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Home Equity Lines Of Credit Are Back As The Worst Of The Housing Bubble Worst Returns

Tyler Durden's picture




 

Wonder why the US banking system has done everything in its power to remove as much housing inventory from the market as possible (primarily as a result of a foreclosure pipeline that is hopelessly and 100% purposefully clogged up as explained in Foreclosure Stuffing)? One simple reason: to provide an implicit housing subsidy be removing well over 2 million housing units from the low end of the market. These houses are still in existence, but the to the banks the trade off of inducing an artificial price rice in performing housing more than offsets the capital shortfall associated with the lack of mortgage cash flow on homes which are in various stages of foreclosure (and where squatters can live mortgage-free for years because it benefits the bank to retain a status quo of collapsing shadow inventory).

What this in turn translates to is one simple word: HELOC, or home equity line of credit, the same mortgage piggy bank that everyone abused in the peak years of the housing bubble, and which product class as we demonstrated three months ago has just hit peak delinquency rates. Recall: "We note home equity lines of equity because as of June 30, 2012, long after HELOCs were widely available to Americans locked in a rabid pursuit to extract as much equity as they could out of their homes, is when the 90+ day delinquent rate on this product hit an all time high of 4.92%, and is finally rising at a breakneck speed....Note the surge in HELOC delinquencies now that the HELOC product is no longer a fad, and consumers can't wait to stop paying back debt which will never be worth even one cent courtesy of the secular loss of real estate value and pervasive underwater prices."

While everything above was correct, we were wrong about one thing: assuming that HELOCs are "no longer a fad" because it appears we couldnt be further from the truth. As Bloomberg reports: "After six years of declines, lending for so-called Helocs will rise 30 percent to $79.6 billion in 2012, the highest level since the start of the financial crisis in 2008, according to the economics research unit of Moody’s Corp. Originations next year will jump another 31 percent to $104 billion, it projected." And there it is: the worst of the worst housing bubble byproduct is baaaack, baby.

“If house prices continue to rise, home equity lending will keep rising,” said Mustafa Akcay, a Moody’s Analytics economist in West Chester, Pennsylvania. “Lenders have been worried about the ability of consumers to pay back their loans, and as the economy improves, that concern is easing.”

Will US consumers, burned from the lessons of the credit crisis use this money prudently to pay down other, more expensive debt? Don't make us laugh:

“People will spend more of their equity,” said Chris Christopher, an economist at IHS Global Insight in Lexington, Massachusetts. “It won’t be as much as they spent when prices were gaining at a rapid pace in 2005 and 2006, but it should have a positive impact on consumer spending.”

The revival in Helocs comes as lenders including Bank of America Corp. (BAC), Wells Fargo & Co. (WFC) and Citigroup Inc. (C) are still coming to grips with bad loans made during the housing boom that ended in 2006. Pressed by regulators earlier this year, banks are writing off vintage Helocs wiped out by a housing retreat that stripped about a third of home values in four years. Banks charged off -- or declared worthless -- $4.5 billion of equity loans in the third quarter, the most in two years, according to Federal Reserve data.

Americans had used their homes like credit cards to go on spending sprees during the 2000 to mid-2006 real estate boom, tapping their equity to buy cars, televisions and luxury cruises. Consumers used about $677.3 billion, or about $113 billion a year, from home equity loans for consumer spending, according to a 2007 paper by former Federal Reserve Chairman Alan Greenspan and Fed economist James Kennedy.

The banks, of course, are delighted that the much more expensive HELOC product is finally back:

Typically, the margins banks add to the prime rate might start at around 2 percentage points, what banks would call prime plus 2. Borrowers are approved for an amount they can use in full or just tap when they need, often drawing on Helocs with credit cards or checks. Rates for Helocs vary with location and credit scores.

Wells Fargo, the largest U.S. lender, is offering a prime plus 2 Heloc with a $10,000 minimum in Philadelphia, according to Bankrate.com, an interest rate aggregator. In San Diego, the same loan was prime plus 2.6.

Bank of America, the No. 2 lender, had a prime plus 3.9 Heloc with a minimum of $25,000 in White Plains, New York. The Charlotte, North Carolina-based bank offered a prime plus 3.7 Heloc in Portland, Oregon. All of the loans required at least a 700 credit score and at least 20 percent equity. 

Finally, it appears the hope is now that the banks will be the prudent ones and limit lending:

During the housing boom, lenders often would approve lines of credit that exceeded home values. One popular type of Heloc was a 1-2-5 loan that allowed the main mortgage combined with the home equity loan to total 125 percent of a home’s value.

Home-equity lenders and borrowers this time will be more discerning, said Anika Khan, an economist in Charlotte, North Carolina, at Wells Fargo Securities LLC, a unit of San Francisco-based Wells Fargo.

“The memory of the housing boom and the correction will make folks a lot more conservative,” Khan said. “That means only getting the amount of loan they absolutely need, and spending it in a more sensible way.”

This is 100% wrong. The banks are now fully aware, that if something systemic were to happen to them, the Fed and the Treasury would have no choice but to step in and bail them all out. But only if they are all in the same amount of trouble. Which is why when one bank start doing HELOCs, all will, and all will go to town.

What is shocking is that this is all happening just as the last batch of HELOCs has hit record default rates, and have yet to be cleared off the banks' non performing books. But who cares: Uncle Ben will fix it all.

That this will all end in another epic housing and credit bubble collapse is by now perfectly clear to everyone. And yet nobody is doing anything to stop it. Surely, once the system collapses for good next time, as at this point the central banks too are all in on rekindling the bubble and there will be nobody left holding the bag, "nobody will have been able to foresee any of this happening." But for now, the music plays, and one must dance.

 

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Tue, 11/27/2012 - 12:03 | 3014335 Frastric
Frastric's picture

Subprime bubble 2 bitchez!

Tue, 11/27/2012 - 12:07 | 3014345 SeverinSlade
SeverinSlade's picture

Americans learning their lesson...That's funny.

