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POPSWhy no outrage over foreclosures? Why do we automatically assume the buyers are at fault? Did they risk other peoples' money? Did they know we were in a housing bubble? Was it explained that the ARM would default if their home value declined? Why do we let professional sales-people make money leading people into the largest purchase in their lives without issuing precautions that first-time homebuyers often do not understand? And why is the homebuyer the loser, rather than the shyster that sold them a loan they could not possibly have understood? Why do we let them take our homes away?
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POPS Bailout Is Not The Right Answer
This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle. Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets. The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government. The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company. Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airline
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POPSMortage meltdown - the real story is fraud. Wow. Thanks to Christopher S. Penn for pointing this one out to me. He's got an insiders knowledge of the lending industry (he runs the Financial Aid podcast) and incredible insights on his blog. Subscribe to him if you're at all interested in what's going on in this crazy market.
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POPSNYT: McCain airs "paint-peeling" anti-Obama ad "calls Mr. Obama a liar, blames liberal Democrats for the sub-prime mortgage crisis, and, in giving them a traditionally Republican label, blames them for pushing 'deregulation.'" Now check out the "evidence" - partially included in the clip - cited in the ad's print. Knock yourself out, Big John - America is smarter than this.
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POPSBank can't prove it owns the mortgage, Judge writes off $460k debt This is why Rep. Kaptur was telling people facing eviction to squat in their own homes , refuse to be evicted, and make the bank demonstrate in court that the debt is legitimate . Possession is 9/10 of the law. I predict that this is the first tremble of a massive shock-wave about to move through our economy.
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POPSFannie Mae & Freddie Mac not the cause of the subprime mortgage meltdown Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble. During those same explosive three years, private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.
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POPSFannie/Freddie Trouble Seen 9 Yrs Ago
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans. ''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.'' Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black
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POPSMore Headaches for McCain’s Camp CONT: NEWSWEEK has learned that UBS is also currently the focus of congressional and Justice Department investigations into schemes that allegedly enabled wealthy Americans to evade income taxes by stashing their money in overseas havens, according to several law-enforcement and banking officials in both the United States and Europe, who all asked for anonymity when discussing ongoing investigations.
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POPS gimme, gimme, gimme, gimme, gimme . . . BuckNakedPolitics writes: “I have little sympathy in one sense with the moans of homeowners stuck with negative equity as a result of a gamble that the value of homes would always go up, up, up. One reason I’m living in an apartment is that I recognized that this myth was a myth.” Conservative blogger Michelle Malkin describes it as a new “massive mortgage entitlement campaign.” Housing bubble blog Patrick.net dubbed it a “plan to reward debtors at the expense of savers.” NewsRantsAndReviews says:”Obama has one word for those who didn’t get in over their heads during the recent housing boom and have paid their mortgages on time: Suckers!”
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POPSFactCheck: Who's really responsible for crisis? "Screwing up takes a great deal of cooperation." D's blame R's and R's blame D's - but those accusations (and I have made them, too, sorry to say) are far too simplistic to help us fix the problem. Here's a list of contributors to the perfect storm.
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POPSOhio woman, 90, shoots self during eviction; Fannie Mae forgives loan In 2004, Polk took out a 30-year, 6.375 percent mortgage for $45,620 with a Countrywide Home Loan office in Cuyahoga Falls, Ohio. The same day, she also took out an $11,380 line of credit. Over the next couple of years, Polk missed payments on the 101-year-old home that she and her late husband purchased in 1970. In 2007, Fannie Mae assumed the mortgage and later filed for foreclosure. Deputies had tried to serve Polk's eviction notice more than 30 times before Wednesday's incident, Sommerville said. She never came to the door, but the notes the deputies left would always disappear, so they knew she was inside and ambulatory, he said. Sommerville said Akron is creating programs to help people keep their homes. "But what do you do when there's just so many people out there and the economy is in the shape that it's in?" He added that many businesses and individuals have offered to help Polk.
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POPSBlaming the Victim It seems it's become de rigueur for the Conservatives to blame the victims these days. IMO, it shows how out of touch these conservative pundits truly are. BTW, for those not familiar, the SPLC is a watchdog organization dedicated to exposing hate groups and suing them out of business. They've done impressive work particularly against the KKK and the American Aryan party.
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POPSWhite America has never liked social insurance for people of color More: Meanwhile, there has been a massive expansion in government-sponsored welfare going disproportionately to the white and affluent. What the political scientist Christopher Howard calls the hidden welfare state includes the tax-favored employer-provided health insurance that most working-age Americans depend on, as well as the home mortgage interest deduction and the childcare and child tax credits. Affluent and educated workers are more likely to work for employers who provide private health benefits than are low-skilled workers and employees of small businesses. Personal tax benefits like the home mortgage interest deduction are available only to the top half of households who pay federal income taxes, and are unavailable to lower-income workers who pay payroll taxes but no income taxes. In many cases, the benefits of this tax-credit welfare state increase with income.
