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Government Using Subprime Mortgages To Pump Housing Recovery - Taxpayers Will Pay Again

Tyler Durden's picture




 

Submitted by Jim Quinn via The Burning Platform blog,

It seems hard to believe, but your government is purposely recreating the mortgage debacle of 2007 and putting you on the hook for the billions in losses coming down the road. In their frantic effort to generate the appearance of economic recovery they are willing to gamble with taxpayer’s money while luring unsuspecting blue collar folks into buying houses they can’t afford. During the previous housing bubble, greedy Wall Street bankers, deceitful mortgage brokers, and corrupt rating agencies colluded to commit the greatest control fraud in the history of mankind. This time it is your government, aided and abetted by the Federal Reserve, that is actively promoting the lending of money to people incapable of paying it back. And again, you the taxpayer will be on the hook when it predictably blows up.

The FHA, created during the first Great Depression, is supposed to be self-sustaining through mortgage insurance premiums charged to homeowners, just like Fannie, Freddie, Medicare, Social Security, and student loan lending were supposed to be self- sustaining through taxes, fees, and interest. This agency was supposed to promote homeownership for lower income Americans, but has been used by politicians as a tool to capture votes, payoff crony capitalist benefactors, and as a Keynesian stimulus tool designed to kindle a fake housing recovery. They entered the fray at the tail end of the last Fed/Wall Street created housing bubble, insuring a huge number of subprime mortgage loans from 2007 through 2009. The taxpayer has already had to bail out this incompetent, politically motivated, joke of an agency to the tune of $1.7 billion in 2014.

Edward J. Pinto, a former Fannie Mae official, estimates that under standard accounting practices the agency is already insolvent to the tune of $25 billion. Mark to fantasy accounting hasn’t just benefitted the criminal Wall Street cabal, but also the bloated pig government housing agencies – Fannie, Freddie and the FHA. The FHA’s share of new loans with mortgage insurance stood at 16.4% in 2005 and currently stands at 44.3%. This is a ridiculously high level considering the percentage of first time home buyers is near all-time lows and low income buyers have lower real median household income than they had in 2005. Distinguished congresswoman Maxine Waters, who once declared: “We do not have a crisis at Freddie Mac, and particularly Fannie Mae, under the outstanding leadership of Frank Raines.”, prior to them imploding and costing taxpayers $187 billion in losses, thinks the FHA is doing a bang up job. Her financial acumen is unquestioned, so you can expect another bailout in the near future.

“Above all, we must strive to have a healthy, viable FHA that can continue to facilitate homeownership for first-time and low-income home buyers, while standing ready in the unfortunate event of another housing downturn.”

How could politically motivated government apparatchiks insuring subprime mortgages with down payments of 3.5%, using weak underwriting standards, easing restrictions on borrowers with past foreclosures, in a housing market poised to drop by 20% when this next Fed/Wall Street housing bubble pops possibly go wrong? The entire faux housing recovery, which has driven average home prices up 30% since 2012, has been driven on the high end by The Wall Street hedge fund buy foreclosures in bulk and rent scheme, along with hot money cash from Chinese and Russian oligarchs, while the low end is being propped up by Fannie, Freddie, and the FHA with their brilliant idea to insure 3.5% down payment mortgages to future foreclosure aspirants.

We have the employment to population ratio at 35 year lows. We have had stagnant real wage growth since 2008 as low paying service Obama jobs have replaced higher paying production jobs. We have real median household income at 1989 levels and still 9% below the 2008 peak. We have mortgage applications 56% below the 2005 peak and hovering at 1996 levels. We still have 4 million homeowners underwater in their mortgages. We have housing starts languishing 40% below the long-term average. We have the home ownership rate of 63.8% at quarter of a century lows. We have mortgage rates at all-time lows. And we have home prices soaring far above the inflation rate and wages because the Federal Reserve, in collaboration with the Federal government decided to create another housing bubble (along with stock and bond bubbles) to rectify the disastrous consequences of their last housing bubble.