Tue, 11/27/2012 - 12:21 | 3014396 vast-dom
vast-dom's picture

and add this to the bogus case-shiller bs of this am:

http://online.wsj.com/article/SB1000142412788732335320457812737403908763...

Tue, 11/27/2012 - 12:37 | 3014445 smlbizman
smlbizman's picture

prime....what is this word prime you talk about......i haven't heard that word for at least 3 years now....

ok 10 points if you know the current prime rate without looking it up...

Tue, 11/27/2012 - 13:03 | 3014500 Agent P
Agent P's picture

Fed Funds + 325

Tue, 11/27/2012 - 12:22 | 3014397 idea_hamster
idea_hamster's picture

Uh, excuse me, but ... "Anita Khan"?  Really?  SRSLY?!

Tell me that isn't some banker name pun.  Someone got punked here.

Tue, 11/27/2012 - 12:46 | 3014457 swmnguy
swmnguy's picture

I actually worked on a project for a live event producer named "Anita Mann" a long time ago.  If my perceptions were at all accurate, and I think they were, a man was the last thing she had any interest in.

Tue, 11/27/2012 - 15:02 | 3014899 pods
pods's picture

I guess she didn't produce Buster Hymen and the Penetrators?

pods

Tue, 11/27/2012 - 16:37 | 3015221 roadhazard
roadhazard's picture

Years ago Herb Cain, San Francisco Chronicle used to post names and occupations like that in his column when he found them.

Tue, 11/27/2012 - 16:02 | 3014865 Uber Vandal
Uber Vandal's picture

I wonder how much the elimination or capping of the mortgage interest deduction will help home owners?

http://dealbook.nytimes.com/2012/11/26/mortgage-interest-deduction-once-...

Funny thing, this has been discussed since 2010, perhaps earlier:

http://www.foxnews.com/politics/2010/11/11/proposal-limit-eliminate-tax-...

Even more hilarious, is how the Tax Reform Act of 1986 eliminated the deduction of interest from personal loans, and helped bring about the HELOC.

https://en.wikipedia.org/wiki/Home_mortgage_interest_deduction#United_St...

Prior to the Tax Reform Act of 1986 (TRA86), the interest on all personal loans (including credit card debt) was deductible. TRA86 eliminated that broad deduction, but created the narrower home mortgage interest deduction under the theory that it would encourage home ownership.

You just can't make stuff like this up.

Tue, 11/27/2012 - 12:08 | 3014347 CH1
CH1's picture

Now I understand why the "housing recovery" meme was promoted Matrix-wide.

Tue, 11/27/2012 - 12:48 | 3014431 Cognitive Dissonance
Cognitive Dissonance's picture

Hooray! Everyone back into the (housing equity extraction) pool.

<Now we really get to see who's swimming naked.>

<<If you've seen one prick/bubble you've seen them all.>>

Tue, 11/27/2012 - 12:10 | 3014353 Dr. Richard Head
Dr. Richard Head's picture

Ben "Bubble Bucks" Bernanke. 

Tue, 11/27/2012 - 12:29 | 3014419 ParkAveFlasher
ParkAveFlasher's picture

HELOC-Opter Ben

Tue, 11/27/2012 - 13:49 | 3014647 NotApplicable
NotApplicable's picture

*fwooop* *fwooop* *fwooop* *fwooop*

Tue, 11/27/2012 - 15:05 | 3014914 pods
pods's picture

 

"Put on psch-war operations, make it loud. This is Romeo Foxtrot. Shall we dance ?"

 

Tue, 11/27/2012 - 15:17 | 3014968 ParkAveFlasher
ParkAveFlasher's picture

I was thinking more along the lines of "Suicide Is Painless", which was the theme song of M*A*S*H.

Tue, 11/27/2012 - 21:47 | 3016160 willwork4food
willwork4food's picture

Cute. All I want is a new truck from my equity loan. Is that so bad?

Tue, 11/27/2012 - 12:15 | 3014370 EscapeKey
EscapeKey's picture

Timed perfectly with .com-bubble 2.0 (Amazon, LinkedIn, Facebook, ...).

And a gigantic sovereign bond bubble.

 

Tue, 11/27/2012 - 12:44 | 3014454 catacl1sm
catacl1sm's picture

TRIPLE-BUBBLES! Like the the 3 titted lady in Total Recall.

Tue, 11/27/2012 - 12:16 | 3014375 tocointhephrase
tocointhephrase's picture

If only I could get double bubble!

Tue, 11/27/2012 - 12:28 | 3014415 duo
duo's picture

My HELOC is 2 points lower than my mortgage (5.75%).  I've used it to pay down my mortgage.  What could go wrong?  ZIRP for at least another 3 years, right?

 

Tue, 11/27/2012 - 12:48 | 3014462 swmnguy
swmnguy's picture

My HELOC is only .75 points lower than my mortgage (4.75% and 3.99%).  I've used my HELOC for expensive functional improvements to the house, like insulation and mechanical stuff.  But the thought has struck me to use it to pay off the mortgage.  Only I've got 27 years left to pay the mortgage, and only 14 left to pay off the HELOC.

Tue, 11/27/2012 - 14:31 | 3014778 ParkAveFlasher
ParkAveFlasher's picture

What you need to do is start transferring balances onto credit cards with zero-interest-rate promotions. That'll shorten you a bit.

Wait a sec, think I'm on to something here...

Tue, 11/27/2012 - 15:33 | 3015028 kralizec
kralizec's picture

Tie all debt to my house, buy physical PM, and let the effers take my house when the scat hits the fan!  Woo Hoo!  Go ahead, take that crap!  Bwuuuhaaahaaa!!!!

Tue, 11/27/2012 - 13:12 | 3014522 slaughterer
slaughterer's picture

Replace Geithner with "terrific" Jamie Dimon: Jamie will take care of this Sub-Prime 2.0. /sarc

Tue, 11/27/2012 - 13:34 | 3014596 EuroInhabitant
EuroInhabitant's picture

Be honest: how many of you will buy a home one of these days/months years? Indeed, you are feeding the bubble.

