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The Short And Sweet On The Upcoming Foreclosure Ban: "Lenders Now Have No Rights"
Yesterday it was announced that the government is taking the first step in a plan to virtually ban foreclosures - a step that can only be classified as capital markets suicide. Today, Rosenberg explains why.
In March 2008, I published a report titled “Capitalism Takes a Sabbatical.” If only that were the case. I really can’t believe what I just read on Bloomberg News (Obama May Prohibit Home Loan Foreclosures Without HAMP Review). In a nutshell, the White House is considering a tactic that would prevent banks from foreclosing on defaulted homeowners unless they have been screened and rejected by the government’s Home Affordable Modification Program (HAMP). George Orwell must be rolling over in his grave.
To think that the government is at the same time pressuring banks to start extending credit again, but the question is why bother when you have absolutely no recourse. We’ve reached a stage in this crisis where lenders have no rights. The long-run distortions from such a heavy handed interventionist approach are too long to list right now, but suffice it to say, this will do more to exacerbate and prolong the deleveraging cycle than solve it.
Of course, lender right abdication under the Obama administration became evident less than a year ago in the Chrysler fiasco. At this point it is a certainty that no matter where you stand in the capital structure of critical industries, such as housing, autos (we feel for Toyota, although it provides almost as good a spectacle as Bernanke grillings), and financials. Yet now that the government is forced to pick between banks and housing, it appears that the house of Dimon may be given the middle finger. Alternatively, if this whole "interventionist" plan succeeds, we can all resoundly say that communism is alive and well, despite the whole Soviet experiment.
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Sounds like what goes around comes around. It started that no loans , no mtter how bad, would ever be eaten by the banks.The Taxpayer would cover all of it and their bonuses too.
What this is really about is forcing the CDS system to fail. House doesn't go into foreclosure, no one collect on the insurance. Banks are forced to take some of those boffo earnings they gambled taxpayer dollars to earn and give some back to the people who need it the most.
If it were communism, you wouln't be writing about. Suck it up
Oh please. Save your whine. The taxpayers are covering the losses in this instance as well.
Let's not forget that the vast majority of those taxpayers who bailed out the banks are not the recipients of this program either.
These f*cked-borrowers are just another interest-group swooping in for a handout.
You can call this interest-group "the people that need help the most", but that's absurd.
The people who need help the most are the savers who were responsible with their finances.
+1
Essentially, the British and US governments bankrupted their national treasuries in a desperate effort to preserve the wealth of their financial elite CLICK LINK TO CONTINUE
http://seekingalpha.com/article/190691-bond-vigilantes-set-sights-on-sovereign-debt?source=email
http://www.wallstreetwatch.org/soldoutreport.htm
http://www.takeitbackday.org/
It's them or us.....and it stopped being about 'capitalism' 17 months ago
"George Orwell must be rolling over in his grave."
I suspect old George must be chuckling to himself. He certainly published enough warnings, both in novel form as well as straight up articles and opinion pieces. It's the collective "we" who will be rolling over as the probe looks for other orifices to enter.
Orwell was an enthusiastic Socialist; I think he'd approve of this plan.
1984 and Animal Farm notwithstanding, the guy was actually in favor of government involvement.
"1984 and Animal Farm notwithstanding, the guy was actually in favor of government involvement."
What is going on in the USA today is way past "government involvement" and Socialism, having tipped towards Fascism some time ago. And that was ultimately what Orwell was warning about, the slippery slope of mixing good intentions (however misguided they might be) with unregulated greed and avarice. Just because the police aren't pointing a gun at you doesn't mean we don't live in a police state.
well said. This is fascism hands down.
It is correct. It is not communism. They do not do such things in China. It is a deliberate destruction of America's foundation using fascist methods.
Obama is 1,000 times more dangerous to America than Osama bin Laden.
Fascism - really!
Any form of government regulation I don't agree with is fascism.
Nazi Germany was fascist, what do you think Nazi America would really look like?
If our government was fascist, our corps would order the government to bomb the industry in other countries and force them to buy our goods.
Fascism is not point of view, fascism has a real definition. Your the one using 'newspeak' to redefine what fascism means.
off topic, but fascism was in Italy. it was a gov/business partnership in running the country, crony capitalism.
nazi-ism was indeed in Germany.
people froth and foam at the mouth from this suggestion but pls consider reading Liberal Fascism. yes, it's by a winger, and yes, you don't have to buy all its conclusions, but I _promise_ you will learn something important by reading it.
No, our military is too busy right now. We will just destroy industry in other countries, like Toyota, with Alar apples.
http://www.google.com/search?q=alar+apple+scare&rls=com.microsoft:en-us:IE-SearchBox&ie=UTF-8&oe=UTF-8&sourceid=ie7&rlz=1I7GFRD_en
This is corporate fascism, not Mussolini/Hitler fascism. Fascism evolves. Corporations have off-shored industry. they own the industry in other countries, why would they bomb it? You have it backwards. Instead, they ordered industry moved to other countries.
In practice, there is no actual difference between communism and fascism. One uses an ideal of a "nation", the other an ideal of "social engineering", both in practice concentrate power into a few hands, and subject the rest of the citizens to slavery for the supposed "ideal".
Foundation of Fascist Philosophy
Fascism, especially in its early stages, is obliged to be antitheoretical and frankly opportunistic in order to appeal to many diverse groups. Nevertheless, a few key concepts are basic to it. First and most important is the glorification of the state and the total subordination of the individual to it. The state is defined as an organic whole into which individuals must be absorbed for their own and the state's benefit. This "total state" is absolute in its methods and unlimited by law in its control and direction of its citizens.
A second ruling concept of fascism is embodied in the theory of social Darwinism. The doctrine of survival of the fittest and the necessity of struggle for life is applied by fascists to the life of a nation-state. Peaceful, complacent nations are seen as doomed to fall before more dynamic ones, making struggle and aggressive militarism a leading characteristic of the fascist state. Imperialism is the logical outcome of this dogma.The third element of fascism is its elitism. Salvation from rule by the mob and the destruction of the existing social order can be effected only by an authoritarian leader who embodies the highest ideals of the nation. This concept of the leader as hero or superman, borrowed in part from the romanticism of Friedrich Nietzsche , Thomas Carlyle , and Richard Wagner , is closely linked with fascism's emphasis on vision, creativeness, and "the will."
