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QE 2.0 Or QE 1.999: GSEs And FHA Are Preparing Auto-Refi Program Taking Millions To Current Market Rates Overnight
The main story making waves this afternoon is the presentation by St. Louis Fed's James Bullard titled "Seven Faces of The Peril" in which the Fed president pledges that the Fed should immediately recommence purchasing Treasurys if the deflation scenario picks up, which he notes is an increasingly likely probability. In the paper, Bullard argues that the Federal Open Market Committee’s extended period language may be increasing the probability of a Japanese-style deflationary outcome in the U.S. within the next several years, and concludes that an appropriate quantitative easing policy offers the best hope for avoiding a low nominal interest rate, deflationary outcome. "The U.S. is closer to a Japanese-style outcome today than at any time in recent history...A better policy response to a negative shock is to expand the quantitative easing program through the purchase of Treasury securities.” While of course keeping up a facade that the Fed is in control, Bullard does speculate about the downside case: “The most likely possibility from where we sit today is that the recovery will continue through the fall, inflation will start to move up and this issue will all go away. Suppose we get another negative shock, another surprise. We have to be prepared in that event to have a plan in place to do something." Yet all of this is in the sphere of probabilities of QE2.0 and for now at least, is something to consider in the intermediate future. Yet something far more sinister may be brewing just below the immediate horizon. As Mark Hanson suggests based on speculation by both MS and ML (oddly enough released concurrently, MS report attached below), the GSEs and the FHA may be preparing to imminently launch an instant auto-refi program which would take millions of borrowers to current market rates overnight! In the process $45 billion of consumer savings would be created. Welcome QE 1.999.
More from Mark Hanson:
There are millions of American's with rates much higher than market rates who can't refi due to lack of equity or income needed to qualify for a new vintage loan. Or, because after all of the new vintage loan level adjustments to the rate and fee structure for being less than perfect it makes the current 4.5% rate into a 6% rate taking away any benefit. We have discussed all of this ad nauseum over the past couple of years.
Their solution is to quickly identify all of the borrowers who are making payments on time and send them a one page refi form, which instantly takes their rate to current market. There would be a few other borrower hurdles but not many. The savings to the home owning consumer would be about $45bb per year, more than the cost of the recent extension to unemployment benefits.
This rumor has a lot of credibility behind it -- all of a sudden copycat reports come out from two credible mortgage shops and GSE premium coupons (5.5% to 6.5%) took a beating this morning -- down 4 POINTS on average. This is because these would get crushed if an auto-refi program was announced.
On a side note if this were suddenly announced it would be coupon chaos crushing the massive number of speculators in the premium coupons, which happens to be just about everybody now days.
If this happens expect all those mortgage owners who have never been delinquent to suddenly become huge fans of the Fed, while as a group saving $45 billion: money that will gladly flow into such much needed GDP inputs as iPads and hookers.
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That was always on the cards. Savers have to bail out the spendthrifts (Didn't you read The Grasshopper and the Ant?). The drawing of the lottery never includes the Savers. The US was always subtly socialistic but now it is all in the open.
Subtly? All you had to do was look a the miltary and you find a gigantic centrally-planned monster sitting inside of an ostensibly capitalistic system.
I'm waiting for a HUGE class action suit based on the prejudicial foreclosure pattern that has emerged. How just is it that virtually no homes > 300k have been foreclosed on?
Bring it on on I'm @ 7.75% & can't refi due to loosing my wallet & CC's a few yrs back. What a mess. Better us than the banksters.
That's it boys, keep playing around, keep trying to escape fate. As you do so, you continue to unbalance the system still further and make the pain greater for all of us.
I agree Eye. No doubt this is also a scheme related to reducing monthly payments to beat back the growing number of strategic defaults. I'll bet a virtual beer that people who are current and with lots of equity get no auto-refi letter.
It will work as good as HAMP. They are running out of ideas since the mandatory cram down on principal isn't on the table......for now.
hilarious. first its green shoots, then, summer of recovery and now panic failure. and people still bow down to this admin.
Preceeded by 8.5% maximum unemployment and vigorous recovery.....
bail deez nutz out
Anyone else seeing a clear Elliott Wave pattern in the DJIA?