Tue, 11/27/2012 - 14:38 | 3014802 williambanzai7
williambanzai7's picture

FICO

Tue, 11/27/2012 - 21:50 | 3016166 willwork4food
willwork4food's picture

They loved what he'd done to the bathrooms..

Tue, 11/27/2012 - 12:05 | 3014336 Sudden Debt
Sudden Debt's picture

BERNANKE DID IT!!! HE MUST BE A WIZARD!!

ALL HEIL BUBBLE BERNY!!!

 

Tue, 11/27/2012 - 12:16 | 3014374 EscapeKey
EscapeKey's picture

As Marc Faber said, Bubble-Benny has succeeded in creating a bubble in EVERY asset class.

Tue, 11/27/2012 - 13:00 | 3014493 SeverinSlade
SeverinSlade's picture

Except PMs.

Tue, 11/27/2012 - 13:20 | 3014542 slaughterer
slaughterer's picture

Sudden Debt, just wondering did you get Goldman's offer to purchase you yesterday?  Many of us got our psychoanalyst bills included as well as payment in bullion.  

Tue, 11/27/2012 - 12:06 | 3014338 Glass Seagull
Glass Seagull's picture

A chicken in every pot, and Versace loafers for every man, woman, and child!

Tue, 11/27/2012 - 12:15 | 3014372 DeadFred
DeadFred's picture

MUST...BUY...iPADS!!!

Tue, 11/27/2012 - 13:09 | 3014513 Big Corked Boots
Big Corked Boots's picture

NEED... MOAR... DEBT... SLAVES...

Tue, 11/27/2012 - 12:06 | 3014340 maxmad
maxmad's picture

They know hyperinflation is coming... so take out your HELOC

Tue, 11/27/2012 - 12:13 | 3014364 mayhem_korner
mayhem_korner's picture

 

 

Nice.  Juice up money velocity.  It's a self-fulfilling prophecy to liquidate "equity" in fear of coming inflation.

Tue, 11/27/2012 - 12:20 | 3014392 Samsonov
Samsonov's picture

It appears that hyperinflation isn't coming.  Instead, it's hyper-wage-deflation, and it's already arrived.  The effect is the same, but wage deflation is infinitely sneakier because most of the victims volunteer for it without even realizing, in such ways as taking out HELOCs, student loans, etc.

Tue, 11/27/2012 - 12:50 | 3014465 swmnguy
swmnguy's picture

And the "stealth deflation" of smaller package sizes for the same prices at the supermarket.  14 oz. can of coffee?  3.5 qt. "gallons" of milk and ice cream.  That sort of thing.

Tue, 11/27/2012 - 13:01 | 3014497 Bobportlandor
Bobportlandor's picture

That was my conclusion a while back.

Inflation in everything you need and deflation in everything you don't need, labor need not apply.

Around and around we go where we stop now nobody knows.

Tue, 11/27/2012 - 12:22 | 3014399 Harbanger
Harbanger's picture

If hyperinfltion is coming and house prices will go to shit, then why not use the Heloc they give you now to buy pms or otherwise hedge against the market.  They can keep the house, you'd probably have a hard time keeping it just because of the rising property taxes and other costs even without the Heloc,  you can afford to buy 6 houses later.

Tue, 11/27/2012 - 12:32 | 3014428 Snidley Whipsnae
Snidley Whipsnae's picture

Harbanger... You git it. IF one doesn't already have their home/RE mortaged then this is, perhaps, the time to go for a (cheap) mortgage and use the money to buy real assets that will increase in fiat value as the currencies become worth less... Thus, preserving some wealth for the beleagured home owners that have been prudent.  

Silver? Gold? Long Oil? Or, some commodity that will benefit from continued money printing and maybe a war in the Mid East.

The mortgage will be paid off in increasingly worthless currency. Picture the debtors running from the creditors during the Weimar hyperinflation because the debtors didn't want the increasingly worthless currency.

just sayin...

Tue, 11/27/2012 - 12:36 | 3014440 MachoMan
MachoMan's picture

The currency is largely a red herring...  the real battle is over ownership of an asset with utility (housing).  To say that taking out a HELOC without sufficient alternative liquidity (why take out the HELOC then?) is a gamble is a bit of an understatement...  the currency will continue to devalue, but getting it may prove a difficult task.

Tue, 11/27/2012 - 12:42 | 3014450 Snidley Whipsnae
Snidley Whipsnae's picture

Of course the currency is a red herring.

"To say that taking out a HELOC without sufficient alternative liquidity (why take out the HELOC then?) is a gamble is a bit of an understatement..."

All of life is a gamble.

All that make serious amounts of money and are not stuck in a shit paying job have few opportunities to make serious amounts of money.

If one isn't ready to take a risk then that one is forever stuck in a fast disappearing middle class.

I didn't get out of that rut without risk taking... nor will anyone else unless they inherit assets.

Tue, 11/27/2012 - 12:51 | 3014468 MachoMan
MachoMan's picture

Risk taking is one thing.  Putting all your eggs in the hyperinflation basket is another.  I advocate for a refinement of your thesis to include deleveraging (sale of the home and withdrawal of equity through sale) and the purchase of inflationary hedges rather than doing it on credit.  The simple fact is that doing it any other way is making a pretty significant timing decision, of which I think we have insufficient information to reasonably perform.

The other part of your thesis that remained unspoken was that should things get bad and default be necessary, you take your PMs with you and shut your mouth...  lying to the court, under oath, if necessary.  While this may be commonplace in the future, do not give anyone the chance to make an example out of you.

Tue, 11/27/2012 - 13:06 | 3014506 Snidley Whipsnae
Snidley Whipsnae's picture

"The other part of your thesis that remained unspoken was that should things get bad and default be necessary, you take your PMs with you and shut your mouth... lying to the court, under oath, if necessary. While this may be commonplace in the future, do not give anyone the chance to make an example out of you."

