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Peeking Behind JPM's Voodoo Numbers, As Jamie Dimon Confirms Borrowers Live Mortgage Free For 14 Months Before Foreclosure
Some accounting voodoo to start off the day. In a nutshell - the bank which missed total revenue expectations of $24.28 billion by almost half a billion at $23.824 (which you may find unadjusted on one place somewhere in the attached presentation but most likely not), and which is entering Q4 with the foreclosure fraud crisis chip on its shoulder, and halted mortgages, somehow is lowering its net charge-off provisions estimate by over a billion. Which is why, hey presto, earnings of $1.01 "beat" expectations of $0.88, and the robotic headline scanners go nuts over the stock. More importantly, in discussing fraudclosure, JPM admits that by the time there is a foreclosure sale, borrowers are on average 14 months delinquent. In other words, all those who end up being "thrown out" on the street, live mortgage-free for over a year! And one wonders where all the excess marginal money to buy worthless trinkets comes from...
Here are the summary results for those who don't believe in magic :
- Q3 revenue USD 23.824bln vs. Exp. USD 24.28bln
- Q3 provision for credit losses USD 3.223bln
- On track to hire over 10,000 people in the US in 2010
- Q3 investment bank net revenue was USD 5.4bln
- Tier 1 capital ratios were 11.9% at September 30, 2010
- Quarterly provision for credit losses USD 3,223mln
- Q3 tier 1 common capital ratio 9.5%
- Sees credit card charge offs continue improve
- Q3 loan loss coverage ratio at 5.1% of total loans
- Q3 card services net revenue was USD 4.3bln
- Total firmwide credit reserves declined to USD 35.0bln, resulting in a firmwide coverage ratio of 5.1% of total loans
- Expect mortgage credit losses to remain at high levels for the next several quarters
- Quarterly mortgage repurchase reserves increased USD 1.0bln pretax
- Net interest margins fell by 26 basis points to 3.06 percent from the first to second quarters
From the Earnings presentation, this is how Jamie Dimon sees the future:
- Home Lending loss guidance:
- Quarterly losses could be:
- $1B for Home Equity
- $0.4B for Prime Mortgage
- $0.4B for Subprime Mortgage
- NSF/OD policy changes:
- Net income impact of $700mm +/-
- Full run-rate impact in 3Q
- Quarterly losses could be:
- Corporate quarterly net income expected to decline to $300mm+/-, subject to the size and duration of the investment securities portfolio
- EOP outstandings for Chase (excluding WaMu) are projected to decline by 15% or $21B YoY in 2010 to $123B
- More than half of the decline in receivables is driven by planned pullback in balance transfer offers
- Receivables projected to bottom out in 3Q11 and end the year in 2011 at $120B, reflecting a better mix of customer
- WaMu portfolio declined to $15B in 3Q10 from $20B at year-end 2009, expected to decline to $10B by end of 2011
- Chase and WaMu credit losses expected to continue to improve
- Chase losses expected to be approximately 7.50%+/- in 4Q10
- Total net income impact from the CARD Act, including reasonable and proportional fee changes is approximately $750mm+/-
- 65% of run-rate included in 3Q10 with expectations of full run-rate impact in 4Q10
And, most importantly, here is JPM's take on fraudclosure, in which it is a primary participant:
We’re addressing the foreclosure affidavit issues
- Issues have been identified relating to mortgage foreclosure affidavits, such as where:
- Signers did not personally review the underlying loan files, but instead relied on the work of others (who personally conducted reviews of the underlying loan files)
- Affidavits were not properly notarized
- Affidavits differ by jurisdiction, but in general the types of information attested to include the following:
- Name of borrower(s), property address, date of Note, borrower has defaulted and not cured the default, amount of indebtedness
- We are currently reviewing +/-115,000 loan files that are in the foreclosure process
- We will re-file affidavits where appropriate
- We have delayed foreclosure sales in these states and will re-initiate when appropriate
- New processes are being put in place to ensure we fulfill all procedural requirements on a go-forward basis
- We take these matters very seriously and have dedicated significant resources to these efforts
Our priority is foreclosure avoidance
- Based on our processes and reviews to date, we believe underlying foreclosure decisions were justified by the facts and circumstances
- We are comfortable that our process between initial delinquency and foreclosure is robust and we make every effort to avoid foreclosure
- We begin contact at 15 days delinquent
- We send numerous letters and make numerous calls to borrowers before foreclosure referral
- In 2009, we established a separate group to review loans before we take foreclosure actions
- Since January 2009, we have prevented 429,000 foreclosures through modifications, short sales and other loss mitigation actions
- By the time of foreclosure sale, on average borrowers are 14 months delinquent
- The proper response if mistakes are found is to address them individually – which we will do; avoiding further damage to an already weak housing market should be a priority
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Do fundamentals count? I don't think so. The stock market has become more a video game powered by the Fed and HFT machines. Guess DJIA will up today because of the "wonderful" earnings reports...
