ArnoldCountry

Foreclosure Moratoriums: It's Time to Get Real

I somewhat agree but I do take exception to the personal responsibility statements. What about corporate responsibility? I equate many of these products to the wares of "snake oil salesmen". We have all lost sight of the old statements "a sucker is born every minute", "if it is too good to be true, it most likely is." These statement have not come about by the housing crisis, they have existed as long as there have been salepeople. The public, for the most part, have been snookered again by salespeople. A combination of wall street, lenders, loans officers, real estate salespeople all have played a part in taking advantage of suckers. Did they sign the loan documents? Yes. Did they read them? No. Every salesperson and corporate officer of those entities knew they would not. Are there abusers? Sure. Are there stupid people who beleived they could own a McMansion while having an average job? Sure. But do not lose sight... corporate greed created the products and sales peoples (snake oil salesmen) peddled them to people who were suckered. This is a time tested process.

Home Prices May Be Nearing Bottom, Bank Equities to Follow?

Lumber is cheap because the demand has dropped significantly with building stopped and remodels way down.


On Jan 14 06:18 PM Rhett wrote:

> Hoover, replacement costs are falling. Lumber, for example, is at
> its lowest price in years.

Home Prices May Be Nearing Bottom, Bank Equities to Follow?

You said: "I believe that real estate has gotten cheap enough that drive-by shoppers will increasingly stop in for a look, and when they do, the combination of price and mortgage cost will turn shoppers into buyers."

The only buyers are really investors, this does not make a market. You need mainstream buyers to come forth, but they can't. Unemployment is too high, many of the folks who would buy have lost their homes and have damaged credit, rent is still cheaper than buying, credit requirements are way too stringent and consumer sentiment is running too low. Its like having a great sale and no one is showing up. Which equates into even lower prices in the long run. Its the perfect storm.

Noose Tightens on Non-Conforming Loans

No big surprise here except that it took them this long to do it. The wholesale market is slowly going away and mortgage brokers are on tract to be extinct if they are not careful. Its all about delivering lousy loans with high defaults and shoddy paperwork. They need good loans for the few loans they are doing and mortgage brokers are not delivering good loans. This statement is not based on the majority but based on the fact that wholesale business has a higher percentage of first payment defaults and delinquencies than their retail counterparts. Its a fact that mortgage brokers own.

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.

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.

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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%.