You make me laugh... thanks.

Behind every great fortune a great crime is hidden. Behind every little fortune a little crime is hidden.

Our country is full of crooks and you are advocating that the put-upon remain honest. What I am contemplating is small potatoes compared to Corzine, JPM, GS, Liborgate, et al...

If you don't look out for yourself no one is going to do it for you.

Tue, 11/27/2012 - 14:20 | 3014731 MachoMan
MachoMan's picture

I don't dispute in the slightest that most people get shit upon daily and told it's merely chocolate pudding.  I get it.  But your entire argument boils down to two wrongs make a right.  This is why moral hazard is pandora's box...  simply because this moral ineptitude eventually permeates every aspect of our society.  You might say that you're simply stealing back what was stolen from you, but I can say without a doubt that you have no idea of the dollar amount nor all of the responsible parties.  In all likelihood, the people who would be following your plan would be defaulting on a party who had nothing to do with the general theft...  this is where hasty generalizations lie. 

PS, everyone didn't steal their wealth...  and this is a really, really dangerous world view.  It opens the door for blanket confiscation, among other things.

Tue, 11/27/2012 - 12:31 | 3014429 MachoMan
MachoMan's picture

A.  They did not contemplate hyperinflation before taking out the HELOC.

B.  Hyperinflation may be coming, but before they'll be able to repay those loans (for the time being), they'll need an increase in wages...  we have no idea what the mechanism to increase wages will be, nor is it even on the horizon.

C.  If they could have stayed in the house free due to lien issues before, they're now likely giving a creditor a golden ticket to a foreclosure (and thus the other lienholders a free ticket to piggy back, although, they'll still likely need to prove standing/identity).

Tue, 11/27/2012 - 12:48 | 3014461 Snidley Whipsnae
Snidley Whipsnae's picture

I don't know the 'they' that you refer to.

Anyone that takes the HELOC and invests in real assets that have an opportunity to rise in price is better off that anyone that does nothing and sits in the 'going nowhere' house with no mortgage... IF those newly aquired assets do appreciate.

The IF is the risk.

As to your second point... Yes, they could sit in that house till they die of starvation or are unable to pay the increasing monthly utilities...

Tue, 11/27/2012 - 12:52 | 3014472 MachoMan
MachoMan's picture

What about just selling the house and taking the equity that way?  Why would you advocate them paying interest (which will likely capture a significant portion of any gains in asset purchases)?  If PMs are such a sure bet, then why not borrow everything you can get your hands on?  See the problem with this?

Tue, 11/27/2012 - 12:58 | 3014486 Snidley Whipsnae
Snidley Whipsnae's picture

"What about just selling the house and taking the equity that way?"

Why? Where would one move to? Rent? Another home purchase? Both of those are also expensive options...

"If PMs are such a sure bet, then why not borrow everything you can get your hands on? See the problem with this?"

There are no 'sure bets' and I feel sure that you through this straw man out knowing it full well.

I did not say PMs are a sure bet... But, as long as real interest rates remain negative there is no surer bet out there.

...and, just to set your mind at ease... I have enough assets to more than cover this bet IF it goes against me.

Tue, 11/27/2012 - 14:16 | 3014718 MachoMan
MachoMan's picture

Yes, rent...  deleverage and let someone else lose money on a house.  It might cost more per month, but the liability side of the balance sheet gets wiped clean.  Generally speaking, levering up isn't difficult if and when the time comes to do so...

The other issue is that you're advocating something that most people can't do...  I'm glad that you have enough assets to cover your bet if it goes against you, but that is not representative of the average american...  hell, that's not even representative of 90% of americans.  Ivory towers are only fit for academic arguments.

Tue, 11/27/2012 - 13:23 | 3014555 Harbanger
Harbanger's picture

You should know that Central Banks all over te World are already printing everything they can and buying all the pm's they can.

Tue, 11/27/2012 - 14:26 | 3014760 MachoMan
MachoMan's picture

Unless you have the power of the printing press in your home (i.e. endless liquidity), I fail to see how this is a realistic comparison. 

Tue, 11/27/2012 - 13:02 | 3014498 mccoyspace
mccoyspace's picture

Rather than HELOC I'm looking at a simple re-fi, maybe even to interest-only. That would free up extra cash each month that would otherwise be locked into home equity. (I'm not under water). That extra money would be used to buy hard assets. This is a somewhat slower climb because it is based on saving bits each month rather than accessing a larger amount all at once. Diverting future equity away from my house instead of removing equity through a line of credit seems like a better idea to me.

Tue, 11/27/2012 - 13:11 | 3014521 Snidley Whipsnae
Snidley Whipsnae's picture

Our situations are different. My home has no mortagage and hasn't for over 20 years.

I have never taken a line of credit of any sort on the home.

I am a senior citizen and a widower.

I have a large home in a nice old neighborhood occupied by me and two cats.

I love my neighborhood and do not wish to move.

I have assets other than my home. I could lose this home without falling into dire straits.

All of these things must be considered. You have a different set of circumstances no doubt.

Tue, 11/27/2012 - 13:39 | 3014617 Mrmojorisin515
Mrmojorisin515's picture

"I am a senior citizen and a widower."

 So what the hell are you worried about anyway?

Tue, 11/27/2012 - 14:28 | 3014765 MachoMan
MachoMan's picture

Matlock?

Tue, 11/27/2012 - 15:34 | 3015030 Snidley Whipsnae
Snidley Whipsnae's picture

Worried about? Nothing. I didn't say I was worried. I want to leave my kids all the assets possible... pretty normal goal for a parent, eh?