This is the absolute perfect point in time when the FHA thinks it is necessary for them to lure low income, low IQ, credit challenged dupes into the housing market. Risky mortgages are increasingly being underwritten by thinly capitalized non-banks and guaranteed by the FHA. In 2012 the large Wall Street banks represented 65.4% of FHA-backed loans. That number is now 29.6%, as even the risk seeking Wall Street criminal banks have come to their senses and realize loaning money to people that won’t be able to repay them will end badly – AGAIN. In their place, dodgy mortgage brokers (non-banks) now represent 62.2% of the FHA lending. Of course, once these low life mortgage brokers make the loans, Wall Street will package them, get a AAA rating from their bitches at S&P or Moodys, and then peddle them to yield seeking pension plans and life insurance companies. Sound familiar?

If you thought the FHA was supposed to help young, employed, first time home buyers who have a limited credit history, you would be badly mistaken. There is a reason first time home buyers only make up 29% of all home buyers, near the all-time low. Over history, when the housing market was not being manipulated by warped Federal Reserve monetary policies and government intervention, first time home buyers accounted for 40% to 45% of all home sales. Even with all-time low mortgage rates, courtesy of the Fed’s ZIRP, the lack of jobs, crushing student loan debt, low wages, and over-priced homes has kept traditional young buyers out of the market. But, the FHA’s goal is to convince anyone who can fog a mirror to get into the housing market before it’s too late.

saupload_141114_FirstTimeHomebuyer

To get some perspective on how the FHA is actively creating the next multi-billion dollar taxpayer bailout, you need to understand FICO credit scoring. Here are the categories:

• Excellent Credit: 781 – 850
• Good Credit: 661-780
• Fair Credit: 601-660
• Poor Credit: 501-600
• Bad Credit: below 500

The average FICO score of all Americans is 687, barely above the Fair Credit level. The average for Americans getting a mortgage is 724, down from 750 in 2012, as the reckless mortgage brokers have taken share from the banks. It is only rational that people with good credit should be the only people borrowing hundreds of thousands of dollars for 30 years. Not in the eyes of the FHA and their politician overseers, who buy votes by doling out free shit to their constituents. Why not houses? You can get an FHA loan with a credit score as low as 500, so long as you have a 10% down payment. And once you hit a 580 credit score, you only need a 3.5% down payment. Credit scores below 600 mean that you have significant derogatory information on your credit report. In other words, you have proven to be a deadbeat. Credit scores below 600 are the result of missing multiple payments on credit cards and auto loans; having multiple collection items or judgments; and potentially having a very recent bankruptcy or foreclosure. Sounds like someone I’d loan money to.

After financial institutions lost hundreds of billions (covered by American taxpayers at the point of a gun through TARP) by peddling low or no down payment mortgages for $500,000 McMansions to deadbeats with no willingness or means of repaying, the percentage of low down payment mortgages rationally plunged from 77% to 60% for first time buyers. Low down payment mortgage loans are a high risk proposition. It wasn’t that long ago when a borrower had to put up 10% to 20%. If you can’t save enough for a 10% down payment then you probably shouldn’t own a house. If your down payment is less than 8%, you are immediately underwater as the costs to sell a home usually total 8% of the selling price. The percentage of first time buyer mortgages with a low down payment mortgage has risen to 66% in the last year and is headed higher, as the FHA is pushing hard on their 3.5% down payment loans.

percent-obtaining

As a general risk guideline, your monthly mortgage payment, including principal, interest, real estate taxes and homeowners insurance, should not exceed 28% of your gross monthly income. Total debt to income generally cannot exceed 43% of your gross monthly income. These guidelines have worked for decades in assessing whether a borrower can afford a mortgage. Why would an arrogant bureaucratic agency, controlled by politicians like Mel Watt and Maxine Waters, follow standard industry risk standards when they are only gambling with taxpayer funds? The FHA is exempt from the qualified mortgage requirement of a 43% debt-to-income ratio. Many loans have a debt-to-income ratio above 55%. Even worse, the FHA only looks at mortgage payments in their calculation. What do you think the odds are of a borrower with a 580 credit score, making $3,000 per month with a $1,500 monthly mortgage payment, of defaulting? They would be high under normal circumstances, and will be off the charts after the next financial bubble bursts and millions are put out of work again.