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POPS This Bailout Was A Terrible Idea! Here's Why This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle. Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen. The costs of the bailout, moreover, are almost certainly being understated. The administration's claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion. The bailout has more problems. The final legislation will probably include numerous side conditions and special dealings that reward Washington lobbyists and their clients. Anticipation of the bailout will engender strategic behavior by Wall Street institutions as they shuffle their assets and position their balance sheets to maximize their take.
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POPSMcCain Adviser: US 'a Nation of Whiners' I'd be completely remiss if I didn't point out that McCain's economic whiz, "Foreclosure Phil" Gramm, has left economic disaster in the wake of his career as a Senator . Enron was largely his fault and the mortgage meltdown has his fingerprints all over it, too. Not only is Gramm a dick, but he's grossly incompetent too boot. Want a supremely effed up economy? Vote McCain.
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POPSLiberals Fueled Wall Street Woes Prudent best practices in lending fell by the wayside under pressure from liberal activists and "community organizers" who advocated "Change" to loosen lending restrictions to minorities. If you liked this "Change", you'll just love the "Change" the Trojan Horse has in mind for us.
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POPSGenius: Mortgage Program Will Spend $3,000,000 per Loan Repair Three million mortgages are believed to be eligible for HAMP with 500,000 in a trial phase. The trial was supposed to last three months, but it has since been stretched to five months . The Doctor believes that many of these "repaired" loans will simply re-default. Why? For one reason, the underwriting (courtesy of TurboTax Tim) for the program uses "stated income", not verified income. These are the very same "liar's loans" that helped trigger the mortgage meltdown! Examining the chart, of the 50,130 trial modifications entered into in May, only 1,711 (or only 3%) resulted in a permanent modification! As The Huffington Post reported a few days ago, the low number of permanent modifications is still appallingly low ("HAMP will come nowhere close to keeping up with foreclosures"). Among the reasons for the low conversion rate: failure to make timely payments (doh!), failure to assemble necessary documentation (like income verification), and other . . .
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POPSDid Obama"Out-Warn"on the Mortgage Crisis? No! March'07,his warnings only came when the end-user was at risk.He was at the roots of promoting, demanding,and inspiring the drive to swell home"ownership" numbers and promote unnatural preferences for non-creditworthy borrowers - by ANY methods or means. Head of the line taking Fannie $, and being fully aware that the policies being implemented could NOT POSSIBLY be resulting in the "desired" numbers if they were ethical and business-wise, Obama was SILENT. He only spoke up when it was unavoidable that HIS policies would be coming to a REAL BAD END. And since he had no other choice but to speak up, being a candidate.
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POPSMedia's Mum On Fannie Mae's "Love Connection" “Herb Moses, who helped develop many of Fannie Mae’s affordable housing and home improvement lending programs, has left the mortgage industry,”Darryl Hicks wrote for NMN. “Mr. Moses - whose last day was Feb. 13 - spent the past seven years at Fannie Mae, most recently as director of housing initiatives. Over the course of time, he played an instrumental role in developing the company’s Title One and 203(k) home improvement lending programs.” While Moses served at Fannie Mae and was Frank’s partner, Frank was actively working to support GSEs, according to several news outlets. In 1991, Frank and former Rep. Joe Kennedy, D-Mass., lobbied for Fannie to soften rules on multi-family home mortgages although those dwellings showed a default rate twice that of single-family homes, according to the Nov. 22, 1991, Boston Globe.
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POPSDid the Community Reinvestment Act cause the subprime meltdown? There have been many clips here arguing that the Community Reinvestment Act (legislation forcing banks to loan in areas from which they take deposits, enacted in 1977 and strengthened in 1995) caused the subprime meltdown, because banks were forced to make loans in poor areas. Robert Gordon shows that the CRA could not have been responsible for the subprime meltdown for two reasons: 1. Timing--CRA activity largely slowed down by 2002, yet sub-prime lending continued to intensify. 2. Lenders NOT covered by CRA played a huge role in sub-prime lending. "Half of sub-prime loans came from...mortgage companies beyon the reach of CRA...Most important, the lenders subject to CRA have engaged in less, not more, of the most dangerous lending...Independent mortgage companies...not covered by CRA, made high-price loans at more than twice the rate of the banks and thrifts."
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POPSTen Days That Changed Capitalism In the days that followed, the Republican Treasury secretary leaned on two shareholder-owned, though government chartered, companies-Fannie Mae and Freddie Mac-to raise capital that their boards didn't want to raise. In exchange, their government regulator allowed them to increase their leverage so they can buy about $200 billion more in mortgage-backed securities. So Fannie and Freddie will get bigger, a welcome development when mortgage markets are in trouble......But everyone knows that if Fannie or Freddie stumble, taxpayers will get stuck with the tab. Wednesday's previously planned auction in which the Fed is trading Treasurys for mortgage-backed securities, is aimed at increasing demand for those securities to drive down mortgage rates. A capitalist economy lets prices-those of homes, mortgage-backed securities and stocks-to fall to the point where the big-bucks crowd rushes in, hoping to make a killing. But if the big money remains on the sidelines, unpersuaded that th
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