Tue, 11/27/2012 - 14:42 | 3014820 MachoMan
MachoMan's picture

Definitely a possibility and absolutely one to consider (everyone should consider all options because everyone's situation is different and everyone's real estate market is different), but I think keeping your house is only a good idea if you believe doing so is a good investment...  only if you really want to keep your house.  And by good investment I mean incredibly well calculated, not some consumptive want.  Why are you so hung up on owning the house?

Realistically, you should get the same amount of net spending cash from any option, the only question is how much debt do you want.  With rates as low as they are, you might be able to refi for the present note + desired extra scratch and still not pay any more a month than you are now...  I'd just issue a really, really strong warning about focusing on the monthly payment instead of the total loan amounts.

I'd also ask you to consider whether you have a MERS loan...  and whether, should you default, if anyone can come a knockin.  Your biggest problem is that you have equity in your home so they will definitely try to foreclose (the pains of being prudent).  But I would really suggest giving it a hard look before giving them a re-do on the paperwork.

Tue, 11/27/2012 - 13:20 | 3014539 centerline
centerline's picture

Whichever way it goes, there is a timing aspect that must be considered.  I agree completely.  This is where some degree of liquidity will be needed.  And hopefully enough to bridge the gap, because deflation or significant inflation along (let alone the -hyper) will feel the same to us.

Along with this timing mechanism, in my opinion, is a point where the majority of the system simply breaks.  Sort of like the analogy of not having to outrun the bear... just need to be faster than the next guy.  That is, liquidity to survive long enough for something more dramatic to happen... whatever that may be.

Tue, 11/27/2012 - 14:25 | 3014756 MachoMan
MachoMan's picture

Pretty much...  my strategy is to deleverage to help provide liquidity...  others' strategy appears to borrow it or somehow do a wage dance and wait for wages to rain from the sky...  the amount of liquidity necessary to continue to float is going to get larger and larger as necessities continue to increase in price.

Although, I think the most realistic scenario is where a group of folks is huddled in a cave and there are bears wanting to get in and have congregated at the mouth of the cave...  being faster than the next guy merely means being eaten later.  One of the most valuable tricks we can learn will be to reassemble our molecules out of the bear shit and pick our cave more wisely next time.

Tue, 11/27/2012 - 12:07 | 3014342 Dr. Richard Head
Dr. Richard Head's picture

I didn't even think there was any equity left to be securitized, profited on by banksters, with the liabilities tossed on the back of the fucking tax payer.  AMERIKA - FUCK YEAH!!!!

Tue, 11/27/2012 - 12:09 | 3014348 BraveSirRobin
BraveSirRobin's picture

This is the real issue for me. With housing prices still in a trough (though rising), there is still a greatly reduced level of equity in houses to borrow against, so I do not see how this number can surge for very long.

Tue, 11/27/2012 - 12:14 | 3014366 LawsofPhysics
LawsofPhysics's picture

Yes, once again, everyone seems to foget that wages matter. People using a HELOC to make ends meet, isn't a good thing.

Stupid fucking sheep.

Tue, 11/27/2012 - 12:14 | 3014369 mayhem_korner
mayhem_korner's picture

 

 

Rising from a trough?????  Did you not see the double-black-diamond signpost????  If housing prices are rising, it's an aberration or manipulation...

Tue, 11/27/2012 - 14:45 | 3014837 BraveSirRobin
BraveSirRobin's picture

"If housing prices are rising, it's an aberration or manipulation..."

I would be veryinterested in your rationale and/or evidence.

Tue, 11/27/2012 - 12:54 | 3014475 swmnguy
swmnguy's picture

There's still equity out there.  I for instance bought a house in 1996 for $50,000, sold it in 2009 for $130,000; then bought a house for $225,000, putting down $100,000 of the proceeds from my starter home.  There's $100,000 equity.  To me, net-net, it made sense because the house I bought in 2009 for $225,000 sold in 1996 for about $125,000, so it was just like the boom/bust never happened for us.  But now I have $100,000 equity, on which my credit union sees fit to extend me a $70,000 HELOC should I choose to run it up that far.

Tue, 11/27/2012 - 12:07 | 3014344 BraveSirRobin
BraveSirRobin's picture

This could be the result of greater consumer confidence and rising employment. Or it could be a sign of severe distress, but presumably, bankers will not give HELOC's to folks out of work or with adverse and deteriorating income/liability ratios.

Tue, 11/27/2012 - 12:12 | 3014363 SheepDog-One
SheepDog-One's picture

What? We get HELOC back, but not accompanying 'NINJA'? That is BULLSHIT yo!

Tue, 11/27/2012 - 12:10 | 3014349 Boilermaker
Boilermaker's picture

SPX GOING GREEN IN 5...4....3....2....1....

The 10:30 EST intervention has taken hold.

This other 'news' is pointless. 

Tue, 11/27/2012 - 12:49 | 3014464 Boilermaker
Boilermaker's picture

.....0

Green and going higher.  I rest my fucking case.

When's the next "the market will collapse" news coming?

Tue, 11/27/2012 - 12:11 | 3014354 Dr. Engali
Dr. Engali's picture

Good Lord people never learn a damn thing. It's very difficult to feel any compassion for what is going to happen to these sheep.

Tue, 11/27/2012 - 12:14 | 3014368 Dr. Richard Head
Dr. Richard Head's picture

Back during my more ignorant years, I ripped $20K out of a split-level back in 05.  Built an awesome pool - http://www.dandjpoolbuilders.com/gallery.htm?groupId=8164#img33556 Ahhhh ignorance was indeed bliss. 

Now I sit on these - https://twitter.com/i/#!/FamilyRotten/media/slideshow?url=pic.twitter.com%2Ft7Vhbz1j

I hope this stage of being prepared will be looked at by me in the future as ignorance.  Sigh......

Tue, 11/27/2012 - 12:26 | 3014411 Dr. Engali
Dr. Engali's picture

I hope so too..but I don't think that will be the case.

Tue, 11/27/2012 - 12:50 | 3014467 Overfed
Overfed's picture

IMO, MREs are very bulky. If you're not going to be on the move, conventional non-perishables make more sense.