People who are serial defaulters with 580 credit scores cannot expect to get the lowest rates. They should expect to see interest rates that are at least three percent higher than interest rates awarded to borrowers with good credit. Even the 3.5% down payment requirement is flexible for the FHA. The FHA is perfectly willing to accept a gift or inheritance as a down payment. So, you could have no savings, a 580 FICO, a 50% debt-to-income ratio and a gift from your parents and that would be sufficient to get you a loan. And it gets better. The transaction can be designed with the buyer paying a higher price but getting a credit for closing costs that covers the 3.5% down payment and other fees. Therefore, a serial deadbeat can purchase a house with a government guarantee without putting up one dime of their own cash. Sounds like a great deal for the taxpayer.

I have personal experience with a current FHA mortgage transaction as my 79 year old widowed mother is in the midst of selling the 900 square foot row home that she has lived in for 58 years in the first ring of suburbs outside of Philadelphia. It was once a vibrant middle class neighborhood of working folk, but has been gradually decaying as the old guard dies off and is replaced by lower class Section 8 tenants. She is selling ten years too late as prices have dropped 30% since 2005. She asked $72,900 and received an offer within two weeks of $66,000, with a $4,000 closing credit. My siblings and I didn’t expect her to get an offer in the 60s, as the dump next door was sold for $30,000 and went Section 8 a couple years ago. Anyone buying this house is destined for another 30% loss over the next ten years. So we told her to take the offer before it was too late.

My brother and I met the realtor at her house after work a couple weeks ago. We sat around the dining room table that had seen so many family gatherings over the last half century and discussed the particulars of the deal and the buyer’s background. It was an enlightening glimpse into the Federal government’s futile attempt to engineer a housing recovery on the backs of hard working tax payers with good credit. The buyer is a 20 something guy living with his parents, with a girlfriend and a young kid. He reportedly makes $29,000 per year. His girlfriend was not on the mortgage application. The only logical explanation is she has bad credit. He is putting 3.5% down and getting an FHA guaranteed mortgage. The $4,000 closing credit will cover his 3.5% down payment and closing costs. He evidently has no money to put down when purchasing this home. Sounds promising.

As a high risk borrower he will be lucky to get a 5.5% rate mortgage. In a world where risk mattered, it should be 7.5%. He should thank Ben and Janet for encouraging this type of mal-investment across the country with their 0% interest rate policy. His monthly cost to own this home would be approximately $800, or about 33% of his monthly gross income. Of course, no one brings home their gross income. The $800 would be about 40% of his take home pay after taxes. He did arrive at the house in a nice car, so it is very likely he has at least one auto loan of $20,000 or more. If he doesn’t have a dime to put down on the house, he is likely acting like a true American and rolling a $10,000 credit card balance at 17% interest. His total debt payments assuming a six year auto loan at 3% and making the minimum payments on his credit card would total at least 55% of his monthly gross income. Lucky for him, the FHA doesn’t worry about his non-mortgage debt payments.

So this guy comes home each month with about $2,000 of income and pays out $1,300 in debt payments, leaving him $700 to pay for health insurance, food, utilities, cable, cell phones, entertainment, and any vices he and his baby momma may have. If this isn’t a recipe for default, nothing is. No bank in their right mind would loan this man $66,000 for 30 years at 5.5%. That’s where the crooked nonbank mortgage companies enter the scene, just as they did when their patron saint Angelo “the tan man” Mozilo was roaming the land doling out billions in subprime mortgages while cashing in his stock options in 2005. Remember back in the glory days from 2002 through 2007 when mortgage company fronts, staffed by used car salesmen, pizza delivery guys, and convicted criminals peddled no-doc, negative amortization, liar loan, subprime slime to every Juan, Bubba and Lakeisha, filling the derivative pipeline for Wall Street to destroy the financial system? They’re back.