Don't they call that game: Soldiers of Fortune?
The more you trash an ruin, the more money you make.
fundamentals dont' count, all they need [and you] are a set of differential operators
Here in Europe they can't call you a delinquent payer if you only pay 25 euro a month. They can only throw you out if you don't even pay that.
I've got some friend that put some house up to rent and can't kick people out who haven't paid for years now.
They can even sue you for harassment if you ask your money more then 1 time a month or try to shut down water or electricity.
And a few years later, when you are able to kick them out, your house is turned into a dump.
no offense but your friend sounds like a stinky landlord. Get a court officer and serve eviction papers stat. My court officer will actually put a bush on his head and wait for them outside in the dark to leave a store and jump out and serve them.
You clearly have no clue how being a landlord is in Germany, for example.
I notice they're not examining their origination and securitization process of the last 7 years to make sure assignments were properly recorded to the trusts. They're emphasizing the paperwork associated with the forclosure process, because it's all fucked up, and they know it. But the reason it's all fucked up is that the origination and securitization process was fucked up from the start. This is the real (much larger, and more serious) issue.
David Cho from the Washington Post just said on CNBS this morning that the bigger problem is not the paperwork so much but rather the responsibility of the servicers to the investors. People are starting to get it...
So, what did they make from trading? Where are the 100% profitable days?
thx to HFT, they are now called 100% profitable microseconds :)
Won't know that until the 10-Q is released.
Jesse had a great chart, showing that almost the day JPM announced they were closing their proprietary trading unit, the price of silver went vertical:
http://3.bp.blogspot.com/_H2DePAZe2gA/TLTJ9VpwTrI/AAAAAAAAO2w/uGfHpfPRe0o/s1600/silver.png
Perhaps they had reached their pain threshold on that little adventure, or perhaps the Fed decided not to backstop them anymore. Who knows, but was quite obvious on the chart.
Excellent! Thanks for bringing up that "coincidence".
What I have noticed over the years is how often Intel followed by JPM quarterly earnings releases mark and intermediate top in the market...
Jamie is in denial. The lemmings are figuring out that the problem is not robo-signing or a missing Note. The problem is there is no party to start foreclosure which must be the holder in due course. The loan servicing arm of JPM does not have "standing" to start a foreclosure unless the alleged deadbeat homeowner is lost in equity.
A loan servicer lacks "standing" and is in fact a Debt Collector as defined in FDCPA.
The halting of the foreclosures will actually make their books look better for a while.
+1
I agree 100%. All this has nothing to do with "bad documents", but I don't think the "lemmings are figuring out" anything. Most news organizations are still talking about how banks were trying to "defraud" home owners.
Slowly they are. Most are now just going to BK if the county court starts rubber stamping stuff. There, they move the secured creditor to a unsecured creditor. If the debt collectors come in there, well, they are starting to learn how to use the force of Law.
Slowly they are learning. Robo-signing is a smoke screen. Sorry, Jamie can have anyone review any paperwork he wants... JPM's servicing arm lacks "standing" to foreclose unless the homeowner is lost in equity.
Jamie is in denial. The lemmings are figuring out that the problem is not robo-signing or a missing Note. The problem is there is no party to start foreclosure which must be the holder in due course. The loan servicing arm of JPM does not have "standing" to start a foreclosure unless the alleged deadbeat homeowner is lost in equity.
A loan servicer lacks "standing" and is in fact a Debt Collector as defined in FDCPA.