That being said, I have a few MREs in the stockpile, just in case I need to patrol the area.

Tue, 11/27/2012 - 13:14 | 3014526 viahj
viahj's picture

MREs are ideal for the initial "emergency" as they don't require a heat source or water.  once things settle out, dehydrated/freeze dried and stored grains/legumes come into play once water and heat sources are secured.

Tue, 11/27/2012 - 12:56 | 3014481 swmnguy
swmnguy's picture

Awesome bacon-wrapped turkey.  But you should probably eat nothing but kale for a while.

Tue, 11/27/2012 - 12:24 | 3014407 vato poco
vato poco's picture

Aw, don't be so hard on the "sheep"....it's just human nature at work. The Germans of the early 20th century were arguably the smartest, most sophisticated, most intellectual, hardest working, most far-seeing people on the planet. They used all that wonderfulness to lose a World War *they* started, a war they'd been planning/manning/timetabling/gaming out all possible outcomes for 20 freakin' YEARS. A mere 4 years later, having suffered truly horrific losses of men and treasure, they were a decimated & crushed nation, humiliated, mocked, and despised in the eyes of the entire world.

So naturally, 20 years later, they went and did it *again*. Only this time, they went _Bigger_!! "Sheep"? Or just ordinary human dumbasses, thinking with their hopes and wishes rather than their brains?

Tue, 11/27/2012 - 12:10 | 3014355 the not so migh...
the not so mighty maximiza's picture

kick ass

Tue, 11/27/2012 - 12:13 | 3014356 slackrabbit
slackrabbit's picture

Truely epic.....the ultimate consumer can kick.......

I suppose since everyone else was doing it, why not them?

These fucktards deserve to starve; if for no other reason than eugenics.

Still if it keeps everyone employed for another year or two then so be it!

Meanwhile keep on stacking...

Tue, 11/27/2012 - 12:11 | 3014357 SheepDog-One
SheepDog-One's picture

HOORAY for the mighty HELOC! What could possibly go wrong??

Tue, 11/27/2012 - 12:11 | 3014359 mayhem_korner
mayhem_korner's picture

 

 

Step 1:  Bail out GM (stay with me)

Step 2:  Have GM produce cars that no one buys and set them on lots to gather dust

Step 3:  Prop up housing values by withholding foreclosed and distressed properties

Step 4:   Release the Kraken of HELOCs to those remaining homeowners in good standing

Step 5:   Euphoric HELOC consumers go out and by new GM car

Step 6:  Euphoric HELOC consumer defaults.

Step 6:  Bail out euphoric HELOC consumer

And that is the grand plan for getting GM moving again!

Tue, 11/27/2012 - 12:18 | 3014388 waterhorse
waterhorse's picture

I don't think Step 7 will EVER happen.  As we've seen so far, it's mostly ONLY banksters who get bailouts.

Tue, 11/27/2012 - 12:47 | 3014459 Vince Clortho
Vince Clortho's picture

Right on the money.

It rips the banksta's guts to even consider any money going to the public.  They know in their heart that it should all belong in their own pockets.

But the big corporations they own will wither and die without consumers.

What to do ... Catch 22 ...   ?

I don't see any components of capitalism or free enterprise surviving as this circus evolves to the next stage.

Tue, 11/27/2012 - 12:31 | 3014423 ebworthen
ebworthen's picture

Correction:

Step 7:  Change "Bail out euphoric HELOC consumer" to "Bail out euphoric HELOC lender".

Tue, 11/27/2012 - 12:13 | 3014365 chunga
chunga's picture

This is only for serious housing bubble/fraud/crime sleuths.

Jodi B. Matt v. HSBC et al (Securities Fraud Exposed)

"Uncontrovertibly, the assignment of the Matt loan was not made in accordance with the terms of the trust. Under 860D of the United States Tax Code (Real Estate Mortgage Investment Conduit provision), there could not be any additional assignments of mortgages to the Trust after the "Closing Date". The result is that the assignment of the Matt loan is fatally defective as it was not assigned to the Trust under its terms. See Hecht v. Malley, 265 U.S. 144 (1923)"

This thing is on deck in the MA Supreme Judicial Court and the affidavits and exhibits are fascinating.

Plaintiff's Counsel, Attorney Glenn Russell, JR. pinned their ears with the "assignment". In response, certain defendants proffered a "stipulation" (LOL) stating that Countrywide CAN act for New Century under a "Power of Attorney".

What certain defendants didn't realize was that Plaintiff's counsel would curry-comb the entire North Carolina Bankruptcy docket on the Delaware BK court site.

Lo and behold...it seems as though documents 526 and 669 only refer to 311 *second* liens, where Countrywide holds a *first* position. Whoops!

Jodi Matt's loan is not a second loan and the Trust says they own it...not Bank of America/Countrywide.

Tue, 11/27/2012 - 12:57 | 3014484 MachoMan
MachoMan's picture

Nice.  Never underestimate the drive of public servants when their pensions are on the line.

Although, I'd rather my tax dollars go to this than most options.  Kudos to the prosecutor and hopefully they see it through to precedent instead of jerking off with settlements.  Then make for damn sure that every plaintiffs attorney in the country can get the discovered documents.  floodgates

Tue, 11/27/2012 - 13:05 | 3014502 chunga
chunga's picture

Glenn Russell (arguably most famous f/c atty out there see Ibanez/LaRace) is a private attorney representing Jodi Matt.

I think he has BAC and Goodwin Procter in a real bind here. I check PACER all the time but the real grime get's sealed up tight (payoff/settlement/hush-money). 

That is a LOT of work he did on this.

Tue, 11/27/2012 - 14:13 | 3014708 MachoMan
MachoMan's picture

Wow, long day apparently.  I totally misread that somehow that there was a prosecutor involved.  Should have recognized him from Ibanez.

And those donkeys are always in a freaking bind...  facts make cases and all the facts stack up against these idiots...  however, a little hush money here and there can work wonders.