Five impulse waves down from the Deepwater Horizon top, three corrective waves up (rising wedge) from the July 4th bottom to the present?
http://stockcharts.com/h-sc/ui?s=$INDU
I'd go even further and say that the action from February to present looks a lot like the DJIA from 2002-present.
The chart patterns are almost exactly the same.
I wonder if this covers commerical mortgages too? I would like lower rates. If not... well screw you fed, I say discrimation from that bald headed guy.
Bullshit. Double Bullshit. On every level Triple Bullshit. Any excuse (excuse # 1,482) will be used to implement QE (fill in a number).
Hi CD,
That's some deep shit - patties to the sky.
Oh yeah, I forgot to ask....better than what?
Economic destruction will continue until conditions improve.
deez nutz bail dem out
Ha! I'll take the one-page refi, continue to hate the Fed, and use our new savings to buy more PMs.
ETA: Or not. I guess we're part of the small minority of mortgagees who are not backed by Freddie or Fannie.
yeah, this is totally fucked up, it only helps homeowners who can pay their mortgages and likely don't need the help - sure, lets only give money to those who least need it, that makes TONS of sense...Why don't you just send every U.S. citizen $10k and get it over with.
Its frustrating to watch our country slowly deteriorate, its like in Saving Private Ryan where the guy is slowly stabbed in the heart and resists the attacker because wants to survive but really is just extending his suffering.
Actually, money should go to those who wield it most responsibly.
ACTUALLY, you have it backwards, those who receive money should wield it responsibly, not the other way around - there is noone who should get money in this manner, just those who do.
Don't see how this puts money in the pockets of the elites, thus this idea will never happen.
the douchebags in Washington are starting to think about their re-election prospects.
this is why they are focusing on people with jobs who pay their mortgage.
whatever... i'll gladly take the hand out, but I'm not holding my breath!
Bingo. It would certainly be the first time they did something which negatively impacted the elites.Consider how many bond holders are going to take a haircut. Plus, there's the unknown impact on the derivatives market, which will have a 100x multiplier on this.
This has the potential to save the homeowners, and bring down the Banks. Ain't gonna happen.
And finally, if this was successful, it would be the first time in history that Government intervention actually worked. Somehow, I don't think that's going to happen either.
People still paying their mortgages on time and at higher than available interest rates are... responsible.
If the Fed hopes to goose GDP numbers they are choosing the wrong demographic. These people are going to save, and pay down debt. This may ease the pain of dismal Christmas numbers but that's about it. God forbid they start buying gold...
"money that will gladly flow into such much needed GDP inputs as iPads and hookers."
iPads are a complete waste of money, and I resent you putting hookers in the same category!
Reading the headline, I thought "auti-refi" referred to the financing of cars. Actually, I wouldn't be surprised if the Fed Gov't decides at some point to go ahead and buy all outstanding auto loans and do to car finance what they did to housing. Works great when the asset depreciates 30% as soon as it's driven off the lot!!!!
This is the first idea I have seen that makes any real sense, however it does screw the bankers bigtime, and it doesn't help anyone in trouble and has no job or is being foreclosed on right now. So what is the take here? They are not going to do this and screw the banks over, so what is the catch I wonder? Their earnings will plummet off mortgages. The question is, as slow as the government moves, then Benny will have to buy treasuries for 2 yrs before people get refi. Rates will have to kept down for a long time. That is alot of printing. And what exactly is the current rate they are talking about?
WFC was recently touting itself as a winner in a Japan style deflation from its miraculous NIM which the WSJ claimed is driven by their low cost deposit mix. But no mention of the asset side which is driven by $33B of residential and commercial MBS yielding 9.59% and $72B of federal agency MBS yielding 5.39%
https://www.wellsfargo.com/downloads/pdf/press/2q10pr.pdf
back of the envelope a 2% roll down implies something like 20-25% of mortgages out.
Also consider that in 2008, the Bush exercise of mailing out rebates cost a cool $120B and netted GDP spike for One Q
http://blogs.wsj.com/economics/2008/07/30/the-2008-economic-stimulus-first-take-on-consumer-response/
Consider that the U.S. economy grew at a 3.3% real annual pace in the April-through-June quarter, the fastest in since the third quarter of last year, the Commerce Department reported Thursday. This was close to double the 1.9% growth initially estimated last month - marketwatch
BEA website now reports real growth at 1.8% for Q2:08
http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=1&ViewSeries=NO&Java=no&Request3Place=N&3Place=N&FromView=YES&Freq=Qtr&FirstYear=2005&LastYear=2010&3Place=N&Update=Update&JavaBox=no
The much touted Bush tax rebate stimulus vanished with time just like this move would.