The halting of the foreclosures will actually make their books look better for a while.
"borrowers are on average 14 months delinquent"
Sorry Jamie, there is no "borrower"... there is a service agreement that is defined as an "obligation". How can there be a "borrower" when there is no "lender", no lending is funded. Fiction.
In order for the wall street gang to pay themselves big bonus, the market indexes must be up so everyone appears to benefit. They can't pay big bonus if the YTD stock index is down, that would cause a PR backlash.
So the residential mortgage shoe dropped, is the commericial real estate shoe to come?
While the CRE has plenty of problems of its own, it doesn't have the securitization problem residential has.
But the global economic system is intertwined in so many complex ways that this feature alone makes a natural domino cascade catastrophe a given at some point down this yellow brick road.
Except that the delay of resolving the residential bubble resulting from "Foreclosuregate" will make it coincide with CRE resets peaking, right around Sept '11.
Implosion, beyoches!
And incidentally, three months after that, it's 2012!
End of the world as you know it, beyoches!
Like I said.
Natural (harmonic) sympathetic resonance can be a bitch when you're inside the structure that's coming down around your ears.
The CRE shoe is in mid-air presently.
http://stuytownluxliving.com/2010/04/trepp-march-cre-loan-delinquencies-in-cmbs-rise-to-761.htmlI say a prayer every day that this mother fucker falls flat on its face so I can walk over to it, piss on it, and get on with life. Alas, I'm sure they will find some way to weasel out of this with only cuts and scrapes instead of getting the superior beat down of a lifetime that they deserve.
Say it with me: In 1932 they jumped, in 2011 they'll need wings.
"in 2011 they'll need wings"
Like pigeons? Oh, imagine the fun:
http://www.youtube.com/watch?v=Z5uHt4AwYb4
"I swear as God as my witness that I thought turkeys could fly." Arthur Carlson
"I say a prayer every day that this mother fucker ..."
Taking prayer out schools ... interesting result.
Hey, I'm from NY. A "motherfucker" a day, fits in, in every way. In hello's and goodbye's, you motherfuckers still say hi. In rhetoric and prayer, you motherfuckers are everywhere.
What's missing then is mom's smack across your stupid mouth. I'll pray for that!
If you're offended by it, then I dare say that you go through life seeking things to be offended by, so you can resolve your excuse for being angry all the time. Instead, you should seek professional help. I'm not the one out stealing your epics from your bag, brother. Surely my foul tongue has no such power. Some things can be looked over.. and some things, not. "Bad words" only derive power from those who are offended by them. Where I come from, bad words don't mean shit. It's just everyday chatter. Thievery, however, is not one of those things in which it's prevalence makes it any less acceptable.
I suggest you take a snapshot into history where brave men prayed that they would be saved while they killed in the name of God. I fail to see the difference between that and my praying for the "falling flat on their faces" of the thieves that are wringing us dry on a microsecond basis.
Go be offended someplace else. The world has no place for sissy's who's response to foul language is preceded with "ba ba ba ba ba.. babble".
"I suggest you take a snapshot into history where brave men prayed that they would be saved while they killed in the name of God. I fail to see the difference between that and my praying for the "falling flat on their faces" of the thieves that are wringing us dry on a microsecond basis."
Violent acts of hypocrisy in history ... no difference between that and praying for justice for the crimes committed by today's thieves?
I don't think you meant that. Right? I certainly wasn't equating the two.
Hey, I feel cheated that you posted your whole last response without a single motherfucker anywhere!!! C'mon, Girlfriend, don't lose your street cred!!!
I feel like such an idiot. Bought a new home for cash back in April 2010. I should have taken out the biggest mortgage I could get and then immediately defaulted instead. I’d still have a free ride for another 8 months, at which time I could buy another house for cash. By that time, I could probably buy the house I defaulted on from the bank for 70% of what I paid for it back in April.
That's exactly what a friend of mine did.
Hasn't made a payment on his house for nearly 2 years now.
His payment was $4,000/mo. Used the $80,000/yr. he saved to put 30% down on another house twice the size, and the payment on the new house is only $1,800/mo.
He's still "squatting" in the old house while he renovates the new one.
