S&P Chimes In On Foreclosure Fraud, Expects 6-8% Home Price Decline Through November 2011

Tyler Durden's picture

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wiskeyrunner's picture

I think the FOMC minutes might talk at QE2 this afternoon. This will shoot stock up, a small leak from inside HQ.

Confused Indian's picture

Come on.....

This comes from common sense. You need insiders to learn this. ;-)

Buy the rumor, sell the news.....

traderjoe's picture

Are they going to take a look at the collateral/security positions on all of those 'empty box' REMIC's, RMBS, and CMBS?

Everyman's picture

Shouldn't this be reverberating through the market as another additional 6% down on house sales?  Doesn't that mean the banks that hold REO, the finance companies, and mortgage lenders are all losing even more money?  DOesn't that reduce the "profit and earnings" that JPM, GS, GMAC/ALLY, WFC, BAC, C report?  Doesn't that meand their share prices should be dropping?

I tell you this "financial industry" and "banking industry" is a bunch of shit.  There is NOTHING that even closely resembles reality.  You can't analyze this stuff, so the only way anyone is making money is by cheating, lying or stealing.

That is nothing professional there.  Financial and banking is no more ethical than theives.

Mako's picture

"The recent news that several major banks will delay foreclosures due to documentation issues may postpone the arrival of the backlog of distressed inventory to the market anytime soon."

No, the banks are stopping foreclosures because they lack "standing" and people are figuring it out slowly.  Matter of fact, there will be years of people that were foreclosed on that will be litigating to get their house back or damages.

There is no documentation issue, you have a "standing" issue that is nearly impossible to overcome if the defendants knows what is going on.  The plaintiff's lack "standing" in nearly all of these cases to start foreclosure. 


RobotTrader's picture

Tough to take any bad news about housing seriously....

Not when Starbucks is outperforming on a down day for stocks..

And Home Depot refuses to sell off despite the horrible news that has rocked the mortgage industry the last 7 days:

UncleBen's picture

RobotHomo you are the GAYest !

Everyman's picture

Thanks for the charts Robo.  I am going to go get a starbucks Latte, and a hammer and just "go with it".  I give up.

You need to post that ladies though!

Skeebo's picture

Funny, was just thinking about how it stinks to be a Starbucks employee when they are closing stores left and right...

VWbug's picture

they are opening them up like crazy down here in SA. They have barely scratched the surface.

Closing in the old world and opening in the new one I guess.

Confused Indian's picture

Its surely the banks and governments win and everybody lose markets....

Surely chaos is about to follow..... :-(

wiskeyrunner's picture

Buy any dip in SP500 futures heading into fall election....make free money $$$$$$$$$ it's all rigged to the upside......ZERO RISK********

Mako's picture

Zero risk = zero reward

Sorry buddy. 

wiskeyrunner's picture

Thats like saying this is a free market hahaha good one.

Mako's picture

Zero risk = zero reward

I laugh when people talk about free market.  I have no idea what people are even talking about when they say that.  There is nothing even in life. 


wiskeyrunner's picture

Do you want to make money $$$$$$ or stand around kicking the dirt an mumbling under your breath.

E pluribus unum's picture

I'll stand on the sidelines of the casino and watch the fun without investing any of my money. But thanks for the offer. The game is rigged and I am too small a fish to know which way.

the not so mighty maximiza's picture

26-28% seems more real for price decreases. 

tom's picture

If the "consensus" is 6%, then you're probably right.

spartan117's picture

Absolutely agree.  I've already witnessed firsthand a 5% drop from April 2010 to October 2010.  A home across the street here in Los Angeles County, CA sold in April for $342k.  It's now listed for $319k.  They'll be lucky to get $310k for it which is a 10% drop in six months.  2011 should not be pretty for anyone wanting to sell their home. 