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I would say fascism is a totalitarian version of socialism. Note that communism is also a totalitarian version of socialism but it is much less concentrated in population control and much more sadistic. Consequently, the early Mao communism in China was transformed in the present fascist state. (But, God forbid, no "intelletual" will dare to call China a fascist state since it is not presently anti-Semitic.)
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Are we moving to socialism? Yes.
Are we moving to communism? No. The US banking elite still firmly control US political life.
Are we moving to fascism? Not yet at least.
So, where are we moving? To a welfare-socialism. It is not sustainable and will not last long.
You say: "Are we moving to communism? No. The US banking elite still firmly control US political life."
You seem well informed concerning Fascism and Socialism, but somewhat ignorant of Communism.
The 5th plank of the Communist Manifesto calls for a central bank. Money based on precious metals is a characteristic of capitalism; a central bank is an enemy of capitalism.
The communist-model central bank was all-powerful, controlling banking activities for the entire country. The US Fed itself is not the banking elite, it is just the banking elite's tool for directing government power to their own interests. So, back to fascism.
As for "Money based on precious metals is a characteristic of capitalism; a central bank is an enemy of capitalism," well, by that definition there is no capitalism still going on anywhere in the world; in that case the point is moot. Let's argue about what exists and what to do with it.
Funny one. A common principal so everything is the same. I just checked the fifth plank as I did not know it.
It reads other stuff like national bank with state capital.
Were not communists opposed to private property they consider the hallmark of Capitalism?
This pointed out, a central bank does not seem to be enough to qualify for the fifth plank. It must be a national (dependent on politics) with state capital (not privately owned)
The FED does not fit the bill. If you only focus on one principal, conclusions are always flawed.
Apparently, in your version of capitalism, you still count on banks. Well, that is communism, because communism relies on bank.
True capitalism is the one that dont rely on banks. This is the true church of capitalism. It has the only true prophets and the most inspired prophets.
Actually, Nazism was short for National Socialism. It always had a strong (albeit warped) strain of socialism. Before Hitler took over the country the struggle was between Communism & Nazism. Hitler fixed that right away; the Communists were rounded up & shot first, even before he started working over the Jews. Of course the other main ingredient in the mix was the support of the Junkers & the arms manufacturers, their version of the military/industrial complex. They were Germany's rich elites.
Have to disagree. Fascism has a specific economic definition that doesn't include the social/political trends you mention above. It can be understood by reading John T Flynn's As We Go Marching (1944) and also see Charlotte Twight's America's Emerging Fascist Economy (1975). This has been a fascist economy since FDR admiringly followed Mussolini's and Hitler's examples. The trend has been obvious if you know what to look for.
The end result of any socialist economy will be the same, fascist or communist. Sorry to say, the parasites are killing the host.
whats it gonna look like?
Just wait and see......................
You need to invest in a good dictionary because you have no idea what you are talking about. You have made it very obvious that you are an Obama supporter and like him without your teleprompter you are lost. Look up Fascist and please get back to us when you actually have an idea what you are talking about.
Mr Obama is on a path to destroy this country starting with the economy and ending with our total subjugation. With no resource to recoup their losses from bad loans financial companies will not loan money for anything and the economy grinds to a halt. He has no idea how a business works because he has never managed anything or held an honest job in his entire life.
You need to invest in a good dictionary because you have no idea what you are talking about. You have made it very obvious that you are an Obama supporter and like him without your teleprompter you are lost. Look up Fascist and please get back to us when you actually have an idea what you are talking about.
Mr Obama is on a path to destroy this country starting with the economy and ending with our total subjugation. With no resource to recoup their losses from bad loans financial companies will not loan money for anything and the economy grinds to a halt. He has no idea how a business works because he has never managed anything or held an honest job in his entire life.
Up pops another 'trash Obama at any cost, in any blog, anytime, anyplace' type troll; go back under your bridge & DIE. The rest of want to have a conversation here.
Osama Bin Laden?
You need to study a bit more. If he is even still alive he was clearly an image created to have an object for the masses to focus their hate on.
Deflect & divert.
Really? Fascism?
Is a woman any less pregnant at 2 months than at 9 months? Was Italy any less Fascist in 1937 than in 1943? Is it full blown Fascism in America today? Is it less that Italy in 1943? Or 1937? Does it really matter? Can I manage to remain in denial a little longer if I can explain away what's going on by splitting hairs and arguing definitions? We can argue all we want about the degree of the corporate/governmental marriage in America but it still doesn't change what's going on.
I heard someone say the other day that America wasn't Fascist because we weren't invading countries and killing people. This person made this statement 5 minutes after ending a conversation about the justifications for war in Iraq and Afghanistan. The degree of difficulty in the mental gymnastics involved in that little trick was astounding and should have been awarded the Gold medal.
The kernel of fascism is not fascism, no matter how well you articulate your point, it is still wrong.
OK, I'll shut up and listen. I'm always willing to learn and I'm most certainly capable of being very wrong. Please define Fascism for me and then explain to me why you don't think it applies to America.
2 things:
#1. It is early yet so it is still easy for the "store front patriots" as I call them to shout down anyone who dares use the F word.
#2. The fact that a larger group of "citizens" have not become alarmed by the steady erosion of our civil liberties allows this opinion held by the people in #1 above to prevail as the percieved majority.
conclusion: the marketing plan is working. "All is well" is still accepted as truth.
Ripped,
You very eloquently described what I think of as the hair cut phenomenon, where you can go for weeks and weeks not noticing the slow growth of your hair. Then, suddenly, you discover that you're in urgent need of not only a trim but a full blown hair cut.
This is what I call the complacency creep and others have called "The Totalitarian Tip Toe" where a little more freedom and liberty is clipped off day by day under you're fingers and toes are bleeding and you're required to show your papers every 5 miles.
