This page has been archived and commenting is disabled.
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.
»
- 19834 reads
- Printer-friendly version
- Send to friend
- advertisements -
XLF up ... on rumor ... I guess that nothing matters any more, banks win even when they lose
DEPRESSION HERE WE COME..............THAT MEAN OLE EVIL INVESTOR GETS SCREWED ON THE MORTGAGE LOAN, RIGHTON RIGHTON
EXCEPT EXCEPT EXCEPT.............THOSE INVESTORS ARE GRANDMA'S PENSION OR YOUR INSURANCE ANNUITY. THE BANKS OWN JUST A SMALL PIECE OF THIS TOXIC CRAP -
THE PENSIONS AND INSURANCE COMPANIES AND BANKS AND YOU THE TAXPAYER OWN ALL THE TOXIC DEBT SECURITIES ATTACHED TO HOUSES THAT OBAMA IS NOW WAVING HIS WAND AND FORGIVING.......HOW DOES IT FEEL TO BE A GM BONDHOLDER INVESTORS, DIDN'T THINK IT WOULD HAPPEN TO YOU, DID YOU? LOL
PENSION AND INSURANCE COLLAPSE ON DECK.....TIC TOC TIC TOC......
You know what. Fewer and fewer of us stupid proles want your damn credit. Put that in your mark-to-fantasy pipe and smoke it. Wasn't it the holy capitalism that would guide all the retirees off into the sunset with 7-8% annual growth forever. Oh, but we live on a planet with finite resources...a closed system. Ooops, didn't see that coming. Maybe those defined pensions were a good idea in the first place. Oh wait, Mish says all this is the fault to the greedy public employees and their unions. Oh, yes, the coming American austerity plan..... Should be fun squeezing blood from a turnip, boys. Good luck with that.
Capitalism might have been a good idea, if it weren't completely lacking in any moral or ethical underpinning. Greed is good, eh? Well, I guess clawing back bonuses, walking away from contractual obligations and putting the hammer down on foreclosures must be good, too, since it serves the greed of those most adversely affected. All in the name of a game with no rules. Oh, those brilliant chaps and their innovative financial "instruments" Too bad those models never considered falling asset prices. Who'da thunk? All this should certainly build a lot of confidence in the financial masters, as they attempt to shred the social safety net a bit more. Is it time to bug out and take the family to the place in the Hamptons, yet? Don't worry. The pitchforks and torches will find you soon enough.
Unless the housing sector improves, not much of anything is going to happen in terms of a recovery. I find the shades of grey much more interesting than black or white, communism/socialism/fascism etc are not labels I throw about, they are rigid. Corporations are driven to provide sterling numbers every quarter, politicians are not far sighted statesmen, they are focused on the next 4 years. In this climate our infrastructure has decayed, nothing gets done...watching the PBS show about the state of our dams, bridges, electrical grid, irrigation, roads and railways was quite a downer. These things are not going to improve with the corporate and political structure bumbling around with myopia.
Millions of dispossed people, with ruined credit leaves fewer consumers for the market going forward. People join their ranks because of job losses, illness, raised interest rates on their credit cards etc which is happening now...how many can we block from our future before there is no one else left? This ball got rolling with a vengence, on interest rates resets. The banks or servicers of these loans have no interest in helping people stay in their homes. They get to write off the loss against the profit from the market they are churning or they get reimbursed by the FDIC. They will squeeze the last drop out of this turnip till there is nothing left, it's in their DNA. The modifications are done straddling the homeowners with even more debt.
http://seekingalpha.com/article/184964-servicing-mortgages-part-1-underw...
Hence, the modifications don't help. Its a cruel joke...of course the situation then becomes proof to many that a lot of home owners are losers. Plenty of people sold their homes during the bubble to buy a bigger one, because the market told them they could. They ended up losing their equity when houses lost a chunk of value. Lots of people decimated the equity in their homes through the easy heloc money. Credit cards.. every one got taken to some degree. Yes, I am sure there is the handful that were wonderfully frugal and feeling rather sanctimonious now, but you are also impacted when the value of your home goes down and the economy grinds to a halt. We are all in this together.