Cynical Esquire's picture

In the current environment does it make sense to refinance from a 30 year conventional fixed with PMI at 5.625% into a 20 year conventional fixed with PMI at 4.25%. I am around 2.5 years into the 30 year. In short, does it make sense to refinance what i believe is a depreciating asset?

wiskeyrunner's picture

Tomorrow mornings headlines ***** JP Morgan Chase record profits ******* Jamie Diamon salary 60million

Confused Indian's picture

No tomorrow's headlines will be


Fed manages to get the V shaped recovery... in Dow intraday..

Atomizer's picture

With a 6-8% haircut, does this mean Home Depot will lay off their day laborer staff?

Home Depot Day Laborer Aisle



beastie's picture

In a scenario where the banks get shafted / just deserts we lose because it will drag the whole system down.

In a scenario where the banks win we lose because that means they can take any assets that suits their needs with no paperwork, no standing or just for the sheer hell of it. That and we are talking TARP 2 which puts the citizens of the USA in the same position as the Greeks or Irish.

The only scenario where we win is to hit the exits before they do. In other words stop paying credit cards, mortgages today. 

Take a look at ebay real estate and some Florida and Ohio real estate and that is the future valuation of your home. 


Chumbawabumba or whatever his name was just a little too early. 


TideFighter's picture

Properties in the panhandle of Florida will now experience the third and fourth round of real estate defaltion. The first round was due to hyperinfalation beach-are homes, then losing insurance companies (low premiums) due to Katrina, The GoM mess, and now dubious claims to title. We have already gone through two rounds of dubious title with house flipping and fast titles. A property is now worth what it cost, i.e., the price of lumber at Lowes or Home Depot. $90 a foot, period (and that's generous). If you use marble and granite, maybe $110 a foot, tops. Thus a 2500 sq. ft. beach home is worth around $250,000 plus the land, which has devalued 80% from it's 2005 highs. Add the pressure of high bank inventory, slowdown in closings, nobody willing to pay rent, etc., and these houses are worth $60-70 per foot (less than cost). The "true" market is down 80%. Regionals are having emergency sessions daily. BXS, RF, TRMK, etc. are f*cked, no matter what the market does. They are worth zero, zilch, nada.

VWbug's picture

imagine what the price decline in houses would have been if all foreclosures weren't halted.

looks like the can gets kicked further down the road.

omi's picture

I'm considering loading up on residential builders when foreclosure gate gets criticals. What I understand this implies is no one buying 'used' house can be sure whether they will have the title to it, and the only way to avoid that is to get a brand new house. This has similar effect to taking these houses off the market.

TideFighter's picture


I consider that to be brilliant strategy, as well as shorting panhandle counties' bonds. It's a sure thing that these counties are in deep doo-doo, with no way out. These counties exyend from the GoM to the state line, but 80% of their revenue comes from the GoM to only five miles north of GoM. I believe you are correct though, there is feeling "in the air" from investors I have talked to, they buying freeze on used homes is on.


HarryWanger's picture

Couldn't believe my eyes when I saw this at cnbc.com: "


Has The Foreclosure Crisis Already Triggered A Double Dip?"


Ricky Bobby's picture

Pulling my hair out. Just finished talking to a close family member and according to her there is no unemployment, and the real estate market in Florida is getting better, the bottom has been made. The mortgage issue is a non issue and it's time to jump on these low prices. I try to point out the facts of government corruption, serious unemployment, and banking fraud. Of course that makes me Mr. negative. It's like if you admit these are problems then it reflects badly on Obammi so bingo these problems don't exist.  

It drives me crazy, I am trying to warn my own family and it is deaf ears. Is any one else suffering from this? Its disturbing there is such a divide between perceptions.

SMG's picture

No, I have the same issue.   Unless you really pay attention, to the average person, things just don't seem all that bad. Tell them about it, but don't harp on it, somethings people just have to learn for themselves.   Most people are like the grasshopper in the ant and grasshopper Aesop fable.  It's been good and comfy for so long, why would that ever change?

They will soon be awoken.

Save a little extra for them anyway they're still family, even if they were wrong to ignore the coming collapse.