These parasites don’t worry about individual risk, financial risk, or systematic risk. They care about upfront fees and their ability to package their toxic subprime mortgages and dump the risk on someone else before it all blows up again. They are willing to issue mortgages to people unlikely to repay because there is a big difference between the risk that faces the company, and the risk that faces the blood sucking founder of the mortgage front. It’s a perfect opportunity for shysters and scumbags. You set up a mortgage company, and take extraordinarily opulent commissions on all loans you book. In this Fed created paradise of low interest rates, investors are desperate for yield. An FHA loan provides the opportunity for an investor to receive a good yield and a guarantee from the Federal government – aka YOU THE TAXPAYER.

The conscienceless CEO and executives of these MBS machines revel in the vast commission revenue as the loans are booked. These companies retain little or no capital on their balance sheets. Instead, they pay dividends to the owners as quickly as possible, before the bottom drops out. When the next Fed induced financial crisis happens the mortgage company will go bankrupt, but the slimy owners will walk away unscathed. These fly by night operations are booking as much business as possible before the music stops playing. When the music stops, the taxpayer will be on the hook again, as the FHA will need a $25 billion to $50 billion bailout. The FHA is flying under the radar, still in the shadow of equally insolvent Fannie and Freddie. Their mission is supposedly to help lower income people achieve the American Dream, but their politically motivated actions today will lead to millions of borrowers experiencing an American Nightmare and taxpayers footing the bill for their crackpot Keynesian scheme, aided and abetted by the Janet Yellen and her Fed cronies.

The FHA has $64 billion of liabilities on their balance sheet supported by $3 billion of capital. They are currently accelerating their guarantees to subprime borrowers with 3.5% down mortgages. Fannie and Freddie will purchase mortgages with only 3% down payments. Wall Street issued $1 trillion of mortgage backed securities last year, with the Fed buying 20% of the issuance as part of QE3. If this sounds like a replay of the waning days of the last Fed induced housing bubble, it’s because it is. Both debacles have been fueled by the mal-investment created by an easy money, excessively low interest rate environment, designed to benefit bankers, billionaires, politicians and mega-corporations. The Fed already has $1.7 trillion of Wall Street generated toxic mortgage debt on its bloated balance sheet. By the time this imminent catastrophe runs its course, there will be another trillion of toxic mortgages polluting their insolvent balance sheet.

To paraphrase H.L. Mencken, anyone who wants the government and Federal Reserve to create a housing recovery, deserves to get it good and hard, like a four by four to the side of their head. Subprime mortgages, subprime auto loans, and subprime student loans driven by preposterously low interest rates are the liquefying foundation of this fake economic recovery. Most rational people would agree that loaning money to people who will eventually default is not a good idea. But it is the underpinning of everything the Fed and government apparatchiks have done to keep this farce going a little while longer. It will not end well – Again.

 

 

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Tue, 05/05/2015 - 17:47 | 6063456 ZippyBananaPants
ZippyBananaPants's picture

FHA,, fuck my hairy ass

Tue, 05/05/2015 - 18:35 | 6063575 Stackers
Stackers's picture

Driving yesterday and heard radio ad for 0% to 3% down home mortgages again.

 

Got love realtor.com walks you through how to do it

http://www.realtor.com/advice/buy-a-home-with-a-low-or-zero-down-payment/

EVERY option is a government program ......

Tue, 05/05/2015 - 18:58 | 6063647 kaiserhoff
kaiserhoff's picture

ZIRP for them.  No usury laws, unlimited interest income for the banksters.

All you need to know about the New World Order.

Tue, 05/05/2015 - 19:18 | 6063705 I am more equal...
I am more equal than others's picture

 

 

 

It is USDA Rural Development program with $0 down and $0 closing cost.  It is creating an oversupplied of new houses below $150,000. 

Tue, 05/05/2015 - 20:04 | 6063886 eatthebanksters
eatthebanksters's picture

No one in goverment really wants to tell people what we need to do to get out of our mess so they just kick the can further down the road and go back to doing all the things that fucked us up in the first place.  When the big kaboom happens watch how the politicians start pointing fingers at the banksters...like the pols couldn't do anything about it.

Vote them all out and vote in new folks who will clean the mess up.