By they way, I saw him at the MX track last weekend, he just paid $7,000 cash for a new Yamaha YZ450.....
LOL....
Sadly I did the responsible thing and sold my houses instead of stopping payment. There are no repercussions for stopping payment and living rent/mortgage free. There are just too many people that have stopped paying, they can't stop them all.
I wish I would have known that being irresponsible could have saved me hundreds of thousands of dollars of non mortgage payments.
You know, I get this. I am also one of the "responsible" ones. Good for you, that you're responsible, too. Individual responsibility is the foundation of a free and just society.
But the resentment and envy that you feel toward those that didn't pay (and aren't paying) is remarkably like that of a liberal/socialist/progressive envy of "the wealthy". Don't be envious of your neighbor's good fortune here. Mako's point, once you really get it, is that the reason that none of of owe the banks anything is because the entire contract between us and them, you know, the whole fractional reserve scam, is invalid and unenforceable because it is fradulent at its core.
I kind of figured you were a 13 year old considering your obsession with breasts. :>)
I'm 34 and I still have a obsession with breasts... WHEN WILL IT EVER STOP!!
Yeah, but you're Belgian. So that explains a lot. :>)
Have to admit I enjoy Robo's pictures and charts, both seem to be cherry picked.
Who the hell financed him after 2 years in default?!! WTF???
BTW- I apologize to you. You were right and I was wrong. Seems we are going to break through all manner of what WAS important technical inflection points on the long term charts today. Enjoy your profits.... while your fiat still has value.
He was most likely never reported as delinquent to the credit reporting agencies.
Remember, if the person isn't "officially" delinquent, all kinds of processes (such as foreclosure) don't need to begin. That includes bank write offs, THE most important part of this banking fantasy.
Once you start down the denial path, there are no limits to the delusion.
I think I'm going to be sick....
Hey, hey. Watch it brother.
Be kind to the poor fool behind you (meaning me) on this roller coaster ride to hell and use the convenient "banksta sickness" bag which can be found in the pouch to your left. Please remain in possession of your bag until the ride comes to a full and complete stop.
Thank you and enjoy the rest of your sodomizing.
So in other words, as crazy as the subprime, NINJA loan, 125 HELOC, etc... mess got, the era of foreclosure, extend and pretend, mortgage payment free living is going to be remembered as much crazier?
I have seven mortgages that I have never missed a payment on despite it being difficult to collect rents, keep tenants, etc... Reading almost every article and most responses here a Zerohedge is definitely having an effect on me. I haven't reached "fuckit" yet, but everyday I am getting a little closer.
Roger that.
A supremely unique quality of collective insanity is that it can never be static. It must grow exponentially or it will succumb to its own gravitational force and implode, then explode in a spectacular shower of blood and guts. So when playing among the insane, the old standards are quickly overwhelmed by new (and improved) levels of lunacy.
Sounds like you're just about to reach for your own personal "bansta sickness" bag. Don't worry, there are plenty more where that came from. So go ahead, use it. We'll just print some more.
As an accountant, I can't believe any auditor would sign off on this. That's right, it's a bank and mark to fantasy was legalized and supported by the O Administration.
No worry if you have a "get out of jail free" card. I suspect they're handing them out like candy at a pedophile conference.
Sooner or later someone is going to look into this a bit deeper. For now, it seems to be just me ranting and raving about this obvious Ponzi facilitator. This didn't just go away when Bush left office. And notice it was instituted long before the house of cards started to come down.
May of 2006
This is just the tip of the iceberg. Everyone is looking at the Fed's POMO. There are other rocks to look under.
http://www.businessweek.com/bwdaily/dnflash/may2006/nf20060523_2210.htm?campaign_id=rss_daily
Intelligence Czar Can Waive SEC Rules
Now, the White House's top spymaster can cite national security to exempt businesses from reporting requirements.
President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye.
Since the metldown began, I have been asking myself over and over again - "Where the hell are the auditors???"
How the hell can they hide all these bad loans & foreclosures. Where did all the families go?
It makes me wonder why Arthur Anderson got caught. I guess AA wasn't too big to fail.
Arthur Anderson was not a gov't agency. There are no penalties for not doing a gov't job.