Pissing in the wind
This is a zero sum game (except - those that get fees from new securitizations i.e. the banksters will love it) insurance companies, pension funds, mutual funds and anyone else that bought mortgage paper having a reasonable understanding of the return will get screwed. Taxpayers - that would be you and me - will get the bill from bailing out the pension funds anyway, this just adds to the bill. Incredibly stupid
We must use our great powers of intellect and imagination here in Zero hedge land to help create physical capital based on a combination of iPads and Hookers.
We can do this people - it just takes a element of belief in the system - everything else will flow from this.
I think you are onto something, here. We can do it like the BIS does with the SDRs, by basing it on a basket of goods.
Well obviously we just need to throw a few more things into our basket of iPads and Hookers. I'm sure we can come up with additional items!
Beer and whiskey can provide liquidity to the system.
I have some PocketLint™ , some used FRNs, and some hot air!
I only accept payment in Hookers with an iPad accessory.
You don't need hookers, now there is an app for that.
I know the market is going to jam much higher till November. That big head & shoulder top in the daily charts of the US indexes will fail and we will make new highs. Just watch, the Democrats will say to the folks, just look at the stock market, we saved our country.
I'm going to make some money, you guys sit around and post more gloom and doom while I make a killing.
You don't get it. The market going up in the face of the middle class being crushed confirms that we are helpless and doom is upon us. What's your precise strategy? November calls? Please tell us what exactly you decide to do because you sound confident and are probably right.
You'll make NOMINAL gains, sure.
Purchasing power? You're going to have your ass handed to you playing in this market.
Economic savings and/or austerity is ecological restoration!
How long can they keep this up? There are factors that cannot be changed. Technological advancements put more people out of work. The cost of the US worker is far higher than Asian compeditors. Our demographics, though population continues to grow, is troublesome at best with massive retirement age population expanding and staying expanded. This equates to huge strain on an ever balloning social support system that doesn't have enough workers paying into it. The demographics (age, workforce population to jobs available to total population) continues to degrade....this is something the Fed cannot control...it is the factor that will collapse the system in it's present form. I think the hope is they can pull a 'Japan' and stave things off long enough to not impact their present day wealth...or at least until they can establish their 'Eagles Nest' away from the masses.
As long as the rest of the world plays along with the USD based global financial system. All this free money given to Americans is finally serviced by goods and services imported from all parts of the world that seeks to earn USD to buy energy/commodities denominated in USD.
We have a sweet deal here! Enjoy the free ride.
They can write this fiction for as long as they'd like. All of those factors are negotiable, except the demographics.
I agree with your point, but think it's valid under the current paradigm. Change the system rules, and different probabilities result.
Rewrite the paradigm to more of a Natural Capital model, and accept natural limits, it's a different story.
before they can do this, they have to let the TBTF banks first load up
Those scumbags loaded up below 1050 , theyre long high beta stocks and waiting for the lemmings to take them off their hands above 1150.
If true, then it is a brilliant political move.
Shoring up the middle class support will lock out the GOP and their menagerie of wing-nuts.
Very Clinton-esq.
It would have been easier to take all the TARP money and other bailout funds and just pay off everyone's mortgage two years ago. I remember seeing an analysis at the time that the numbers were do-able. You want to goose consumer spending? Imagine what consumer spending would look like if no one in America had to make a monthly mortgage payment. Downside: Terrible shortage of iStuff!
But, of course, that wouldn't have helped the banks.
You have a lack of imagination! Why stop at paying off the mortgage -- pay everyone a decent amount every month and have everyone gamboling at the beach/casino/brothel. That should goose consumption -- we can let the illegals pickup after us.
tarp was 700B mortgage debt outstanding ~11T
Yeah, but just think of the hookers you can get with 700B.