BTW, those "store front patriots" will be the first to sign up as enforcers for the various pacification programs the govt rolls out when the population begins to recognized they've allowed themselves to be backed into a corner.
"The Totalitarian Tip Toe" where a little more freedom and liberty is clipped off day by day under you're fingers and toes are bleeding and you're required to show your papers every 5 miles."
That is a great description and clearly the guiding technique applied to every little step taken.
Never try to take too much at once (until 9/11, then the opportunity to take massive amounts of "ground" while enriching the insiders simultaneously was "allowed" by the Patriot Act).
I have gotten to the point where I pretty much need to keep to myself on these topics. My only outlet is the Internet. The fact that the bulk of the population buys the "safer but at the cost of less privacy" spiel indicates that the struggle is lost.
Those that get lost on the "while enriching the insiders" part only need to inquire as to where and how the budget for The Department of Homeland Security is spent. You won't be able to see it. All the private firms who are paid millions by DHS and the amounts they are paid are kept secret as a matter of national security. This is not the CIA, armed forces or any government agency. These are private businesses (think Halliburton and Blackwater just to name 2 higher profile ones).
This is your tax money. You should be able to know at least who is getting it and why (in very general terms) Why is it totally secret? Ask yourself that question with healthy skeptecism as the backdrop.
When you think about that long enough then think about how the greatest tragedy this country has experienced since Pearl Harbor has been used as a lever to reduce our freedoms and enrich insiders. When you arrive at that destination, then think about it some more and then you will have the fear in your stomach that you should have.
The fear (and outrage) that I live with every fucking day.
Your ignorance is the quintessential example of how Fascism grew from a kernel to what you understand as 'fascism'. In your mind Fascism manifested overnight. Instead, it was a gradual process, with 'kernels' of fascism increasing in frequency and magnitude. Did our income tax go from 0% to 35% overnight? Wake the fuck up. Here's some caffeine: http://mises.org/misesreview_detail.aspx?control=311
We are clearly at the beginning stages of Fascism. But why would you expect a born and bred American idiot to understand it? Most have been brainwashed from birth to believe they are living in the land of the free.
+ 10,0000
x 1,000^10
Carlin on "our owners"
http://www.youtube.com/watch?v=acLW1vFO-2Q
This has been posted here before but it should be watched daily.
Clear as mud. Sorry, we are at the end stages of fascism where the corp-state buddy system is falling apart so that the state has to finally take over for the corp--GM, Chrystler, GE, AIG. Dear Ghost, you are not far behind those you just criticized.
RE: the Bamma Boy....Don't watch what he says.....Watch what he DOES!!
Ask yourself this: is a doctor that recommends you quit smoking, then goes outside and lights one for himself, wrong in his recommendation?
Second, what I know about Orwell (and it's not much), I'm not so sure he was in favor of government involvement. I believe he had influences in socialism to the extent that the community would labor and reap rewards of that labor as a whole, which would jive well with capitalism if such 'sharing' was a mutual exchange, and not one that is coerced by government. Noting this distinction, he was not a fan of Soviet Communism or German Fascism, both of which had government unilaterally or bilaterally control of capital.
Having recently read 1984 and Animal Farm (and not knowing much else about Orwell) I can jive with your mutual exchange theory. Some may disagree but that is Ayn Rand's stance as well. Trading value for value - those in the exchange agree on what satisfies them. Gov't screws it all up.
I'm not sure his novels were a warning, but maybe more a utopian fantasy.
Animal Farm was an anti-Stalinist warning of potential dystopia. 1984 is the hell of a perfect, perpetual dystopia because of the ruling collectivist oligarchy.
we are damned either way. The treasury secretary can declare Force Majeure; simply, we cant and won't pay. we are insolvent. This would be the time to do it. Make our currency collapse. Just get it over with!!! Then, we beign to build manufacturing and supply ourselves with everything because it will be too expensive to import. Short term pain versus long term pain.
Seems very bullish to me, which of course means that it isn't, which of course means that equities will rally, which of course means that, if I am smart, I will short this market so that there is at least some cannon fodder for the afternoon meltup. After all, holding through the weekend during times like these is all the rage. It's just sound portfolio management goshdarnit.
Any rational market analysis is useless today, as all is manipulated and distorted. That's also why nobody trades anymore and the only volume is coming from SPY's and ES's.
Liberty 33 is now controlling almost anything, from banks,autos,insurances and.....financial markets.
I only make money in this market when I throw being rational right out the window and watch it get banged up as it rolls to a stop on the side of the road to hell or Vegas. All that said, I have a hard time making money investing since it is very difficult to stop thinking and just roll with absurd irrationalility.
The government is the only institution still lending anyway, so who cares?
first, nice german painting you've got as an avatar there.
why would anyone care? why would you even bother to make a mortgage payment now? You can't get kicked out and there's a good chance your credit sucks anyway at that point. It's a free place to live until the govt says it isn't. I'm sure given the number of people who start to default would be overwhelming and the speed at which the govt tackles the problem would be pathetic, you could probably live rent free for at least two years maybe more.
Klimt was Austrian, not German, but apart from that, good point.
So was Adolph Hitler & our beloved California governor, Herr Schwarzenegger.
So the Fed loads up on MBSs, and now Obama puts the coupons in jeopardy? Why would anyone under water continue to pay? Did he run this brainstorm by Ben first?
correction...why would anyone with any mortgage continue to pay?
ill get on line with the rest of the delinquents and wait 10 years for my loan mod
In the short term this looks like a good thing for the consumer, but not so fast. The bank would still be increasing the principal on the mortgage by adding your missed interest payments to it, so you keep your house, but when 'times get better' you will owe more than when you started. What this is is a sly attempt to make people keep their house rather than dump it.
Get all the facts.
There is no such thing as "good thing for the customer"
As soon as you find yourself believing that, DUCK!