So if I read you correctly, by pulling out the double negative I get.....
"There are penalties for doing (your) gov't job."
You, you .... semanticist, you.
There are no penalties -- for not doing -- a gov't job.
You heard the one about not being able to make a negative using 2 positives?
Yeah, right.
I want to see the Ice Queen melting from the end of a stretch of hemp. Ha Ha Ha
They must have lost a lot on their gold/silver puts in September. However, since they can choose how much they feel like putting into loss reserves then they can basically pick whatever amount of profit they want.
This means that all banks are going to probably beat on the earnings front. This was my flag to see where QE2 is headed. If the banks all beat, it means they aren't desperate for +2T QE. Therefore, I expect the Fed now to tone down their rhetoric next month. This is all orchestrated ahead of time.
QE2 isn't going to happen in November now. At least not to a size that anyone will want to mark it as QE2. It's a done deal, the ink was already dry on this script ahead of time. They will continue the tough talk and say they are ready and able to commit more money should the need arise and continue rolling payoffs into treasuries.
QE2 is probably etched in stone. But, this gives the insiders more time to disgorge themselves of all those shares to the lemmings.
JPM is a Fed-approved, PigMen-sponsored ticker symbol.
Therefore, the stock will trade in the direction the plutocrats want it to.
I've learned that is the way it works these days, and I'm not going to fight it.
Provision drops the new norm and the bonus source for all banks across the board. How can provisions be lowered if foreclosures and all credit default across the board are rising?
Square pegs only fit in round holes in ponzi land I suppose.
Luckily for banks foreclosures are becoming outlawed so imagine the bonus pool next quarter.
Anyone who does not believe Wall Street is not a dying business model only look at what they have been reduced to in an effort to stay relevant.
First they lost the big commisions because of discount traders
Then they drained the finance world dry pumping up the .coms
Then they had to resort to paper alchemy and securitize anything with value
then they securitized things without value and used rating agencies to falsify value
Then they levered to the moon to take a generations worth of profits in a few years and still required favorable Greenspan rates
Then they used cramer to lure the retail community like never before seen and even that was not enough to cover the losses
Then they resorted to shaking down our politician cowards for 800 billion
That wasn't enough so they had the accounting rules changed
So now to even falsify profits they turned to ZIRP and QE alchemy and there we have it
Wall street has been entirely reduced to all monster hedge funds holding American deposits hostage.
Who's money is left ? Ben is already about to create another batch of cash for them but what is gained?
We are in a worse situation then before without jobs and soon inflation in Twinkies, milk and gas. How will this aid the average citizen?
Will we send them more empty promises?
Ain't no more money Wall Street just your own.
We are witnessing the bubble to end all bubbles.
Fakery, forgery,dishonesty, they don't even try to hide it now.
It is one massive farce that all can see. It needs somebody to put them out of their misery, but since they are all the top dogs there is nobody around to tap them and the media is bought off, they will ride it all the way to the bottom then turn on their masters.l
So we can only sit back and watch the show.
Nothing happens because:
Regulators all corrupt.
Politicians, most corrupt.
The more gold and silver goes up, the more worthless Dimon bullion shorts are.
On one hand, they will be decimated by bullion shorts, on the other by mortgage payment boycott.
No bailout will save JPM Chase! Too many derivatives.
"Gold is Money"
John Pierpont Morgan
ha, ha, ha, ha, ha, ha, ha:
http://www.youtube.com/watch?v=R1X6RQLZtoA&NR=1
Don't worry guys...David Faber is on it...and he dared to mention that some wonder[almost unbelievingly] if things have changed for banks...in terms of future profitability. God bless CNBC.
Nothing to worry about...move along...buy all banks everyday 'til those bonuses are paid out.
In a related CNBC note, and regarding housing, Mark Haines mentions, "You cannot win which ever way you go." Dianne Olick, real estate guru, answers him with, "The big banks transferred home sales documents improperly...that's a larger issue that poses greater risks to the housing market." Neither questions the other...close curtain...go to floor traders.
You know, I've always thought coherence was overrated...which is why I follow CNBC so carefully.
I've lost more moeny than I have ever lost. I guess I'm just a complete a hole. 150k gone. I guess the economy is great and everything is fine and I'm just a fool. Ok. Fine.
