Looch's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/90412/comments http://seekingalpha.com/article/143169-a-tale-of-two-mortgages-what-have-we-learned?source=feed#comment-547117 547117 In your first example I would assume that there was credit enhancement -private mortgage insurance- and the recovery would have been over 70% and possibly even more if there was another layer of coverage calle pool insurance. However, the MI company would have to approve the short sale inoredr to waive its deficiency rights against the borrower which exist in FLA.

Yes, with the entire mortgage insurance industry puckering up with constrained underwriting guidelines the FHA -GNMA- is now becoming the latest radioactive waste heap. The government does not have the risk management discipline, technology and resources to operate effectively. And now that the FHA loan limits have been permenantly raised the private market is being further squeezed out. (FHA doing 85% of high LTV loans)




On Jun 15 09:39 AM Bruce Krasting wrote:

> Virginia - I am sure you are right. The FL. story shocked me. That
> is why I wrote about it. This was a subprime loan from the start.
> It was a cash out refi on silly terms. So it was lumped in with all
> the other junk mortgages. I think that is why it got resolved so
> quickly.
>
> This small example raises an interesting question. Does the outcome
> of one's mortgage woes depend on who their lender is?
>
> In my example the conclusion is yes. If that were to be broadly true,
> then there is some big inequities. It is likely that those inequities
> will have to be addressed. We can't send one person to debtor prison
> and give the other a free ride.
>
> bk]]> Mon, 15 Jun 2009 10:35:00 -0400 In your first example I would assume that there was credit enhancement -private mortgage insurance- and the recovery would have been over 70% and possibly even more if there was another layer of coverage calle pool insurance. However, the MI company would have to approve the short sale inoredr to waive its deficiency rights against the borrower which exist in FLA.

Yes, with the entire mortgage insurance industry puckering up with constrained underwriting guidelines the FHA -GNMA- is now becoming the latest radioactive waste heap. The government does not have the risk management discipline, technology and resources to operate effectively. And now that the FHA loan limits have been permenantly raised the private market is being further squeezed out. (FHA doing 85% of high LTV loans)




On Jun 15 09:39 AM Bruce Krasting wrote:

> Virginia - I am sure you are right. The FL. story shocked me. That
> is why I wrote about it. This was a subprime loan from the start.
> It was a cash out refi on silly terms. So it was lumped in with all
> the other junk mortgages. I think that is why it got resolved so
> quickly.
>
> This small example raises an interesting question. Does the outcome
> of one's mortgage woes depend on who their lender is?
>
> In my example the conclusion is yes. If that were to be broadly true,
> then there is some big inequities. It is likely that those inequities
> will have to be addressed. We can't send one person to debtor prison
> and give the other a free ride.
>
> bk]]> http://seekingalpha.com/article/133155-more-evidence-that-housing-is-stabilizing-yet-forward-markets-disagree?source=feed#comment-477693 477693 It will blow-up the supply this year particularly the end of the second quarter unless the politico's change the constitution: a citizen has an inalienable right -from God- to own their home. The Divine moratorium may do it.]]> Sun, 26 Apr 2009 09:46:36 -0400 It will blow-up the supply this year particularly the end of the second quarter unless the politico's change the constitution: a citizen has an inalienable right -from God- to own their home. The Divine moratorium may do it.]]> http://seekingalpha.com/article/111791-the-pursuit-of-wealth-and-its-consequences?source=feed#comment-335591 335591 And so you see -as in this article- philosophical discussions which are exssentially moral positions taken by the respective authors. Talk of purely metaphysical terms like "greed" "wealth" "moral hazard" is at its foundation a discussion of right and wrong.
In fact, isn't this massive bailout which keeps expanding to every segment of society, a de facto biblical Jubilee? Except there isn't so much forgiveness as their is transfer of indebtedness to the taxpayer.
And so as our esteemed authors layout their case for what caused it, what it is, how to prevent it and where we should be, they must establish some moral baseline. You know, the straight stick laid up against the crooked one ...so you can tell it is crooked.
My, friend as I finished the article, the words you quoted from scripture were on my tongue; and they appeared in your comment.




On Dec 22 08:44 AM Good News Economist wrote:

> Interesting quote from about 2000 years ago
>
> "For the love of money is a root of all kinds of evil. Some people,
> in their eagerness to get rich, have wandered away from the faith
> and caused themselves a lot of pain." I Timothy 6:10
>
> mast-economy.blogspot....]]> Mon, 22 Dec 2008 09:38:21 -0500 And so you see -as in this article- philosophical discussions which are exssentially moral positions taken by the respective authors. Talk of purely metaphysical terms like "greed" "wealth" "moral hazard" is at its foundation a discussion of right and wrong.
In fact, isn't this massive bailout which keeps expanding to every segment of society, a de facto biblical Jubilee? Except there isn't so much forgiveness as their is transfer of indebtedness to the taxpayer.
And so as our esteemed authors layout their case for what caused it, what it is, how to prevent it and where we should be, they must establish some moral baseline. You know, the straight stick laid up against the crooked one ...so you can tell it is crooked.
My, friend as I finished the article, the words you quoted from scripture were on my tongue; and they appeared in your comment.




On Dec 22 08:44 AM Good News Economist wrote:

> Interesting quote from about 2000 years ago
>
> "For the love of money is a root of all kinds of evil. Some people,
> in their eagerness to get rich, have wandered away from the faith
> and caused themselves a lot of pain." I Timothy 6:10
>
> mast-economy.blogspot....]]> http://seekingalpha.com/article/95832-aig-buyout-in-the-long-term-we-ll-pay-for-this?source=feed#comment-257052 257052 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.
]]> Wed, 17 Sep 2008 12:01:58 -0400 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.
]]> http://seekingalpha.com/article/72471-the-housing-crisis-personal-responsibility-and-wishful-thinking?source=feed#comment-152817 152817
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 .]]> Fri, 18 Apr 2008 09:18:46 -0400
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 .]]> http://seekingalpha.com/article/72040-barney-frank-s-subprime-relief-plan-may-make-a-bad-situation-worse?source=feed#comment-149893 149893 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.]]> Sun, 13 Apr 2008 14:39:30 -0400 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.]]> http://seekingalpha.com/article/40219-excess-liquidity-who-s-left-holding-the-bag?source=feed#comment-90628 90628 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.]]> Sun, 08 Jul 2007 09:25:56 -0400 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.]]>