws on the books at the time of the crime.

     

    What the average citizen is really mad about is that in our world, we pay for our misdeeds, and we don't like it that a certain strata of citizens apparently don't have to pay for theirs.
    12 Oct 2010, 08:32 AM Reply Like
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