Wed, 05/06/2015 - 11:22 | 6065854 Panopticon 131
Panopticon 131's picture

The strategy of "voting out the rascals" is not effective when the entire system is in a state of DEEP CAPTURE.  Moreover, this next round of engineering a bubble is more problem, reaction, solution to steer us towards their totalitarian 1984-esque global Technocracy.  

After the last round, it appears TPTB have been working to place a floor on housing prices, preventing any true de-leveraging to make private home ownship increasingly rare and even more of a ball and chain scenario than it already is.  Great for Agenda 21 and we are always boiling frogs.

Notice the big establishment push to increase wages for the lowest paid workers and the shifting of subsidies to keep this group quiet and wholly dependent on government handouts to survive.   McDonalds and Walmart recently announced sizeable wage increases and establishment foundations have been working behind the scenes to get state legislatures to substantially increase the mininum wage.  Socioeconomically, we are being transformed into Europe, where the housing price to income ratios are very high and the trend is already well established in several areas of the US. 

 

Tue, 05/05/2015 - 20:15 | 6063930 MonetaryApostate
MonetaryApostate's picture

It's the O L D - W O R L D - O R D E R.... BRICS will be the New World Order!!!

Wed, 05/06/2015 - 11:34 | 6065890 Panopticon 131
Panopticon 131's picture

It's Hegelian.  The Anglo American centered empire is the thesis to the BRICS antithesis facilitating the synthesis of a single global goverance system with the international banksters at the helm of the IMF transitional SDR global reserve system on the way to their more perfect global currency tied to "energy credits".

China is the apex globalists' model Technocracy.  The Chinese government just developed a Social Credit Score tracking system to monitor every citizen's words and actions to include what they read and post online.  Russia and China were never bastions of Libertarian ideology by any stretch.  Be careful what you wish for.

Tue, 05/05/2015 - 19:14 | 6063698 williambanzai7
williambanzai7's picture

Tue, 05/05/2015 - 20:14 | 6063926 MonetaryApostate
MonetaryApostate's picture

+1 for the lulz! :D

Wed, 05/06/2015 - 11:42 | 6065928 Panopticon 131
Panopticon 131's picture

Yep, we don't have any real standards anymore for anything.  And soon top universities will be routinely accepting SAT scores of 600 - probably W's score assuming he bothered to write his name down to get the baseline minimum for showing up.

Tue, 05/05/2015 - 17:51 | 6063465 NoWayJose
NoWayJose's picture

Most people cannot swing a four by four fast enought to cause any damage to the side of a head.  It is, in fact, better to use a two by four -- as it is easier to grip and can be swung with much greater velocity!

Tue, 05/05/2015 - 18:05 | 6063503 NoDebt
NoDebt's picture

"A man of my position is expected to have certain.... enthusiasms.  Enthusiasms.  Mine?  Baseball!" <displays Luisville Slugger>

You know what happens next.

Tue, 05/05/2015 - 18:46 | 6063615 greenskeeper carl
greenskeeper carl's picture

personally, I prefer the expandable baton. Easy to swing, light in weight, packs a helluva punch. Also, it can fit in my pocket while collapsed.

Tue, 05/05/2015 - 20:16 | 6063936 MonetaryApostate
MonetaryApostate's picture

Yeah, something tells me the citizens of the US are going to see a lot of those in the near future....

Tue, 05/05/2015 - 20:09 | 6063910 No.Fifth.Turning
No.Fifth.Turning's picture

You glorious bass turd you!

Tue, 05/05/2015 - 17:58 | 6063477 Zirpedge
Zirpedge's picture

The premise of this article is completely wrong. The Fed doesn't get into markets to promote economic health and vitality. The Fed only exists to promote dependency on it's extortion / protection racket. If you look at the policy through this prism, it's really a great policy.

Tue, 05/05/2015 - 17:58 | 6063481 ted41776
ted41776's picture

time for sub-sub-prime mortgages, where they pay you to take out a loan

Tue, 05/05/2015 - 18:31 | 6063567 mvsjcl
mvsjcl's picture

Under NIRP this is entirely logical.

Tue, 05/05/2015 - 17:59 | 6063483 10mm
10mm's picture

Crash and burn.