Tue, 11/27/2012 - 12:16 | 3014376 Shizzmoney
Shizzmoney's picture

Who is buying these houses?  None of my peers (18-30) are buying houses.

Tue, 11/27/2012 - 16:51 | 3015250 roadhazard
roadhazard's picture

Hedge Funds and foreigners. Gonna rent'm until the price goes up.

Tue, 11/27/2012 - 12:22 | 3014377 ebworthen
ebworthen's picture

I heard last night on ABC News radio that car loan delinquicies are up, and bank auto debt per borrower as well.

More info:  http://www.streetinsider.com/Press+Releases/TransUnion%3A+National+Auto+Loan+Delinquency+Rate+Rises,+Though+Remains+Relatively+Low/7903647.html

HELOC chart; looks like the SHTF first quarter of 2006, after five years of "being patriotic", and shortly after genius Greenspan started raising rates.

Watch them do it again.  I know everyone says "they can't raise rates" but I bet they will.

More defaults, more bailouts.

Tue, 11/27/2012 - 15:26 | 3015007 ParkAveFlasher
ParkAveFlasher's picture

The takeout delivery guy in my nabe drives a mid-00s BMW 5-series.  He delivers take out  HE DELIVERS TAKE OUT.

Tue, 11/27/2012 - 12:17 | 3014379 SheepDog-One
SheepDog-One's picture

Fucking bubble blowing assclowns....I really don't think I can sit thru another one of these!

Tue, 11/27/2012 - 12:18 | 3014381 Yen Cross
Yen Cross's picture

O/T Time for the joke of the day...  I sense a large degree of frustration in Germany over all these Pigs bailouts!

  Germany to ban sex with animals: report | thetelegraph.com.au

 

Tue, 11/27/2012 - 12:18 | 3014383 apberusdisvet
apberusdisvet's picture

All retail  corporations are about to experience margin compression to the nth degree; there are no organic first time home buyers of any significant amount; autos are still being channel stuffed.  So naturally, bring back the HELOC?  What we are seeing is the morph of the Matrix and the Twilight Zone, with a liberal dose of LSD laced delusion.

Tue, 11/27/2012 - 13:22 | 3014548 viahj
viahj's picture

a lot of the "first timers" are using FHA 3% down with gift money (or 100% rural housing) so there's zero equity at closing...

Tue, 11/27/2012 - 12:19 | 3014385 Temporalist
Temporalist's picture

Maybe like the farmers and police in Brussels this won't end until everyone is milked for all they have:

Mad Farmers Outgun Cops With Firehose Full of Milk

http://www.bloomberg.com/video/dairy-farmers-spray-riot-police-with-milk...

Tue, 11/27/2012 - 15:28 | 3015012 ParkAveFlasher
ParkAveFlasher's picture

I love the convergence of metaphor and reality.

Tue, 11/27/2012 - 12:18 | 3014386 buzzsaw99
buzzsaw99's picture

bankers only care about their next bonus check.

Tue, 11/27/2012 - 12:20 | 3014393 caimen garou
caimen garou's picture

lets see here, either china is learning from US or visa versa! give them credit and they will buy! give them the bill and then they cry! bah, bah, little sheep ,stand in line for your ebt.

Tue, 11/27/2012 - 12:24 | 3014403 Temporalist
Temporalist's picture

It's a wonderful foreign exchange program of ideas.  The Americans have learned how to ignore their people and destroy civil rights and the Constitution while the Chinese have learned how to print like keynesian suicide bombers and they both have learned to never, ever tell the truth.

Tue, 11/27/2012 - 12:22 | 3014400 waterhorse
waterhorse's picture

With Warren Buffet championing Jamie Dimon for Geithner's position, the looting and pillaging will continue but at a stepped-up pace.

Tue, 11/27/2012 - 13:04 | 3014503 Quinvarius
Quinvarius's picture

Buffet knows who is in the same boat as he is, and he wants to make sure his views are represented.  He probably needs a massive loan after Sandy as well.

Jamie Dimon is a horrible choice for the job.  He is really immature and has no interest in representing the good of the nation.

Tue, 11/27/2012 - 23:17 | 3016347 willwork4food
willwork4food's picture

Right. It's like having Norman Bates in charge of the CDC in Atlanta.

Tue, 11/27/2012 - 12:22 | 3014401 Rainman
Rainman's picture

I got a 1% under prime HELOC line of credit for a hundred grand in 2006 after being pestered by my broker to do so. It cost nothing and is good for 10 years. I guess he picked up some vig on the deal, but I never use it...even 2.25 is too much for a miser. Whenever he tries to sell me something else, he reminds me of how right he was talking me into it because : " they don't do those deals no mo ".

A man bites dog story.

Tue, 11/27/2012 - 12:30 | 3014421 lindaamick
lindaamick's picture

The thing is under the current system where predominately money = debt, debt HAS to be issued otherwise the whole system locks up.

There is no choice.

This arrangement will work until it doesn't.  As long as the majority continues to believe in the system and plays by its rules, debt will be issued and sophisticated methods invented to protect creditors to keep the game going.

 

Tue, 11/27/2012 - 12:36 | 3014444 Snidley Whipsnae
Snidley Whipsnae's picture

It all depends on what the home owner does with the HELOC.

Take a mortgage on an unmortgaged home. Use the money to buy real assets. Pay off the HELOC with increasingly worthless money while sitting on a pile of real assets.

Remember German debtors chasing German creditors down streets trying to press debt payments into their hands?

One possible option.

Tue, 11/27/2012 - 12:31 | 3014424 PaperBear
PaperBear's picture

Is it setting itself for a bigger crash ? I think so.

Tue, 11/27/2012 - 12:33 | 3014434 Seasmoke
Seasmoke's picture

the wipeout of all those WORTHLESS UNDERWATER HELOC, thru the joke AG settlement, was really really impressive .....Only people who can see 3 moves ahead , pull that one off

Tue, 11/27/2012 - 12:35 | 3014438 Cursive
Cursive's picture

"vintage HELOCs"  LOL.