I never thought the U.S would be more socialistic than my home country. I was wrong, this is fucking insane... And wtf is up with this market, has the FED put on a huge Nick Leeson option bet and is trying to keep the fucker at 1100?
Nope - just another day at the office for the FedCo HAL9000-driven Plunge Protector 10,000, pat. pend.
Bulltard
To the economy, a panic driven QE2 is just trickle down economics if massive cash is directed towards the markets. Thanks for the gift but no jobs of substance will result.
If existing mortgages under control of the Fed and agencies are automatically refinanced at lower rates, then this is bottom up QE2 and will certainly have a bigger positive bang for the buck economy wide than any trickle down method.
Worth a try, depending on actual final cost. FASB can figure out how to rejigger the loan valuations so that no net loss to the agencies occurs.
In fact, it might be a brilliant idea. Maybe the first one. Especially if it only costs $45B. If the actual cost if $XXXB, then slow down. Squeezing the banks to lend more is a bettter action and still on the table, regardless.
Wouldn't this already be priced in (except for points the refi cost), since this debt is prepayable at the obligor's option? Could this be unilaterally done for homeowner debt that has already been securitized by the GSE's? Wouldn't the evisceration of the key assets (mortgages bearing above-market rates) of the GSEs require shareholder/bondholder approval? Seems sketchy (although Hugo Chavez would love this story...bring in private investment then expropriate), but would love to hear the thoughts of informed persons on this significant rumor. Thanks!
And here I just @#($@( refi'd
I actually like the auto-refi idea
but the stock markets still are a joke above SPX 750
So someone with a 7% mortgage rate instantly gets 4.5%. And the financial instituations that were going to pocket that difference for the next 20 years gets what...nothing? Or do they get their money upfront courtesy of the US Taxpayer?
Someone looking at macro-economics and getting panicky if this is actually on the table. "Gotta get some consumin' goin' on out theya"
Now what are the odds that they'd set up something so slimy as that? </sarcasm>
That happens all the time when the market is healthy. People refi their mortgage at lower rates, pay off the higher rate mortgage. But when the banksters fuck up the value of homes by blowing out foreclosed homes for pennies on the dollar, because they are covered by the GSEs and FDIC for any losses they normally would have to take.
This EZ refi for people who have kept making payments through this cluster fuck, makes more sense than any of the other half assed programs for the deadbeats who don't make their payments for whatever reason.
All those Ivy-league B-school and Econ PhDs and still these geniuses evidently don't understand something as simple as "The Rule of Holes".
To Infinity, And Beyond.......
And of course for the WSJ: "
Popular ‘Zero Down’ Mortgage Program Makes Comeback"
Oh the good old days!
I saw that as well and could only shake my head in amazement. Ignorance is bliss, or at least easier on the stomach and worry beads.
There is no doubt what-so-ever anymore (if there ever was) that it's re-inflate or die. Because as B9K9 said in some other comment, what do they have to lose? They (the Fed, the system, the powers-that-be) will not survive deflation. Period.
Faced with a certain outcome, the desire to try anything, even if it only gives them one more day of "life", is preferable for those who are not at peace with (financial, emotional, intellectual, political, etc) death on any plain. Only the spiritually strong and centered can peacefully accept their own death. It's clear TPTB are not centered.
Once you have identified with something (money, power, status, ego, etc) you feel compelled to do anything and everything in order to sustain what you have identified with at the expense of everything and everyone else.
You cannot make this shit up. What an f'ing circus act this global system is. All that money spent on a PhD to simply change global interest rates, rules and regulation, with the flick of a pen. Why even teach this shit in school anymore?
Wow, automatic refi's! What will they think of next?
Just this morning I noticed that VA loans are 1/2 point lower than my rate. Then while researching VA refi's I discovered they have a program similar to this new FHA stuff called VA IRRRL (Interest Rate Reduction Refinancing Loan). They are also known as Streamline loans since they eliminate most of the closing process.
As for the idea that this new FHA program is a tax-payer sponsored bail-out, isn't it the banks that are the losers in this game? After all, it's their interest stream that is being discounted. In my case, the VA program will result in Wells Fargo getting $200 less per month for basically the same loan. It seems to me that it may help the GSEs guaranteeing the loans, as this should prevent at least some of them from blowing up. Now, whether or not it will make any significant difference, I have no idea.