Do you remember the last place you put it? Did you look under the sofa cushions?
Too bad JPM, cheap silver and gold only means a buying opportunity now.
Silver Anvil, testicles, golden hammer. Enjoy.
Silver looks bullish but it seems it faces great resistance at 24.00. The day before yesterday it breached 23.64 briefly but was beaten back. Guess the EE will resist fiercely at 24.00
So, basically, you're saying it's going to the moon with some small rest stops along the way?
farcism at its best.
"In other words, all those who end up being "thrown out" on the street, live mortgage-free for over a year! And one wonders where all the excess marginal money to buy worthless trinkets comes from..."
I am an investor that buys distressed property, often in short sale or foreclosure ( http://www.Ibuyhoosierhouses.com ). It is my experience that the quoted statement is not typically true.
The bank may not have received payments for over a year. However, the homeowners are usually not foreclosure experts. They think early on that their eviction is imminent and they abandon the property months before the sheriff's sale. Then they struggle to come up with security deposit and rent that is not much less than their old house payment.
Sure there are some people that game the system, but in my experience these are the exception and not the norm. Think about it - if these people were financially savvy they probably wouldn't be in foreclosure in the first place.
I wonder if your experience is region specific. In the DC area, which granted does have a higher income and education level, many are hanging in to the bitter end.
Also, I suspect even if you're correct, as more and more people do become more savvy just from what they read or hear on TV, that they might begin to squat right up until the sheriff shows.
I know of a few instances where these people moved their good furniture and prized possessions elsewhere when the wolf came a bit closer. Then, if he showed up in the middle of the day or evening, not much of value would be kicked to the curb.
Here in AZ, I know of one person who is in his fourth year of living mortgage payment free.
Another friend of mine got a modification on his primary residence (cut the payment in half) and hasn't made a payment on a second home in Scottsdale for almost three years. The Scottsdale home sits empty (he actually had it rented out for one of the three years), he can't believe that the bank hasn't foreclosed on it yet. The only notice he has received is that the bank paid the taxes on it. No HOA fees, no insurance payment, no utility payment, it just sits empty.
Fanfuckingtastic, loan loss provisions were $3.22 billion, down from $9.8 billion a year earlier and $3.36 billion in the prior quarter.
Clearly, for JPM it really was the summer of recovery.
When you mark to fantasy, everything is mark-able. Including marking up those bonuses.
"Bugatti, Ferrari Sell Out of Supercars as Luxury Roars Back"
Buyers hoping to purchase the Ferrari SA Aperta are also out of luck. Ferrari isn’t making any more of the 80 SA Apertas that it’s already sold. The model costs 400,000 euros and was built to honor car designers Sergio and Andrea Pininfarina.
“We are sorry for many Ferrari collectors, but we cannot do more,” Ferrari Chairman Luca Cordero di Montezemolo said in an interview in Paris yesterday. Ferrari is predicting double- digit growth in earnings and may end 2010 with close to record profit, he said.
bloomberg.com/news/2010-09-30/bugatti-sells-out-of-2-7-million-world-record-model-as-luxury-roars-back.html
Anymore questions?
No question as the truly wealthy KNOW to get out of currencies now and into rare cars, important art/paintings, 'collectibles', etc.
We are discussing people with immense wealth getting out of currencies. Smart 'family' wealth has known this for generations.
How much in bonuses is JPM paying out this year?
Adding my two cents worth from down here in Florida:
1. Everyone I know who has gone through a Loan Modification circle jerk has only lasted three months on "reduced payments" before the bank puts them back to the original payment plus ask for the three month differential in arrears. Subsequently they just stop paying altogether. Banks must be making money on foreclosures as they seem to be encouraging it. Loan Mods sound good politically but in reality they don't exist.
2. People with new homes built with Chinese DryWall are in the real pickle, banks don't want the homes, value of property has dropped 90% from original price. Have a friend stuck in one of these property's, he has not paid his mortgage in almost three years and the banks don't seem to care.
Banks are either getting massive tax write-offs or MORE free government money for foreclosures....