Tue, 11/27/2012 - 12:43 | 3014452 walcott
walcott's picture

Men are the new bitchez...

CNBC all day long bitchez...

Tue, 11/27/2012 - 12:43 | 3014453 Hondo
Hondo's picture

What happens when the mortgage deduction is eliminated???

Tue, 11/27/2012 - 12:48 | 3014460 JoBob
JoBob's picture

I doubt Congress has the gonads to do that. Re-election is always coming up.

Tue, 11/27/2012 - 12:59 | 3014490 ebworthen
ebworthen's picture

Sure they do; they don't work for the people, or will do it and say "we did it for the children".

They will also re-instate the tax on gains from the sale of any residence.

Remember, this is about the banks, not the people.

Banks defended at all costs.

Middle Class bled.

Tue, 11/27/2012 - 12:58 | 3014487 mr1963
mr1963's picture

Can you say "equal opportunity lending act?" Lend the money to a bunch of people who have no intention of ever paying it back or Holder will use "statistics" to prove you're not lending to enough minorities -- whether they qualify or not doesn't matter.

Housing bubble, aside from McMansions, is centeered in poorer neighborhoods with poorer credit scores because the fed manadated they lend soley based on race.

Tue, 11/27/2012 - 12:59 | 3014491 Watching in Bal...
Watching in Baltimore's picture

Why not.  The TBTF have learned that they are indeed TBTF what is the risk to them when they have the Fed as a bottomless ATM

Tue, 11/27/2012 - 13:01 | 3014495 venturen
venturen's picture

ZERO DOWN 100% Financing BABY! 

Tue, 11/27/2012 - 13:05 | 3014505 azzhatter
azzhatter's picture

Amerika- Hell Yeah!!

Tue, 11/27/2012 - 13:08 | 3014509 TrumpXVI
TrumpXVI's picture

dwdollar said it succinctly in a previous thread today.  This kind behaviour isn't that hard to explain if one conciders the way people might naturally be expected to behave during a collapse...as opposed to a recession or depression.  Get everything you can right NOW; no reason to worry about tomorrow.

Tue, 11/27/2012 - 13:08 | 3014511 monopoly
monopoly's picture

What a pathetic country we have turned into. 

Tue, 11/27/2012 - 23:20 | 3016358 willwork4food
willwork4food's picture

We didn't just happen to turn into it. We were headed that way for decades.

A little Zen?

Tue, 11/27/2012 - 13:09 | 3014514 virgilcaine
virgilcaine's picture

Bernank is a true madman.. one of the biggest ever. Whatever he was smoking in the 70's we are paying for now.

Tue, 11/27/2012 - 13:11 | 3014519 ebworthen
ebworthen's picture

Dear FED,

Please reference this important information:  http://www.exploratorium.edu/ronh/bubbles/

Tue, 11/27/2012 - 13:33 | 3014592 virgilcaine
virgilcaine's picture

bartender...One Student loan bubble "on the rocks" with a heloc shot and a sub prime auto chaser.

Tue, 11/27/2012 - 13:44 | 3014631 yogibear
yogibear's picture

Max out the debt because it's the game. 

Bernanke's own son is doing it. 

Take out a homeequity with $200K or $300K. Can default on those but not student loans. Buy assets that cannot be taken. Overseas assets, etc.

Rack of $100s of thousands in debt and then tell the banksters to go screw themselves. Free money baby. 

Play the big boy's game of high finance and fraud.

 

Tue, 11/27/2012 - 13:53 | 3014651 ekm
ekm's picture

Typical.

House prices creep higher because of hidden inventory.

Stocks prices creep higher because of hidden inventory.

Crude oil price creeps higher because of hidden inventory.

 

This looks to me like a setup for the mother of all crashes. Things are kept in inventory if there are no buyers. There's no bid for houses, stocks or crude oil.

 

Stay 80% cash and 20% gold in the backyard. Be ready.

Tue, 11/27/2012 - 13:59 | 3014670 kalasend
kalasend's picture

This is fucked up.

You can be prudent. You can be a gold bug. You may enjoy the show with pop-corns. But you can't buy time.

What these mofo's are doing is to kick the can down the road for so long that you and I will have to look back at the last few years of our lives, and regret not joining the binge.

Please tell me it ain't so. But I'm afraid it just looks that way. If the onset of 2008 was not enough to bring the system down, what will?

Tue, 11/27/2012 - 14:18 | 3014724 WhiteNight123129
WhiteNight123129's picture

Is this life for real or are we all collectively stuck in the same twilight zone episode?

Tue, 11/27/2012 - 23:24 | 3016368 willwork4food
willwork4food's picture

I often wonder if the good people of Russia thought that back in the early '90s.

Tue, 11/27/2012 - 14:27 | 3014762 pragmatic hobo
pragmatic hobo's picture

all bernanke wants is to cause double top in the housing market but this time it will be the tax payers holding the bag and not the TBTF banks.

Tue, 11/27/2012 - 14:43 | 3014826 GMadScientist
GMadScientist's picture

Put it on my imaginary credit card, Jeeves!

Tue, 11/27/2012 - 19:17 | 3015752 drdj4425
drdj4425's picture

Could it be that banks are dragging their feet on foreclosures until 2013?  After Jan 1 the amount of loan relief that a bank gives will be regarded as income to the person being foreclosed on. In 2007 the mortgage relief act allowed that loan forgiveness for short sales and foreclosures was not regarded as income by the IRS.  That law expires in 2013.  Banks will be in a much more powerful postion after January 1.  There will be no more jingle mail arriving at the banks.  People in foreclosure or short sales will pay the tax on the forgiven amount or face going bankrupt

.

Fri, 12/07/2012 - 23:29 | 3044858 cgagw
cgagw's picture

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