Tue, 05/05/2015 - 18:03 | 6063497 NoDebt
NoDebt's picture

Damned straight.  And the sooner the better.  Until then nothing changes, in fact it gets worse.  The path of corruption has been embarked upon at all levels.  There is no going back.  The path must be followed to the end at this point.

Tue, 05/05/2015 - 18:00 | 6063484 kchrisc
kchrisc's picture

Good article, but there is no such thing or person called a "taxpayer"; in the same way their is no such thing or person called a loot-payer in reference to a mugger. They take it, it becomes theirs, and it is no longer yours. Power only utilizes the word "taxpayer" to give their victims the feeling of some control over what has been stolen from them--"Hey, you're our quasi-partner in crime. Ain't that swell?"

Additionally, this is just another win-win-bend-you-over, for the banksters. They steal your deposits, counterfeit more on top of that, then loan it out to somebody. When that somebody cannot pay, the banksters take possession of the real, not counterfeit, assets, and then counterfeit more lucre that they then loan to the DC US with usury. The DC US then turns around and gives that "borrowed" lucre to the banks to "make them whole."

Which leads me to wonder once again if "guillotines" are too clean and painless for the banksters? Anyone know of a how-to guide for burning at the stake.

Liberty is a demand. Tyranny is submission.

Tue, 05/05/2015 - 18:55 | 6063636 g speed
g speed's picture

I've always had a fondness for impalement--- It has a landscape of possibilities ----"""over hill, over dale, stand the pikes up to impale- l

Tue, 05/05/2015 - 18:01 | 6063489 NoDebt
NoDebt's picture

Had a good reply.  Lost to "ZH is in maintenance mode".

Fuck it.  Don't give a shit.  You guys probably already know what I was going to say anyway.

Tue, 05/05/2015 - 20:18 | 6063944 MonetaryApostate
MonetaryApostate's picture

You know the (<-) Back Arrow on your browser is there for a reason!!!

Tue, 05/05/2015 - 18:03 | 6063495 SERReal1
SERReal1's picture

Well there's a surprise, a new housing bubble. Who could have seen that coming???? /sarc

Tue, 05/05/2015 - 18:04 | 6063501 i_call_you_my_base
i_call_you_my_base's picture

The only difference this time will be the introduction of torches and pitchforks.

Tue, 05/05/2015 - 18:06 | 6063505 NoDebt
NoDebt's picture

I appreciate the sentiment, but you're early on that call.  Teach your children.

Tue, 05/05/2015 - 18:13 | 6063526 i_call_you_my_base
i_call_you_my_base's picture

It's a shakey prediction, but I don't see how they can dilute the blame for it twice in a decade. People will put the blame squarely on the government.

Tue, 05/05/2015 - 19:07 | 6063679 NoDebt
NoDebt's picture

Watch them.  It won't be called the same thing, but it will be basically the same thing.

Tue, 05/05/2015 - 20:14 | 6063927 chunga
chunga's picture

It doesn't matter who get's the most blame. It only matter who get's the moast money!

Blame is for muppets only. Too big to blame doesn't care..

Tue, 05/05/2015 - 20:23 | 6063960 MonetaryApostate
MonetaryApostate's picture

I believe you may be a bit mistaken upon one fact.....

America is nothing but a burned out Hooker, who took the bait*, and now it will be time to pay up....

(It's NOT going to be a pretty sight mate, not at all...)

*Bait = Hookers, Blow, Loans, Casinos, Pawn Shops, and it was indicative to what happened to Poland during WW2...

(The elite bent America over and and shoved a debt dildo the size of an elephant's wanker up her skirt!)

Tue, 05/05/2015 - 18:08 | 6063509 buzzsaw99
buzzsaw99's picture

they are lending to some real scumbags fucking up previously decent neighborhoods. thank god this state allows fast foreclosures.

Tue, 05/05/2015 - 18:09 | 6063516 SERReal1
SERReal1's picture

So true. Just remember that's because everyone gets a trophy. Soon Section 8 will be able to live in $1MM houses.

Tue, 05/05/2015 - 18:13 | 6063528 buzzsaw99
buzzsaw99's picture

they already do. they just rent out the bedrooms.