Any solution involving banks will not work. The OneWest FDIC revelation and the other one cited above, makes it obvious. People are not going to pass muster when their mortgages are upside down and they are underemployed. Time for sweeping action that will perhaps anger many, but it is the right thing to do to stop the bleeding. Have a cap of 4% on all residential mortgages. It will give everyone breathing room, and it is equitable. Everyone benefits. Don't start with the moral hazard argument about sacred contracts...I don't think any of them are doing God's work. The 30% interest rate on credit cards is ridiculous, they need to cap that too. 8% sounds about right...the pendulum has swung too far in favor of the banking cartel, the swing back in the opposite direction should be a doozy. Or we can just suck up all the other defaults clogging up the pipe line, what's it gonna be? The value of the homes will be written down, do it through short sales or whenever, it will happen. Wouldn't it make sense then to just face reality now? Marking time has just made this situation worse for far too many.
You can't conflate credit card loans (revolving consumer credit, unsecured) with home mortgages.
I won't bring up anything about "sacred contracts"; but if politicians insist on deconstructing the lending industry, nobody will be able to get a loan. Or rather, it will only be the government who provide loans, which may have been the intention all along. This opens a host of problems, not the least of which being denied a loan for whatever politically correct reasoning can be found.
Capping rates just means more write downs? I dunno.
Credit card loans and mortgages are different animals, I agree..however, remember when having a 30% interest rate was unheard of for anyone with a average credit score? Now it is rapidly becoming the norm. Fannie and Freddie are keeping the mortgage business afloat as it is. The banks are getting about 1% interest on money from the government, who thought the banks need to be out there lending. Well, they are not, and there is no demand. The banks got money from the tax payer, and has used it to shore up their position. Their abhorrent behavior in the modification program, and the sweetheart deals has robbed us all. A government program like many others, food stamps or grants etc, have guidelines that the bureaucrats pretty much stick to. I do not see discrimination being a problem. I doubt home loans will be handled any differently. My fear is, as we wait, there are millions more who will be tossed aside this year, or decide to walk. The value will come down one way or the other. Make sweeping changes or watch the countrys lights die out, one house at a time...This problem is HUGE and it will snowball.
http://online.wsj.com/article/SB1000142405274870379500457508784314465751...
So what happens when the value of your home equals your property taxes?
The Government will own everything, and take care of everything. Or as a friend of mine living under Communism stated, so I take stuff home from the factory, it's not stealing because the Communist's say we all own everything.
Can't steal from yourself.
The whole country is a BIG JOKE, and the president is "The Jocker".
When the Banks conduct HAMP on millions of homeowners, they will get to INVENTORY families' ASSETS and INCOME, like the German government did with target populations in 1936. Then they confiscated it all. (Who do you think is paying for all those "credit counseling" ads on the radios? - the same banks who paid for the NINJA ads 5 years ago. 90% of the home loans out there are RECOURSE. This new ruling lets the banks get CASH FLOW, hide their losses and rack up the principal balances till they are good and ready to foreclose and collect deficiencies attaching any assets the family has, all while taking the good trust deeds back. Then they will rent all the houses to the serfs.
You've got to think like a banker. You have to be nuts if you think anyone is doing this to help homeowners.
LOL What a joke! Face it, people.., America is over. The United States did this to their own self when they elected Congress of today, and that President. LOL Actually, this is no surprise. LOL
whoo-hoo...ripped chunk tosses out a nugget from the dead. if you all missed it we can sing along to uncle john s band.
we are most certainly in a proto fascist economy. GM, the fannie and freddies, the brokerages, SOME insurers (aig), and by slow turns the economy will become a Frankensteins monster that no one recognizes.
and in the end it helps to remember that very few of Obanma's boys have ever held a private sector job...how would they know that nearly everything they do is counterproductive.
i simply cannot think of any better way to encourage the banks to stop lending than to ban foreclosures...or do they intend to replace the concept of loans between two consenting parties to a contract with a one big governmental lender. hmmmm, my conspiracy theory detector is SCREAMING!
what a load of shit...obama has shoved this country off a cliff. i do not think we can right this ship. THIS SHIP OF FOOLS.
don't blame me, i voted for Ron Paul.