"Cause when life looks like easy street, there is danger at your door"
It's not going to work, Mister Prez. After the mod, the principal amount is still a lot higher than the property value, and the payment is still a lot higher than rent for an comparable property would be, and the home'owner' is still still sitting on his fat butt eating doritos inside his wasting asset, which he no longer has the HELOC to use for maintenance. You can't fool all of the people all of the time.
Sure you are right, but I suspect the ultimative action of the Fed will be : bail out all homeowners at zero cost + they can stay in their house. What about that ?
WaPo (via Ritholz) reports the FDIC is proposing a test program of principle reduction for negative equity homeowners. That's a change you can believe in, maybe.
They should have done that ages ago. Would have been much cheaper than what was done.
Dear dipstick - and at what point do you expect the prudent to say "Eff It" and join the parade? Don't you realize what seeing speculators get bailed out has done to the ordinary observer? And you think bringing it home to Main St. will improve that? HGTV showing patrol cops shopping $900k McMansions. Let em keep it, poor babies are underwater. Up yours, that precedent will really be the end of America.
In 1996 my new wifie and I took out a mortgage on a single-story clapboard dwelling for $86,900. It has 1200 square feet, but nearly two acres of land. Not enough house, too much grass to cut. We'll have it paid off in two years. Now, we're both 50, no kids, and when we got married we could have bought a bigger house, but didn't, because we wanted to stay within our means.
People now are saying that HAMP is a half-measure, and more programs for people who are upsidedown should be enacted. It comes at a cost of higher taxes to people like me who didn't bite off more than they could chew. I'm supposed to feel sorry for the 30-yr old guy and his wife who bought a $350K two-story house that is now worth $250K, and who already has taken out a second mortgage, but can't get anybody to talk to him about a third, just now too, as his balloon payment is about to kick in.
I don't give a damn about him, his wife who just lost her telemarketing job to somebody in India, or their two bratty kids. They can all go live in a box in the woods separating a divided highway. When their house goes up for auction, maybe I'll be the one to buy it. Probably not. I like my two acres now. Just bought 2 50-lb bags of Pontiac red seed potatoes. I'll be planting them in the next week or so here in North Carolina, and should have over a 1,000 lbs to harvest come the first of July. Then I'll plant kidney beans and black-eyed peas. When dried they'll store up to 30 years.
Bought an AR-15 yesterday for $849, handmade in Elizabethton, NC. -- and 500 rounds of ammo. It holds 30 rounds in the clip. Stylin' now. Got 11 oz of American Gold Eagles, and some 25 lbs of silver, including 200 Silver Eagles. I don't care anymore about bailing anyone out. I got my rice, my beans, my handpump for the well, my four cats, and plans to raise chickens in the near future. I just don't give a good god damn for anyone else's problems.
Looks like I missed the boat when it comes to something for nothing. Apparently, I should have 'bought' a house that I could ill afford, instead of saving my money and investing wisely so I could actually afford it. It seems the end result will wind up being the same...
Of course it isn't going to work, if by "work" you mean make any long-term improvements. But if by "work" you mean "shut down foreclosures till after the 2010 elections", then it just might be a stroke of genius.
absolutley, and guess who doesn't have to recognize the loss of a foreclosure on their balance sheet(s)?
If you wrote "Capitalism takes a Sabbatical", then you should be embarrassed because Capitalism hasn't been on a sabbatical. It's been buried and a Plutocracy has taken it's place. Yes, government IS economy.
There hasn't been Capitalism practiced in this country for over a hundred years, (except for the local dry cleaners fighting it out for the right clean your suit) but some fucked up, bastardized hodge-podge of a financial system made up of socialism, communism, a tiny bit of free markets in the underground economy, fascism, and just about every other political economy ever conceived.
The latest of which has been Collateral Default Swaps economy and other derivatives estimated at $600 Trillion that pretty much has destroyed the world economies of whatever stripe they choose to go by.
We need a new name for the economy that encompasses this witches brew.
I agree it will fail, but rosenberg is absolutely stupid with his screaming "LENDERS HAVE NO RIGHTS".. these banks are going to be doled to without fail for years and years it looks like.. they are scum and should have already collapsed
Lenders have the right to take your savings and lend every dollar out X times and make points and fees with every ring of the register. And they apparently have the right (at least the big ones do) to expect you to bail them out when in their joy at making money from nothing they let things get out of hand every five to seven years, like Uncle Jamie (?) said.
I still can't fathom why the government wants our houses to be more expensive. As long as the government pursues policies that inflate home prices, people who have been wise with their money will continue to sit on the sidelines.
The FED / IRS realize that the spectacle of tens of millions of formerly middle class and upper middle class families - suddenly bankrupt and homeless - would complicate political discourse.
They will do whatever they can to hide the signs that the US Economy has collapsed. Kids in private school uniforms out begging for money on the interstate - so daddy can pay his accelerated taxes - would NOT inspire confidence.
^This
Like it or not what other option do they have? They already gave gazillions to the banks and have gotten nothing out of it for the broader economy. If housing is going to stay weak, but at the same price level, with a weak jobs market something has to be done to ensure that we don't simply become a leper colony. They could just give the money straight the taxpayers (such as the 80B to AIG, 12B to Iraq, etc) and let us spend it, but then Chopper Ben would have to acknowledge inflation, which he won't do.
The lost decade is looking like the 100 year flood
Talk about moral hazard. Everyone is worried about financial institutions taking advantage of being propped up, I can only imagine what kind of message this sends to the entitlement generations.
It almost seems better to see foreclosures motivating the populous into action, better than letting them know they can do nothing and still hang onto their home. Then again my home isn't being taken from me, so maybe I need to get out of my off-white tower.
Oh oh - looks like someone foolishly neglected to speculate on their real estate. NO ATM FOR YOU!
Hmmm. I know I over simplify, but since Helicopter Benny holds almost the entire universe of MBS - or stated differently FNE/FRE has issued virtually all of the mortgages in the last two years - isn't this a little like the government agreeing not to foreclose on itself?? Well at least it is consistent. If the banks won't foreclose their own bad loans, why should the government. The Chinese should be demanding that we recognize the losses so that they will be better able to instruct the UK what to bid on its behalf at he next Treasury auction. Don't tell me that like Greece, Goldman is in there helping the US create a mark-to-fantasy capital structure.
