Tony Porvencale

4 Comments

    • ON: Wed Sep 17th 12:01 PM
      Commented on:
      AIG Buyout: In the Long Term, We'll Pay For This
      Pragmatism is an ideology. One cannot avoid taking a philoosphical or ideological position, by claiming "not to have taken one."
      While professing "pragmatism" to be a disclaimer on moral choice, those who have chosen this path have absolutely made a value judgement on what course of action to be take.
      View article »
    • ON: Fri Apr 18th 09:18 AM
      Commented on:
      The Housing Crisis: Personal Responsibility and Wishful Thinking
      This is my second time around working for a company that is trying to stem credit losses by working with borrowers, lenders, insurers and the GSE's to create loan workouts. I was intimately involved in this same activity in the mid eighties to early nineties -I guess that was Desert Storm to today's Iraq.

      One stark observation differentiating the two cycles is the borrower beahvior.

      As ahs been noted in numerous publications, a significant number of borrowers this time were pure speculators.
      Many misrepresented their intent to occupy the home inorder to price the loan more favorably.

      While I agree that there is contributory blame within the entire food chain we cannot excuse borrower behavior based on ignorance. While I'm sure many did not fully understand the ramifications of Neg Am.

      It has been correctly noted that the disclosure documents at closing are enough to choke a horse. I can't imagine what more can be disclosed to ensure that a prospective homeowner -or a reasonable man in his.her position- understands all the potential ramifications of a mortgage. However, it looks like the market has put forth the solution; no one will be originating Option Arms for a long while.

      The walkaway trend and encouragement by financial sages to do so is also disconcerting. A the end of the day the sanctity of a contract is being eroded simply because the market value of a home is eroded. Should the converse be acceptable: when the home value rises should the banks be allowed to ignore the mortgage contract and foreclose on the home so they could make a profit?

      I'm not suggesting a strict approach to repossesion.
      However,the tsunami of home retention initiatives from Federal, State and local governments and every component of the aforesaid food chain should help any distressed borrower who wants to retain his home to do so.
      Some of the largest banks, the GSE's and all the private and govy mortgage insurers are doing everything possible to preserve homeownership through proactive loan conversion, e.g. soliciting borrowers with Option Arms to convert to 1/5 ARMS with no Neg AM.
      Even those borrowers who are delinquent and in foreclosure are receiving help through very creative programs.

      These remedial initiatives, while not expressions of institutional altruism, are assisting many homeowners and neighborhoods .
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    • ON: Sun Apr 13th 14:39 PM
      Commented on:
      Barney Frank's 'Subprime Relief Plan' May Make a Bad Situation Worse
      Excellent portrayal of the economic consequences of moral hazard.
      I closed on an 80/15 wiht Countrywide (a 1/5 fully amortizing ARM) last in July of 2007.
      My LTV then was a 95% and I guarantee you ha tit is about 110% today. But as long as I can afford to pay I will or I'll refinance or sell when the market is more favarable, regardless of Barney ball.
      View article »
    • ON: Sun Jul 8th 09:25 AM
      Commented on:
      Excess Liquidity: Who's Left Holding The Bag?
      Cudos for an outstanding article which gleaned data, opinons and analysis from disparate sources to draw a compelling conclusion.
      I have a particular perspective as an executive of a software company that develops Web-based default servicing technology to the mortgage companies managing the "financial toxic waste."
      Having been in the mortgage default industry for over 20 years I saw the all too familiar signs of a declining real estate market in 2005 when demand for our products and solutions started to spike as mortgage servicing managers saw the pig entering the python's jaws.
      As your article implied the looming disaster is disguised by accounting sleight-of-hand but will soon be exposed as default incidence -which is at historic highs in many mortgage data subsets like subprime and FHA- convert to highs in loss severity, particularly when the option arm baloons reset.
      View article »
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