Perhaps this will be the straw that breaks the back of the banking system? (
As noted by Prof. Antal Fekete in his writings about continually falling interest rates destroying capital. http://professorfekete.com/articles%5CAEFGrowthAndDebt.pdf)
"As for the idea that this new FHA program is a tax-payer sponsored bail-out, isn't it the banks that are the losers in this game?"
Um, yeah, the banks will lose.. NOT. You don't think that the mortgage refi depts will get a 'tax credit' (the difference between booked rates and market rates, probably also including the closing costs for each refi) to offset the loss to their book? You really think that all of those mortgages haven't been securitized and sold off with the spread baked in? No my friend, the banks never ever lose, not in the new normal. In fact, I will speculate that this will end up being a huge bonus to those banks rather than a loss. Pfft, banks losing.. that's a good one.
wait wait wait... why the uproar? what don't I get here?
as a 'current' mortgage paying shlub, with a decent 5%-ish rate, literally in the throes of a re-fi to 4.25%-ish...
this is bad?
i see a one page re-fi as doing a couple of good things:
- potentially gets rid of $10K in needless re-fi title, doc, points, etc fees for mortgage houses/banks that add NO value to the current situation, and got us into the crap-hole to start with.
- actually rewards those working/taxpaying folks that bought and are *still* paying on time! (or would you skeptics rather continue to reward the slouch borrowers and thieving mortgage brokers...)
- actually *increases* tax revenue to the goobermint from those same folks by *lowering* their relative interest deduction... (no free lunch here folks)
- lowers the monthly cost to the borrower - more cash for saving/spending
- lowers the foreclosure rate for the banks, protecting the depositors and the FDIC (i could give a crap if the banks benefit, btw)
- cuts out the mortgage brokers completely from this adjustment (i hope)! yay! f---k'em all
- To those that responsibly paid your debts, good on you! and realize that you will not be bailing out slackers, and realize that the beneficiaries of this proposal are still in there with you, still paying mortgages, and its the BANKS that are not seeing the profits (4.5% vs 6%), not the taxpayers eating ANYTHING! again, i will be paying MORE taxes, albiet less mortgage each month. more for dinners out and replacing those bald tires, and ...?
I don't think this is bad in much any way, or at least NOT as bad as pure welfare, which is the only other crap these QE plans have been doing since 2007.
again, am I missing something here, or could this actually be a good/lesser-evil thing in the context of today's chaos?
The bad, as I see it, is this: According to the MS report, there are approximately 18 million homeowners who would not qualify for this program because their mortgages are not backed by Fannie, Freddie, or FHA. That's about a third of mortgage holders (myself included).
Now, all this time, we've continued to pay our mortgage promptly. Our home value has fallen by almost a third since we purchased, but we still continue to pay. We have two main reasons for doing so. First, our livelihood is dependent on a good credit score. Second, we believe it's our responsibility to keep up our end of the contract.
However, this could be the proverbial straw for people like us who would not qualify for an auto-refi. How many of those 18 million homeowners who have kept up their payments would finally throw their hands up in the air and say "I quit" if this goes through?
chit.
that sux for me too.
ok, i concede. the idea is good. the limits on the participants is typical, unfair, and just sux big hairy ... nevermind.
maybe the ultimate result will not be limited that way. dam. i got all excited and everything. bad for the psych.
Given that the GSEs are going to be massively altered into a new completely federal program, my assumption is that they will use your cry of "not fair" as a mandate for change. (cuz that's why they make things unfair to begin with)
Then, I'll bet they come up with a program to allow you to convert your private mortgage to Federal Homeloans Inc., thus nationalizing the last bit of the private mortgage industry.
Funny thing, the entire time the housing bubble was blowing up, I repeatedly asked people the question "who needs X million empty houses"?
Well, it turns out that the answer is politicians. Before this is over, I expect to see them go so far as to offer lotto tickets specifically for houses. Or massively subsidized houses for the politically connected.
Isn't socialism wonderful?
Along those lines, would there be an incentive for private mortgage companies to "refer" you along to such a program and get your devalued property off of their books? Would it be another backdoor bailout for the banks, but couched in terms of Main Street assistance?
With so many homes owned by the government its only a matter of time before they become a tool for social programs to help the greater good.