I can, and will, spend much of the weekend thinking only about this topic.
Interesting times, interesting times.
SWEET TOMATOES - coming to a grocery store near you courtesy of a Buffett owned company - this time Kraft Foods.
http://www.nytimes.com/2010/02/25/business/25tomatoes.html?partner=yahoo...
A foreclosure ban is meaningless without an accompanying jingle mail ban.
So, why am I making a mortgage payment again? The govt will prevent foreclosure by getting my file lost in the federal bureaucracy. I could buy a lot of gold with that mortgage payment...hmmm....
+100
i hear that MANY people have not paid their mortgage in over 6 months (some well over a year without paying) and if this new move passes, imagine how long you could go without paying. Then delay in filing the paperwork when they send it to you, fill in a few things obviously wrong (pretend like you have an IQ of 22) when you do send it in... you could get two years of free and easy living. Play dumb, just like the Federal Reserve, the President and CONgress does every step of the way.
Your principal still increases with the unpaid interest, and gold has peaked, so sure, throw your money away there, why not!
- "interest" will be waived, borrower will be responsible for consideration only.
the same reason you're making those credit card payments, paying taxes. just say "no." no mas. buy your gold and a small piece of arable land with all those payments you no longer make. then do a hundred hail marys and it's all okie-dokie.
A little irony. What about the local RE taxes. They are usually built into the mortgage payment through the bank. Don't make the mortgage payment, county doesn't get paid, police and teachers don't get paid, etc. The county can foreclose. Did "The One" crank that into his Centrally Planned Economy? Of course there is a heirarchy of payments once the bank gets the check, and I think that taxes come off first. So maybe you send in the tax every month. Odds are good that a bank would foreclose about two years before any local government would get around to it, so why bother. Do the banks pay the taxes during an arrearge? Wish I knew - I think so. If they do it only adds to the principle - which will get crammed down through a wave of The One's pen by Monday no doubt. That would give the banks a little more motive to foreclose. But wait ... they can't. They be getting squeezed. Ouch.
"we can all resoundly say that communism is alive and well"
Your interpretation of this policy--to outlaw foreclosures without first going through HAMP--would imply that the goal is to help the common people (the proletariat if you will). Given the abysmal performance of HAMP to date, how many homes do you think will be saved?
This is not communism (for the people) but instead is socialism for the rich. By putting the entire mortgage foreclosure process on hold (by tying it up in red tape), the parties that actually benefit are the banks: they will now be able to postpone recognition of non-performing loans and thus avoid write-offs (saving their stockholders' equity).
No, this is not communism. It's fascism.
+10,000^googleplex
Exactly right. Almost nobody qualifies for HAMP as it stands today.
Well, if it's one thing that will get banks lending again, it's knowing that any toxic crap they might have been motivated to foreclose on will now remain regardless of whether they try to hide it off-book or not. /sarc
The message that's being sent here is that everyone has a natural right to a 3% mortgage with $0 down, and to top it off, you don't even have to worry about paying the mortgage if you don't feel like it.
This is honestly motivating me to wish for the whole system blow up, just to slap the Boomers, Gen-Xers, and Virtuals in the face with the reality that the universe doesn't owe them a living. Most worthless generations in human history, and that's saying something.
The white house can't forbid foreclosures stop promoting lies. The federal government might have power through licensing or other programs to stop big banks from foreclosing and even that is pretty far fetched.
If I loan money to my a friend, he buys a house, the house is collateral, he stops paying, I can foreclose and there is nothing the federal government can do to stop it... property ownership is a matter of STATE RIGHTS. Why do you think you have a county or parish courthouse that holds the property records?
Most of the big banks don't even have clean title or records to back up most of the foreclosures anyway, if someone wanted to fight these things they have a good likelyhood of getting a house. There is no clear line of ownership with securization.
Stop acting like the federal government is a entity of unlimited power, if you really want change start at the state level and cancel the state agreements with the federal goverment ie Social Security, Income Tax, etc.
What you say makes sense. Maybe Barry O'Potus is just fucking with us?
People need to take back their States and cancel these agreements with the federal government, this is only way to take this country back.
As far as the financial system it's toast, you humans do not have unlimited power to hold back the exponential equation which the system is built on.
Take back your State and you take back your country.
Here is Michigan's Plan to work with the feds with SS.
The public Act 1 of 1936 then the Public Act 280 1939. This is Michigan Law that conforms to Federal Law that gets the State of Michigan in the act of SS. How about those apples?
Cancel all agreements with the Federal government, take back your State then you will take back your country.
Ummm...haven't you been paying attention? It is unconstitutional to hold American citizens without charges, and to subject American citizens to unreasonable search and seizure. It is unconstitutional to prohibit Americans from peacably assembling to petition the governemnt for redress of grievances. Yet the governemnt have given the upraised middle finger to all those rights, and more. As George Bush said of the Constitution, "it's just a goddam piece of paper."
The government will do whatever it damn well pleases in the name of protecting us, and there appears to be no force, inside or outside the government, that is willing to put a limit to it.
The legeslation that went through last year included a 90 day moratorium on evictions for tennant occupied properties following foreclosure sale. Federal law superceeds state law. And the fall-back, is the interstate commerce clause.
While property ownership is recorded and tracked at the state/local level, the security and all interests thereof cross state lines. A property in CA is acquired by a mortgage servicer in Denver on behalf of a Security from Deleware with a trustee from New Jersey. Certificateholders are from D.C. New York, and Virginia (if not international as well). Additionally, this directive can be specifically related to GSE loans, and the trustees and owners of non-GSE securities can make their own determination whether or not to apply the GSE standards to their portfolio (as happens with HAMP).
Mako
I don't normally post on ZH. But, I work in this industry.
If you believe this can't and won't happen, then you
are kidding yourself. You are correct that a foreclosure is a matter of state law but, in this case, the government carries the big stick.
