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Federal Housing Administration Head: "We Are At The Point Right Now Where No One Trusts the American Housing Finance System"
Federal Housing Administration head David Stevens said recently that
no one trusts the housing finance system. As the Washington Post writes:
In
a recent speech, David Stevens, the FHA's commissioner, recalled
meeting a group of international bankers who "peppered me with
questions - very difficult questions" about what the U.S. government
was doing to bring back their trust.
They all have been burned, he noted, after buying mortgage securities with triple-A ratings that turned out to be junk.
"We are at the point right now," Stevens said, "where no one trusts the American housing finance system."
Of course, the government couldn't let housing prices adjust to a sustainable, non-bubble level. As US News and World Report points out:
Most economists feel the economy won’t rebound until housing prices bottom out and stabilize.
And Massey Knakal notes:
The
value of mortgage backed securities and derivative products based on
these securities cannot be accurately valued unless there is a high
level of confidence in the value of our housing stock. A big concern
about the implementation of the TARP is what the government will pay
for these toxic securities. If we know what houses are worth, it will
be easier to determine fair market value of the securities.
And couldn't give "bailout" money to American consumers, so they could pop their heads above water.
But, no, the government couldn't possibly do any of those things. Instead, it obviously has to pickpocket the people to try to artificially prop up housing, MBS and derivative prices.
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I'm in the same Boat No Debt but No house for the Wife...oh well we rent or move..
I built a House 10 yrs ago and Sold in 2008.
Thats why Benwanker wants zero reserve requirements.. he knows the Banks are insolvent, so why should they have 1 % in reserves? Scary.
Ya it sucks bigtime. If I do get this overvalued property maybe I can sleep at night a bit easier knowing I still have a year or two worth of cash reserves to get by while living decent/well if and when SHTF.
Worst case scenario if I'm on the wrong end of the stick when SHTF, I'll only be 1 of 275,000,000 other Americans.
very nice RVs can be purchased at a bargain right now. many people live in them, while building a house. a rural lot with a small barn, and an RV can provide a comfortable home, mobility, and off grid capacity. a $5000 solar power system is adequate, sattellite internet access, portable propane tanks. some people live year round in various rv parks. a toybox is ideal, with a pickup truck. check out staking a mining claim, its still possible, although homesteading seems to have disappeared. a mining claim is cheap to file for, and cheap to maintain, and you can walk away, with little loss
Pickpocket the people, never a truer phrase that...
And obscene and the fact that that is what has happened
Ugh, this makes my stomach churn as I'm in a multiple offer scenario right now trying to buy a rural house in small townville NorthWestern Ohio right now.
I put in a bid around $140k, and personally I think it's worth $100k as I do with most overvalued houses. The problem is wifey will chop my dick off if I prolong a housing purchase much longer. So even though I know the system is screwed, I'm secretly hoping if I get this house that this crap will either extend till I pay it off, or just not hit rural Ohio that much.
Dicks are relatively expensive to reattach (the surgeons have a really strong negotiating position).
Just make sure she puts the house it in her name... In a few years you'll be glad you did, because *you* won't have an upside down mortgage.
...But your ex-wife will.
What is RE after all? some wood, a few bricks and windows. I think the Banks value it more than I do.. its a liability with TAXES, Oil and Insurance pmts.. I shall pass on this.
Its going back to 1982 levels which will take years.
The Govt interfered with the market now we have so many imbalances in the economy..
All of those plates cant stay in the air for much longer.
Why the Fed is frightened if you will? All of the deposits that they took in were loaned
out via RE and CRE..the junk is all they have to show for it.. for The Whole Banking system.
IMO a well insulated trailer and a diesel truck to haul it with has more value.
Maybe a wood lot with some water on it if you want to buy land. But I wouldn't put a structure on it.
OK, maybe a woodshed and a chicken coop.
These comments by the FHA sound like more Adminstration propaganda to push through their Financial Reform Bill....which, similiar to healthcare. no one has read.
"But, no, the government couldn't possibly do any of those things. Instead, it obviously has to pickpocket the people to try to artificially prop up housing, MBS and derivative prices."