It will start with a simple idea of rewarding good citizens fallen on hard times the opportunity to live in abandoned house for free so they can be cared for. Then idle homes can be utilized as shelters for the homeless.
There's no telling what fun the government will have with this.
They'd rather bulldoze them in order to create more demand for homebuilding and to keep people unsettled. Remember what was done with cars at C4C? Destroyed.
Unfortunate perhaps but not unfair. Others gain is not your loss. Besides, the chance of an auto refi program is very close to zero for reasons I do not have time to share - But I do expect some type of program to help borrowers that are current on their underwater loans. As long as it was not a CASH OUT refi or if the original loan was Low Doc.
Hey sweetness,
You know me, I am not an expert on financial stuff like most here, but I am going to give this a shot.
Your mortgage is in a bundle of something that got sold to someone. That thing is a performing asset. They bought your loan expecting a particular return. They won't get that return. If the fed has not bought the bundle that has your loan in it already, if enough of those loans are getting the new interest rate instead of the old one, it becomes an underperforming asset. If that asset is backing anything in someones business deal --->margin call. If they are just bag holders, you have the govt. telling the one who bought that asset to eat shit cause they say to. If it belongs to a too big to fail, does the fed buy it? And if it already belongs to the fed, and they unload it at a loss, the US tax payer is on the hook for it.
Someone is going to pay. They sold it one way, it got assigned a value. When that value is arbitrarily written down by the gov. instead of the market, well, I just don't like it.
in the big picture, your logic is spot-on
that the general legal contract process is now broken beyond recognition - i've been appreciating that since the GM/Chrystler (sp?) bondholders got 'told' by obama to eat sh-t...
and i don't see that trust/order being restored anytime soon. hence my general 'doomer' posture.
at a more 'local' level, this 'plan' struck a chord in me in a lesser-of-evils sort of way:
if 'magic' lower interest rates for responsible folks helps stem the foreclosure tide at the expense of the interest receiving banksters, it seems like a good idea - reasons above: lower monthlies, more tax revenue, less welfare-ish, etc.
good on those who can participate, but it sux when we can't
(i would still be stoked that my house was paid for..., regardless the current crapola going on)
I know in the big picture I come out ahead owning the house and being debt free. Many months I can save over 2/3 of my paycheck. I am not drawing interest or watching stock values grow or anything, but I am slowly making gains just by saving and buying PMs here and there. And if I wanted to work the system, I could certainly use all kinds of credit I have to work a doozy of a deal, there is no doubt. If I am hit with unemployment, I will be better off than most. So I bitch, but I am being babyish and I know it. My original reaction was like yours. If something like this was in the works, doing it day one would have been much smarter than now. You would have prevented a greater number of foreclosures and applied some brakes to the downward spiral we are on.
Always enjoy seeing you around.
frustrated but ever rational. priceless.
even though most of the current shtuff (sic) is re-hash anymore, i still return to ZH for those morsels of 'good stuff' from 'good folks' - and not all are the old-timers - i do miss many of them/us, but a few of the newer folks - dochen, rocky, apostate, walkure, jim in mn, etc. are worth digging around this lint for the goodies.
please do keep your thoughts and wit in the ZH game, as i can't imagine going down with a better crew!
I just had my 1 year ZH birthday and it seems like only yesterday...
lol, that anniversary *was* yesterday - you guys crack me up. in blog terms, are you a seasoned vet? congrats either way.
but hey, i just noticed i'm like a whole 6 days smarter than you :^)
it must have been a busy week on the wire this time last year. a lot of folks hooked into ZH that month.
FWIW, your input qualifies as some of the fresh air i mentioned above. glad you're here too. tip-e, rusty, chindit, dumpster, fresh-meat, merehuman, trav, b9k9, and both cd and cb of course. - actually too many to name. more than i thought.
and i don't always agree *many* of these folks. but i treasure the discourse with the civil ones.
even if they occasionally call him 'maobama'... (oh wait, i'm the one who does that. nevermind, just trolling for junks :^)
i still like my theory from last year. Claw back all interest payments on homes from 2007 -2009 and re-apply them directly to the principle portion of the mortgage. Begin with new mortgages as of Jan. 1, 2010.