Not too long ago Peter Schiff said that “the US government is a “cancer on the economy,” and the Fed “has managed the economy into the ground,” with couples having to work overtime to bring in the same income that a single wage earner did 30 years ago.” My take; The US Gov is like a cancer sucking this country dry with their corruption and ineptitude. Well the only way to get rid of an invasive cancer is to cut it out. Executive branch and Congress are out of control and completely ineffective. The President’s Executive Orders should be limited, Congress should go back to being a part time job with limited staff, compensation and term limits.
I suggest the State Governors all get together and simultaneously pass state laws refusing to support the IRS with their state citizen’s taxes. The States are required to have a balanced budget. The states, 48 of which already have state taxes, can collect taxes to support their respective state demands and request a budget from the Federal government only for essential services, i.e. Military, Supreme Court, Treasury, State Dept., etc. Abolish the IRS, Federal Reserve Bank and all other Departments deemed non essential. The Federal government has for too long usurped the State’s rights and its time for the States to reclaim them.
Yes, agreed, but too late:
http://www.whitehouse.gov/the-press-office/president-obama-signs-executi...
This executive order is a power grab with broad language for doing so. The 10 governors on this council are traitors to their states. It's all a pipe dream until the rule of law is restored. Next stop: martial law.
If you read the press release, you'll see that the President was authorized by Congress to establish this council: "The formation of the Council of Governors was required by the Fiscal Year 2008 National Defense Authorization Act which stated, 'The President shall establish a bipartisan Council of Governors to advise the Secretary of Defense, the Secretary of Homeland Security, and the White House Homeland Security Council on matters related to the National Guard and civil support missions.'”
The real crime was the federalization of the National Guard which happened several years ago, which effectively stripped the States of their sovreignty by taking away their ability to defend themselves.
Certainly we cannot place all blame on the Executive Branch. This is all a slow Elite game of solitaire as everything comes into place. If it gets out of control too quickly they have islands and underground bases to run to. Surely this is all common knowledge for the Free American People:
http://www.youtube.com/watch?v=vZVauU3KRsU
http://www.youtube.com/watch?v=mnCnWyzk9pQ
http://www.youtube.com/watch?v=uEDAE_9v4h0
WW.....Thank you for your info....I was unaware of this and you are right, this is a very dangerous precedent. But remember this my friend....IT IS NEVER TOO LATE!
This is a great point: "Why do you think you have a county or parish courthouse that holds the property records?"
EXCEPT, in order to facilitate the securitization of mortgages a way around the county courthouse registration or property title or deed, whatever it's called, had to be found. I bet this is a kind of gordian knot. Some states are much different in the way they treat real estate, of course - but in general, MERS is shown as the mortgage holder on computer database, aka the mortgage electronic registration system.
Finance terms from private lenders lilkely to be strict in the future to compensate for the borrower having discovered his put option.
I thought I read that this program would only be used on mortgages at failed banks, and the impact would be insignificant.
If the government owns the property or through a government sponsored entity then I would imagine Congress could stop foreclosures but there is no federal law that could stop all foreclosures at the state level. Which is what is hinted at.
Once a default happens per the contract then its up to the creditor to move via State Law.
Serves the banks right. They sliced and diced those mortgages to the point that in some cases they can't even prove they ARE the lender.
who wrote this trash?
why can't bankruptcy courts modify owner-occupied residential mortgages like they can for commercial or second home mortgages?
Not sure, but at this point they cannot reduce principal owed.
They are not talking about bankruptcy, they are talking about stopping all foreclosures, once a default happens then it's all over. IMHO
Didn't you hear? If bankruptcy judges had that right, it would be TEOTWAWKI for residential mortgage availability and rates, even though such a longstanding policy has had absolutely no effect on commercial mortgage availability and rates. By the way, almost all residential mortgages today are guaranteed or issued by an agency of the federal goverment, as the private market for providing mortgages no longer exists. Remember your local savings and loan? They used to do these loans, until Reagan signed the deregulation bill for the S&Ls in the 80s - his quote at the time:"
"[This bill is] the most important legislation for financial institutions in 50 years. All in all, I think we've hit the jackpot." - from "Inside Job: The Looting of America's Savings and Loans" by S. Pizzo, M. Fricker and P. Muolo, 1989 (bold supplied)
HAMP is total bull. Only about 1% ever get approved for a PERMANENT modification. This new proposal is simply an opportunity to delay foreclosure for a few months. November elections are coming.
The banks (not the taxpayers) need to take a haircut on the underwater mortgages.
Folks, I have no skin in the CRE game but count on it, they are going to bail out CRE. Goldman knows it and is pissed and wants its piece of CRE bailout pie to be bigger which is why they put out that downgrade notice Simon properties. Simon has been buying shit CRE for a while. They want to be sitting on all that real estate.
I'm soooo stupid. I worried and paid off my mortgage. What a gullible dumbass.
I don't think that's stupid at all. In a world of unknowns, you reduced yours by 1.
being responsible is sooo unamerican
It's not too late to refi, buy GOLD, etc., and have rent for 2 years set aside for when the Sheriff says you finally can't live in your house for free anymore. Jingle-all-the-way.
Fuck being proud everything is paid off - we are forced to live with asymmetrical ethics in order to be proud of a 700+ FICO which is gamed anyway.
Be sure to check recent case law in your state so you can toe the thin line between "civil disobedience" and fraud.
The United States of America stopped being a (relatively) free market capitalist economy when its politicians abandoned Glass-Steagall in favor of a new era of crony capitalism and predatory Robber Barons (e.g. GS, JPM, C, etc.). We cannot pretend that a free market exists in order to guarantee the legal rights of capitalist investors who were, by omission or commission, complicit in empowering the banking sector's rape of Joe Six-Pack -- and now passively accepting that no significant regulation will be imposed on the banks. The answer to predatory winner-take-all State-sponsored fascism (as defined by Mussolini) is socialism to protect the middle class. As in the 1930's, socialism is the natural consequence of the Banks' and politicians' collaborative fascist behavior. When the Govt stops coddling the banks, the free market will return.
ouch!