What's the sense of having power if you don't use it to exploit those least able to fight back and protect themselves? I mean really, get with it GW. I always look for the code words, which are every where. When they talk about saving the "system" they aren't talking about you and your well being. They're talking about the 5% who own 95% of the system.
These code words are used to convince "us" it's in our "best interest" to continue our assigned roles as wage slaves and chess pieces in various profitable wars and other sundry acts of aggression between the 5%.
There is simply no way of preventing RE prices from falling to pre-1980 levels.
The money supply is shrinking dramatically, along with incomes. Anyone who bought from 1994-2008 - unless they paid cash - will be forced to default. Radical tax and mortgage debt relief wold help - but that's not going to happen. We've chosen the path of foreclosure and deflation. "Inflation" is a mirage to trick people into buying MBS and GSE.
As income and money vaporize, the only things left standing will be cash and UST. RE will fall dramatically, especially in big population centers on the coasts (LA, NYC, SF, Atlanta, etc.) where the combination of falling incomes, rising taxes, asset liquidation and social services cut-backs will be the most, um, problematic.
Places like Nebraska, Kansas, Idaho ... will be protected from marauding gangs of homeless, jobless, cannibalistic IRS fugitives.
Good luck trying to protect that McMansion in Greenwich.
Actually, the only things left standing will be... Actual things.
You know, actual physical "stuff", food, oil, tools and that funny ductile stuff that's been used for over 5*100^2 years.
Bernanke will make sure the USD has no trust left in it, and therefore no value.
"...no one trusts the American housing finance system." After all the fraudulent loans made to people who were obviously unable to pay them back, after all the trash paper sold as AAA, and after all the blatant upward manipulation of house prices, is there any other outcome? Nowadays, only a token few are doing the perp walk no matter how much they deserve it, and the printing presses are running to keep insolvent institutions from a well-deserved collapse, yet only modest and token efforts made to help we-the-people.
Trust? Yes, we-the-people trust the system. We trust it to turn this country into a banana republic run by the usual kleptocrats. We trust it to keep hugely wealthy people from losing a dime no matter how stupid their investments. What other rational conclusions can we make?
Oh, and thanks, Mr. Washington, for your tireless reporting of this mess. Ugly as it is, all us citizens need to see it. Consumers, not so much.
"Most economists feel the economy won’t rebound until housing prices bottom out and stabilize."
Or as J. Kyle Bass put it, what we need is a Darwinian Flush!
Injection at the top was a right choice among others.
among others injection at the top ,, will prolong the agony,,
what part of the thieft do many not understand , ,
injections here , injections their , petty soon the whole dead dieing body has no place or room to place another needle ...
brain cells operating on life support ,,
The US society is held together by two principles: -no matter your level of income, a version of a product will exist for you. You might not buy the best car in the world, but you will have a car fitting your work output. This principle is enabled by China mainly. -if you shut up and work hard (the myth of hard work), in the end, you'll own your piece of land with a nice house on it. The real estate bubble was precious in the last principle's regard as it allowed to add 20-40 millions new houses on the US soil, houses that cant be transported anywhere (same scheme as crashing infrastructure projects, a well known trick in the US) Without the bubble, much less houses in the US. In the US, houses sold for 400,000 USD are now offered for 80,000. You can build similar houses for 80,000USD in some places of the world but certainly not in the US. Very often, the fallacy that houses prices should come down in brackets the common US citizen can afford is reported. As the US is improving as an environment to human life, houses will become more and more expensive to build in this environment. Either a US citizen can afford to pay for living in this environment or he cant. Not a matter of lowering prices so the US citizens can afford it. This is the only sustainable level for house pricing. The lesson in this is that some stuff still cannot be done openly. Letting the real estate crash will only expose the very fact that many of these houses could not have been built in the US in the first place, with selling prices not even covering the US labour cost let alone the cost of material. This would expose the massive theft the US has operated on the rest of the world. And the lesson is only this one: for some reasons, the US cannot allow themselves to be exposed on this.
Ah, another point. Multipliers story is fine for economists but still, if the system is balanced in terms of distribution, the bail out level injection level does not matter. This is why an injection at the top works as fine as an injection to the bottom. Injection at the top was a right choice among others.