Lowers the principle amoutn, keeps more peopl in their homes and fucks the banks and their buyers of the securitized products.
Ok so you get everybody into a 4.5% interest rate and drop another 5 trillion in QE, then what? When the next 5 trillion is gone just like this last 20 trillion dollar enema, you are done!!! FINI!!! There will be absolutely no refis again, EVER! and if the rates go up NOBODY will buy a house. Just keep spackeling and painting your way into the abyss.. At least we will not go down like Japan with the lost Decade+, we will go down as the country with the lost century!
Newbie question: Does this potential move have any correlation to the balance sheet fraud that Bruse Kastling identified last week? Just askin...
Thanks.
I lived in Argentina from '89-'91 and saw what a truly fucked up government can do to the people. If this latest scheme is true, the US is now even more fucked up than I thought. This sort of action will have long-term unexpected consequences... similar to spending a few hours riding bareback at a Bangkok bath house. It's all good until later when you get the test results showing that you're positive for HIV.
Long: southwest. Vegas casinos. Glitter
LOL, There is a sucker born every minute.
FHA borrowers that are current on mortgage payments get to refi at current rate. Diminishes the possibility that mortgage holder upside down will walk. This is the only benefit.
Does this mean FHA will originate new loan (refi) in excess of appraised value? Will the the mortgage holder no longer be upside down.
In addition, And you know that PMI will be required where loan value exceeds 80% of appraised value. This PMI will be added to the loan payment.
Have you thought of all the upside down mortgages that are not paying PMI?
Yea baby, insurance is the new game - Health Insurance, Home Owners Insurance, Private Mortgae Insurance, AIG
Any small swinging dicks have any idea what is going on with ticker symbol GAP?
Up 25% on 3x normal volume.
Gapping to the upside.
That's why they have those catchy ticker symbols.
ummm...well if they aren't going to put bankster in jail after they just pocketed billions and billions in bonuses </Carl Sagan voice>...don't you think giving some sugar to the beaten down and petrified honest home owner a nice gesture? And I tend to agree with @theworldisnotenough that these are exactly the people who would be most likely to save a good chunk of that mortgage relief or maybe invest it the next biotech/Age of Aquarius miracle technology that will cure all the World's ills.
I say go for it. It would be worth it to see the expression on the PPT's face when it works for 3 months and then doesn't.
Stocks (and gold down). Im assuming volume has increased this afternonn. Geithner is going to get beat on for this poor market reaction to such a plebby rumour.
I sense gold is going to go buckwild if any >QE1.99 programs are for real. So far , so quiet.
No doubt the inability for many borrowers who are current on their above market rate loans has been a huge transer of wealth to MBS holders. However, THE GSEs (AND US TAXPAYERS) have reps and warranties to protect em from being sold poorly underwritten or misleading loans and they will not nor should they give up on that option to put these losses back to the banks that sold em the loans in the first place. What makes sense is a program that waives the Reps and Warranties for select borrowers who have been current but have high ltv due to house price declines but otherwise steller credit.
As anyone considered that the Plan has already been test run? Look at Japan, the demographics, the real estate bubble etc. I mean we can bitch all we want about what should be done, but do we know the outcome? Chances are Japan was one big CFR policy experiment and if it didn't blow up, well guess where we're headed.
the upside of all this is that before they are done, this will be a truly free country.
Either the Masterbot just went into "kill mode" to totally give the other slave bots a butt fucking or some really big dog in the market decided that the fucking PPT wasn't gonna win this time. I seriously imagined PTJ yelling "offer 3000 at 100, there's more behind it", it was like a fucking hammer hitting down tiny PPT nails... Anyways, that was an intense fucking closing. Pardon the cursing, can't help myself right now. Too bad the stupid european (I'm one of them so I'm entitled to say it) retail investors (still in the market) and institutions will see this as the buying opportunity of a life time tomorrow.
Some trillonaires got the GDP numbers early and are just fucken around with everyone, because they can and it is fun.
I admire your passion and gift for the language.
all the people still sitting in ARM's are paying 3.5% right now.. (waiting to blow up one day I might add)
anyone who has equity to do so has refi'ed at this point..
leaving you only those who don't have ARM's and don't have enough equity to do so and must be current..