1) If I understand it correctly, the banks etc were given "incentives" to enter into these loan modifications. Too bad they weren't given incentives to stay with these loan modifications. It was a planned failure, a controlled demolition if you will.
2) Since China and the USA are currently engaged in extended lip locked copulation mode, don't expect much to be done about the "Chinese Sheetrock" problem because a "Firewall" has been erected around any Chinese difficulties other than those which can be leveraged for political gain. Since the Sheetrock issues is currently a lose/lose issue for the powers that be, expect it to remain buried until the trade wars "officially" begin.
So "Chinese drywall" homes become Superfund candidates? The banks don't want them, so they let your friend live there mortgage payment free? These are the real "toxic assets" of the housing bubble. I take it that appraisers in FL are well versed in determining the drywall status of a home? Kinda rules out a "desktop" appraisal system for FL given the drywall problem.
I used to worry about the potential for tenants to cook meth in my rental properties. That has the same effect as Chinese drywall on property values. In fact, you have to have a hazmat crew tear the house down (not covered by insurance), and you would still "owe" the mortgage on it. I guess I won't concern myself with it at this point, given that the bank is willing to take a hit on truely "toxic" assets. BTW meth labs are a work from home opportunity here in AZ.
Roger that. God bless American entrepreneurs. :>)....er.....:>(
http://www.amctv.com/originals/breakingbad/
http://en.wikipedia.org/wiki/Breaking_Bad
I call colossal bullshit.
Good insight CD, I agree the banks have been given an incentive to enter into the loan mods but not stay with them. The loan mods are nothing more than reduced payments achieved by adding ten years to your existing loan.
AND in non-recourse states, the opportunity to turn that mortgage loan into a recourse loan. That's the hidden enchilada here.
Any time a non-recourse loan is modified, it become a recourse loan, thus allowing the bank to go after the person for any loss the bank suffers. The mortgagee screwing that keeps on giving from the banks point of view.
Ok. I am beginning to really wonder about this given that my BAC serviced mortgage is still listed as being held by Countrywide Bank. I think the following question is a reasonable one for me, a property owner to ask.
"Is my mortgage payment actually getting into the hands of the people that hold the note?"
I am beginning to think that they simply threw all this into one big pot and have sold payment agreements as opposed to my note. X number of investors agree to be paid x amount based on the overall amount of money in the pot and the amount of money still coming into the pot. Is my money in essence, servicing someone else's mortgage? To what extent? Sure, they can track the fact that I am still paying into the pot. And I am sure that they can also track me to see when I have paid all I am supposed to. But did my money actually go to retire my debt?
I am beginning to think that since the average homeowner no longer stays in their home for more than five years, and that virtually every mortgage in the country is put through the MERS system, that actual notes, actual mortgages, no longer matter to these institutions. Can anyone at this point get a clear title to their property? Or have I become one of the millions of squirrels running like crazy to generate bonus money skimmed off the top of mortgage payments for the geniuses that came up with these investments?
Are we at "The Matrix" level now? Where they say, "You think that's a mortgage note you're paying?"
From Ed Steer's column today:
Underwater homeowners who stop paying, if you think about it, that is a form of "run on the bank". It amounts to all of them taking money out of the banking system. Whether they go to the bank and remove funds directly, or just stop sending in mortgage payments, it's a run on the bank.
Bank Run - is the one thing that our financial system cannot tolerate, and it originally led to TARP I.
Amazingly, bank stocks are not taking any hits, because everyone knows they are backstopped now, and who is hell is going to go short anyways, that is investment suicide.
It is this simple, it is all "fundamentals"... JP Morgan has *NOT* had a losing quarter since 2006, I believe. EVEN through the crisis... that basically tell you who is in charge of this country and the politicians. QED.
With regard to the Trepp portion of the report - those guys write CMBS/CRE commentary every morning. I am pretty sure it's free but you need to register. It's called TreppWire. Might help the traders among you avoid getting picked off. Tons of stuff on loan modifications, delinquency predictions, loss severities.
"And one wonders where all the excess marginal money to buy worthless trinkets comes from..."
Or the money to buy shit you actually need... there are surely some people out there using this chance for all it's worth.
Jaime Dimon's umbrella carrier scoffs at your concerns
But the guy who changes his Depends has to be worried. :-)