Always that surprising to read that some people appear to think really that before 1913, there was no governmental intervention in the citizen lifes. Especially when that's US citizens whose ancestors were handed down their entire country by the government.
The wild, wild west is over and Indians ran out of lands for the US government to steal and distribute to its citizenry.
TPC has a nice piece, (see attached letter at the bottom)
http://pragcap.com/the-many-myths-of-warren-buffett
Tyler wrote: "we can all resoundly say that communism is alive and well, despite the whole Soviet experiment."
Sorry to say but you know nothing about the Soviet experiment. Under the old Soviet system, borrower had to pay (even with his/her life under old Soviet rulers). The problems with Soviet system were: overwhelming fraud, thievery, bureaucratic inflexibility and incompetence, and rabid sabotage of any workable initiative.
I think it would be interesting (read: profitable) to learn more how mortgages work (and worked) in the US, and in other countries and regimes, in historical terms. For some reason my google-fu doesn't get a lot of info on these areas of study. 30 year fixed, no money down is an historical abberation, that much is sure. To my way of thinking, easier terms are no bargain if the rule of law and property rights are expunged along with sound lending practices. Anyone smell a rat, or what?
That boring backwater of capitalism, Insurance, wasn't available (at all, but wasn't required, either?)under the Soviet system. What happened in automobile accidents, no idea. AIG was called by someone "the financial equivalent of oxygen". Hm.
The problem was too few were ruling too many
"The problems with Soviet system were: overwhelming fraud, thievery, bureaucratic inflexibility and incompetence, and rabid sabotage of any workable initiative."
Uh, you misspelled American there.
F the lenders
Won't the banks just foreclose on properties en masse before the law takes effect, like the credit card companies raised rates in response to the consumer protection act?
Its actually a master stroke of genius. Shut the whole system down in one day. I like it.
"Obama May Prohibit Home Loan Foreclosures Without HAMP Review"
Jobs baby! Yeah! HAMP reviewer with bennies, where do I sign up! Maybe the HAMP reviewers can offer people cellular phone packages and other bullshit to spend that stategic default mortgage money on while their loan is being reviewed.
Completely unconstitutional on several grounds, but of course that doesn't matter to anyone in Washington or the talking heads.
Tyler wrote: "Yet now that the government is forced to pick between banks and housing, it appears that the house of Dimon may be given the middle finger."
Not true. Preventing foreclosures is another attempt to SAVE banks - not "homeowners".
Preventing people from getting booted out of their houses makes for good press, but, in reality it is preventing another round of bank writedowns and more capital injections. Obama is simply delaying the painful process of adjusting housing prices downward to where buyers and sellers would normally meet. Quite simply, this is more transfer of bad private debt onto the books of the government.
LOL there's going to be millions of americans living payment free in underwater houses. And their "new found" discretionary income is going to boost GDP. you just wait and see. OK, kool-aid down...this is just crazy sauce!
The "Moratorium on Brains"
Call me a little bit confused about all this "free market, constitutions, and capitalism" blather here today. Bail out AIG and the banks to the tune of billions if not trillions of dollars without hesitation but when it comes time for lenders to exercise rights in connection with residential mortgages to the detriment of ordinary citizens, the notion of government-compelled forebearance or some degree of bailouts sounds a death knell for "Capitalism"? How do you differentiate the two? And if you do, it is no better than the reasoning behind helping the homeowners, and setting up the system for what very well may be oceans of home mortgages in default.
I am fine with the rights of lenders to foreclose, but since we have (whether you like it or not- I do not) already adopted and executed socialist policies benefiting the super-wealthy, we crossed this bridge along time ago, and to suddenly draw up the bridges now in the name of upholding sacrosanct principles of free markets and capitalism is a bit silly, is it not? Hypocrisy is another good name for it. Once we bought into the notion of the government deciding which investment banks and reckless insurance giants were worth saving and which ones were not, we're duty bound to follow that policy down into the last mortgage out there.
This bed was made in September 2008. Call Hank Paulson if you think this is unfair and a blow to capitalism.
Seriously Ned ... Where do we stop with this ... mortgages, commercial real estate, student loans, credit cards, corporate bonds, personal debt, corporate debt?
When the Democratic Congress and Democratic President forced the FASB to change mark to market accounting they doomed our childern's children to poverty.
P.S. Obama and the whole Democratic Congress agreed with Paulson ... last time I looked, Conrgess is charged by the Constitution to appropriate funds
People who have lost work have my sympathy, but they cannot pay and need to downsize. Yes, it sucks, but if it wasn't 10/15/18% UE you wouldn't hear about it, or say boo if you did. People who have lavish houses that they Alt-A'd into, and NEVER could afford can kiss my backside. GTFO, squatters!
I do believe they shouldn't be kicking people out because they can't make payments because pretty much no one can anymore (or soon won't....them and you...just a matter of time) . That's what the HBPA of 2007 was for. But, since the rules are different than that, and the game is....green shoots, it's a bit conflicting to offer that when recovery is supposed to be on the way.
But of course that's not the end-game but the transition to other things where you could remove such protection. But if you aren't going to fix things, this move is asinine. You can't do this AND not fix it. You can only do this sort of thing AND fix it. Amazing.
Of course everyone is doing mark to fantasy, so the benefits of this are a bit murky to me, or if I understand correctly, much smaller than one would likely assume.
Since holding onto homes so they don't have to foreclose because the game is rigged that they get more by holding onto these houses, plus don't have to realize the losses, I'm not sure how the banks benefit by this directly. (i'm sure there is a way)
Of course since Fannie/Freddie is buying up loans and the lender is The Federal Reserve, it seems as though the lender doesn't care. Of course if we believe the Federal Reserve is going to stop being the Mortgage market next month, this move is a bit perplexing. My guess is, they already KNOW they must stay 90 percent of the housing market, they just aren't letting us in on this fact until either the last moment, or when it serves their purpose. (maybe as another bullet to alter the markets when something they don't want happens)
If I read correctly TD thinks this a shift from the gov't helping banks to homeowners? Or an attempt? Hmm have to think of the implications on that. I'm sure I'll read more juicy details later. Good take.