Just when I think I've heard it all. The administration comes up with an even more outrageous, stupid idea than the one before it. What's the matter with these folks? Why don't we just turn everything over to the poor and indigent, and be done with this travesty once and for all. Then maybe we can rename this country, Zimbabwe 2.
I think what we are seeing is the discrediting of pure capitalism as a political system. America today is as close to that as it gets. Look at the results (remember to hold your nose). Look at the vast numbers of victims. 1% of the citizens holding 95% of the wealth & having literal life & death power over millions of their fellow citizens. The fabric of the nation torn to shreds. The crisis is building up to the same collapse as hit Russia. It may take a year or it might take decades but it will come at last.
Can we please avoid the ideology on this one folks.
1)If you are going to back banks the way we have then it is fair play to back the consumer as well
2) the banks have been given every chance to modify the loans. In fact theey have been getting paid to do so (more taxpayer subsidy)
3) they have used this time to stall and keep people in their homes until every last sent is taken form them and then forclose
4) There have been writings that the banks/speculators are actually getting paid when they take a loss
5) had the banks actually been acting as honest brokers this step wouldn't be being taken
6) Let us not forget the huge amount of fraud involved in getting these folks into their homes.
- the banks owned many of the mortgage folks who gave them the nonsense loan
- they knew the nonsense and packaged it off
-No prosecutions so far
_please read william black
I wanted to nationalize the banks because it would have cost less in the long run. Having to allow the free market to get back the money has been a disaster. Mark to market gone, fed interest rates to zero to support over valued housing (this approach does not work), endless gimmicks for the banks, QE. And the banks still don't lend. Let us add that if you are a big bank with a "hedge" fund the best way to keep interest rates to zero so you can gain outsixe profits manipulating the market is to starve the economy of credit (this is exactly what happened as I predicted). Lastly by usng the "free market" (LOL) capital that should be going to restore balance sheet gets diverted to bonus money so we loose 40% of the money that should be going to fix balance sheets.
So, please lets put things in perspective. Commie Obama has been beinding over so much for the banksters it's a joke. And they ensure the only plans that can pass congress are designed not to work, but to stretch things out. (i.e) tey are designed to get every last nickle from you and me.
Come on, think about what they are already doing to get around credit card rules. Capitalism doesn't mean permitted theft. !!!!
Puh-leze. "Commie Obama" is no different in policy than George Bush. The Janitorial Presidency is strictly a custodial operation, awaiting orders from the Boss. No different from the Bush/Cheney regime, or any other prior regime for that matter. Well, maybe Andrew Jackson didn't follow orders, I'll give him that.
This is still the greatest country that ever existed on the face of the Earth. If we allow some methods resembling socialism to turn us into socialists, then all of our freedoms during the centuries of our existence were for naught. We still have the brilliance of our people and the toughness of our philosopy - let's not degenerate into a babble of hateful partisans who only want to find fault and destroy the good people who lead us. Instead, let's clean up the corruption and get this country back to democratic principles. No one - none of you knows if this temporary attempt to make a fix will really work. However, I agree that it is still an affront to capitalism. But as we learn how far we can go in slapping our American ideals around, we also learn if our system is as resilient as we thought it was. Removing foreclosures though, would simply be one more way to tell people that they can cheat and lie and get away with it!
"the good people who lead us. Instead, let's clean up the corruption. . ."
The "good people" leaders are the corruption who need to be cleaned.
way to go, president Oblamama...
ucvhost is a leading web site hosting service provider that is known to provide reliable and affordable hosting packages to customers. The company believes in providing absolute and superior control to the customer as well as complete security and flexibility through its many packages. windows vps Moreover, the company provides technical support as well as customer service 24x7, in order to enable its customers to easily upgrade their software, install it or even solve their problems. ucvhost offers the following different packages to its customers.