HarryWanger's picture

Been saying this for weeks. Most of America doesn't care or just don't pay attention. When your life is dominated by which NFL game should I watch or which app should I download for my iPhone or Will Ricky Schmuck win American Idol, you don't have time for anything that really matters.

Cynical Esquire's picture

Most americans do not care unless and until it lays them low on a personal and direct basis. Even after suffering repeated blows from a corrupt system they will still believe in the system and in the myth that they are one good idea away from being a rich and powerful player. What a system we have when those most abused by the system are some of the systems biggest supporters and proponents. The truth is the average american does not care about his fellow americans (many of whom he views as vermin and worthy of contempt) nor does he give a damn about people in other lands. The ugly truth is the average american knows full well how many people are slaughtered globally in his "name" and he does not give a damn. If 100,000 iraqi children must die each year in order for US gasoline to remain under 3 bucks a gallon i can assure you the average american would sign up for that in a heartbeat and would not lose a minute sleep over it. our elite treat us like animals because we ARE animals...

Jim B's picture

Disagree, this is a pause before the next leg down.  I wouldn't buy a home unless I got a hell of a deal (well below market).  The FED is propping up the market with low rates and low down payments mainly through the FHA.  Gravity, at some point, will take over.

Psquared's picture

There are two ways to clean this up. For some it will simply be a matter of filing properly executed assignments to establish ownership of the mortgage. The problem with that is the potential for fraud. In many cases the documents do not exist and will either have to be re-executed or contrived. It will take significant testimony to establish the chain of title and standing and in some cases the evidence will be insufficient.

The other way to clean this up will be statute. Each state will have to consider some sort of law that will clear the title of property that is otherwise defective because of missing and/or unrecorded assignments. This won't help the lenders, servicers and securitizers who may be sued by MBS owners, but it will help "subsequent purchasers for value" by establishing a legal basis for title despite these defects. The question arises whether the US Congress will attempt to pass some sweeping new law affected real property title in all states. If they do there will be legal fights that will last a decade or more and will not provide any certainty.

What needs to happen is for the ABA to establish a panel to study the issue and create a uniform law for each state legislature to consider and pass. It will be different for states in which the "common law" of real estate applies (like those on the east coast) and those where a statutory framework of real estate titles exist like the western states. Two versions of such a Model or Uniform law will have to be worked out and modified.

As far as investors in MBS instruments are concerned the only way to resolve that issue will be through some sort of RTC procedure. This is a massive problem and there are no easy solutions. The idea would be to allow as many foreclosures as possible to go forward to recover principle and interest for MBS holders and somehow those assets would have to be transferred to a "Resolution Authority" after the mortgage procedure is cleaned up by the states.

The biggest problem that I see is to create a mechanism where new purchasers can acquire clear title to property. If property transfers subject to doubt because of defective foreclosures or where recorded instruments are doubtful it will stall a huge segment of our economy.

This could go on for a generation.

HungrySeagull's picture

Let the prices drop.

Eventually we might go and grab a 3000 square foot monster on ten acres built a few years ago for pocket change.


Let em drop I say. Probably just add up the amount of hardware in form of nails, plywood, bricks, glass etc and call it even on the asking price.


There is a movement away from single family homes in my area. Every time one is burned down or a family moves out and no one wants to rent or buy, it gets demo'ed and a fresh Duplex or 4 Plex built in it's spot. To double or quadruple the income from one peice of land.


The crazy thing is after about 20 years all this will be a memory and happy days will be here again to a new wave of people growing into adulthood who has no concept of anything that happened now while they were in wee diapers.

Psquared's picture

With the dollar continuing to weaken I wonder what the deflation in home prices is - or will be - in real terms?

Psquared's picture

With the dollar continuing to weaken I wonder what the deflation in home prices is - or will be - in real terms?

Psquared's picture

With the dollar continuing to weaken I wonder what the deflation in home prices is - or will be - in real terms?