Review by Hamp? Puhleeze how is that going to change anything? "Let's take a look here...you put 10%, 20% whatever down, homes have decreased by 60% you don't have enough equity to qualify for HAMP, trustee sale tomorrow for you sir, next please!" And if not that...oops you make too much, or too little. The truth is almost nobody qualifies for that program. It's a joke.
exactly. it's just a program designed to pretend to do something while at the same time it really helps the banks. everything that is being done is intended to help the banks, not the citizens. they will do everything but force the banks take a haircut on the mortgages.
This is amazing! Simply amazing! I wonder is Chavez consulted the Whitehouse on this? This is major folks. This will further cripple this Nation. Why can't they get the fact that the debt must be allowed to clear.
They failed to clear the debt and hurt the wealthy at the top of the food chain, but we should go ahead and have this "cleansing" at the bottom? I know life is not supposed to be fair, but the actions of the government need to be. I can't get behind throwing hapless or unemployed people out of homes while bankers take home big, taxpayer dollar fueled bonuses. And yes there was fraud, but there was fraud at the top too - you cannot have laxity on one side and tough policy on the other.
Ned,
I agree that both sides were fraudulent, but residential real estate and more so home building has been my life and I've facilitated 100's if not 1000's of transactions and I can tell you that 99% of these idiots knew exactly what they were doing. Furthermore, the real culprit here within all of this is the insidious cash out refi. and it's rarely talked about. It's not talked about because the banks have not been forced to recognize these loans. The re-fi cash out was what pushed prices up far more than general demand and again the homeowners knew EXACTLY what they were doing.
Ned, shame on them and as far as the bankers, their respective boards of directors should have fired every last one of them where appropriate. The banks are not out of the woods by any means and I really believe that the chickens (bad debt) will come home to roost and at this time everyone involved will be vindicated.
The only small group I have some compassion for are the honest, hard working families that put a lot of their cash into a deal are now in trouble.
It's tough policy to enforce the terms of a contract?
No - it is the correct thing to do. But we started this "but wait a second" policy with the bailout of some very, very wealthy banks who had intentionally and with full knowledge made some very bad deals, no different than the homeowners mentioned above who did 100% refis, and bought way more house than they could afford, and they were bailed out by your money! I do not see the difference, and how one is OK, justified and understandable, and the other is an affront to capitalism and free markets. What fucking free markets are we referring to? Why is so OK to save those at the front end of this crisis, and tell the ones at the back end "tough shit"?
HAMP policy is for the reasons stated above, to slow the flow of foreclosures so as to maintain orderly markets in the bank's collateral, and to forestall a collapse in collateral values that would bankrupt the banking system (or, rather, force an existing insolvency out into the open), dressed up in the conveniently available disguise of humanitarian concerns.
Here is how it will unfold. Washington places moratorium on foreclosures. Hundreds of thousands of loans clog the system. Loans just sit there, idle. People live in their homes for free. This entices their neighbors to do the same. A total cluster fuck unfolds. Obama lets the loans just sit there until 2012 when he relieves all debt (through an emergency presidential decree) above whatever can be proven to be market value in an attempt to win his election yet again. He may get the entire Nations vote by this time. I'm going out and buying the largest most expensive home I can stretch into. Then I'll just quit making my payments and take a number at the local HAMP office and wait for years to get called. In the meantime I'm living free baby! Only in America!
I posted that very scenario as likely on another topic. Not certain, but if we head further into a Depression 2 scenario, likely. And I agree, go buy the biggest house you can, if you believe this is where we are headed.
"The problems with American system were: overwhelming fraud, thievery, bureaucratic inflexibility and incompetence, and rabid sabotage of any workable initiative."
Fixed.
www.youtube.com/watch?v=P36x8rTb3jI
Guess Peggy Joseph was right! She's not going to have to worry about her mortgage!
This is America, there is not supposed to be such a thing as foreclosure.
Jeezus, I need to run out and buy as big a house as possible so I can default immediately, then.
Anything for illusory "growth" in consumer credit, eh?
I agree.
The problem is that homeowners who would qualify for HAMP have likely already applied. This will force bad candidates though the system, delaying the inevitable. Not to mention only 12% of HAMP modifications have resulted in permanent modifications, and even those are failing at a rate of 10% per year.
Obama's foreclosure ban proposal will just delay the inevitable
http://www.pacificnorthwestcoastbias.com/obamas-foreclosure-ban-proposal...
Do you have the PDF of the David Rosenberg piece?
Bull crap. Oh my poor bleeding heart. Those poor lenders! *snif* *snif*
Most lenders gave up their rights.
They can afford to loose every cent on all their mortgages because they will have that tax money shoved down their throats like foie gras geese.
They wanted the money, now they have to accept the fact that they are being absorbed as government entities and have lost their rights since they started selling their souls in 2009. In effect, the government is now subsidising housing through the banks.
Result:
Government grows larger and wins, and gets to eat Strasbourg Pie.
Taxpayers and smaller banks loose, and gets to eat something quite different.
I have a question open to anyone wanting to respond. What is Obama's intention with this proposed ban on foreclosures (unless borrowers have been screened through the HAMP process and denied)????
I haven't read the details of the plan or any detailed statements of his outlining how it the plan would function, BUT...
Could it be that this plan's true intent is to ensure that borrowers cannot and do not just purposefully default (as many probably should)????
If a borrower is so far underwater and he/she realizes that it doesn't make one ounce of economic/business sense to continue paying (regardless of what HAMPS says it will do), the borrower has probably considered or is considering "walking away" (just as MS and other comm r/e borrowers have done, using good business sense).
It sounds as though the administration is well aware of the possibility of a wave of intentional defaults and it seems as though this supposed solution by Obama would be an insidious way to REQUIRE borrowers not to default, under the guise that is is requiring that banks "work with" borrowers through the HAMP process.
Any takers on my supposition? Or, if anyone knows more detail about the proposal and whether or not it's only unilaterally requiring banks to engage the borrower and not vice-versa...please opine.