I suspect that is not 45 billion worth of savings.. that would mean the above catagorey is at least a half trillion of mortgages.
This rumor has a lot of credibility behind it -- all of a sudden copycat reports come out from two credible mortgage shops and GSE premium coupons (5.5% to 6.5%) took a beating this morning -- down 4 POINTS on average. This is because these would get crushed if an auto-refi program was announced.
Anyone know how to follow this on Bloomberg (or elsewhere)?
The Fed has a big dick and it's in all of our asses.
That's it. I've said my piece.
Conclusion: "Base money can be removed from the banking system as easily as it can be added, so private sector expectations may remain unmoved by even large additions of base money to the banking system."
Enough said
This is too funny. I sold all my gubmint backed mortgage bonds last week. Lucky me! suck it gubmint bitchez!
Printing money directly into the consumer market might make consumption increase?
Whoda thunk?
Not to worry, everyone ; I bought a chocolate cake today, and the chocolate layers are thicker than usual.....
All the $500k+ mortgage debting policy wonks in DC are writing themselves a get out of jail free card, apparently.
spot on +1000.
" . . .While the US
household sector would be the clear beneficiary of a
streamlined refi process, the losers would be the holders of
agency MBS. Prepay speeds would rise dramatically and MBS
spreads would adjust accordingly. Admittedly, this could
temper the magnitude of our estimated benefit to borrowers –
unless the Fed were to step in and serve as the backstop buyer
once again."
Tyler, why no mention of the Feds $1.25T MBS portfolio and their DV01 w/ a rate reduction of 125 bps?
So the trillions MBS on FR's book will all the sudden take a 30% haircut? If Bernanke is this "smart", I would have to say we as a nation is doomed.
This Bullard is eying Ben's chair? He is trying to establish himself as a C130 instead of a helicopter.
Print, baby, print.
Talk about "stealing sales from the future". You better quit your job if your in the mortgage business. Imagine that, all the business in an industry gone, poof at one time. Next we'll be hearing that the financial institutions holding the paper will get a 1 pt origination fee compliments of FED. Fucksters!
My current interest rate is about 3.75% in and I'm in the 6th year of a 30 year 2/5 ARM tied to the FED funds rate. If the Gov't pulls this overnight refi for all, I will be at a higher fixed rate. Not a big deal, I intend to sell in 6-12 months ... just noting that not everyone with a mortgage benefits from this type of QE1.xxx. I have equity in the home, great credit score and could refi or just pay it off, instead I'm enjoying the only positive consequence of ZIRP that is beneficial to me. I don't believe ZIRP will change for a long time to come <i.e Japan>.
It's quite simple, really. They tell anyone that takes the auto-refi that they are no longer allowed to deduct mortgage interest on their taxes. This way, they screw EVERYONE.
How about everybody pays for their own shit?
And politicians stop trying to get credit for being charitable with my money?
Yeah, and monkeys might fly out of my butt.
I sent Richard Gere an email concerning monkeys flying out of your butt.
His reply, I quote "the only way that is going to happen if you stop feeding them bananas:)"
The rest of the email just went on about how Pretty Woman was the best movie ever made.
$ 45 BILLION PER MONTH savings - not per year. It was a typo.
DANG! I read pretty far into the posts and NO ONE HAS EVEN TALKED ABOUT THE POST!
Can we stop all the crapola about who said what, who traded what when and talk about something intelligent like the good old days???
WRT the post: It doesn't matter what insane (or even somewhat logical) scheme the Govt comes up with at this point. If the intent is to keep the same MIFWICs (mofo's whats in charge) and continue power-trippin', then controlled descent into terrain is assured! I'm just wondering at this point if we'll be treated to the same old video clip of Palestinians dancing in the streets, celebrating the comeuppance the USA is receiving.
Found ZH via GATA. The level of civility here, kept me coming back. The topics are always relevent and the posters intelligent. Soon I began stopping by ZH daily. Six months passed before deciding to post. Great site Zero Hedgers....!
You must have skipped over the first 20 posts
I skipped the bashing...
Welcome Fast Twitch,
There is community here. More than that, an education. I feel fortunate that I can learn from everyone and test out ideas. Gets a little rowdy at times. Hope those sprint fibers of yours serve you well.
Stick around and tell the truth as you see it.