Tue, 05/05/2015 - 22:00 | 6063604 ThroxxOfVron
ThroxxOfVron's picture

"Soon Section 8 will be able to live in $1MM houses. "

Not quite there yet; but, close...

 

Property values are deep underwater and the mortgage delinquency rates in and around Newark and Philadelphia are as high as 49% in some zip codes, with the 'west NY'/Jersey coast and parts of greater NYC metro faring little better:

http://www.zillow.com/visuals/negative-equity/#9/40.7015/-74.1742

 

It would take over a $1T just to bail out the Banks and Pensions holding the associated MBS; and at least $25B just to relocate and mitigate and manage the diaspora when/if the plug is pulled.   Tens of millions of would-be section 8 or market-priced renters are effectively squatting in large swathes of the NE urban and suburban sprawl...

I personally know people that ARE living in $700K to $1M+ homes that haven't paid a cent in mortgage payments, home-owner's insurance or property taxes since 2008...

Instead of actually tackling the Housing/MBS Crash the FED/.GOV has focused almost exclusively on propping the Cartel Banks, bloated Government bureaucracies, failed businesses; -and boosting stock indicies.

Tue, 05/05/2015 - 18:08 | 6063510 buzzsaw99
buzzsaw99's picture

dup

Tue, 05/05/2015 - 18:12 | 6063525 BandGap
BandGap's picture

Just like the last crisis no one is really going to pay for this, either.  Once the cancer sets in it is just a matter of time.

 

"To all those muthas who I'll call friends, I'm glad to have you with me cuz here we go again". Ted Nugent

 

Tue, 05/05/2015 - 18:20 | 6063547 Goldilocks
Goldilocks's picture

The Wizard of Oz: Cyclone Clip
http://www.youtube.com/watch?v=WhQySxqSANU (4:12)

Tue, 05/05/2015 - 18:22 | 6063552 kchrisc
kchrisc's picture

Off topic:

I know little about Martin Armstrong, and his theories, but he posts some serious "whack" commentaries on economics.

This one is from today:
http://armstrongeconomics.com/archives/30243

Based on this one, and others, he seems to take known good theories and then twist them around, even changing the language, so as to seem better informed than he might be. Problems is, his nonsense is misleading people who truly want to know what and why what is happening.

Sad.

Liberty is a demand. Tyranny is submission.

 

But then it could very well be me that is wrong and misleading people. I guess we shall see.

Tue, 05/05/2015 - 18:35 | 6063578 Tapeworm
Tapeworm's picture

"This agency was supposed to promote homeownership for lower income Americans, but has been used by politicians as a tool to capture votes, payoff crony capitalist benefactors.........................."

------------------------------------------------------

 It was created as a tool to capture votes, payoff crony capitalist benefactors. Anything else that can be construed as a temporary positive is coincidental and not the real goal

Tue, 05/05/2015 - 18:34 | 6063580 Korea98
Korea98's picture

The author argues that the last crises was due to corrupt bankers and THIS one will be due to the government.  

We need a history lesson here.  While corrupt bankers played their role in the last housing bust, the government was the cause of that one as well.  Banks had to loan to unqualified folks because not to do so would be racist and they banks would not be able to borrow from the FED if they did not impliment loose lending proctices the government commanded.  The bankers jumped on board of course but again, it was the government policy that started it all.  

 

Once this housing market bubble bursts this time, I'm sure the bankers will yet again get all the blame just like last time.  

Tue, 05/05/2015 - 19:14 | 6063696 chunga
chunga's picture

I beg to disagree. The govt. nor the banks care about minorities or bad credit.

The young guy in Quinn's story here doesn't have any money and doesn't make very much either. Therefore he has nothing to steal. Here's the trick...give him the money now...and then steal it back when he defaults. By then, the "loss" will be safely in the hands of the taxpayer courtesy of fnma and fhlmc. 

Between now and then, the clever finance people can sell it a bunch of times, bet against it..., phoney default insurance, so on and so forth. Same thing that happened last time, then blame it on the borrower guy who took a "liar loan" or was just irresponsible.

Tue, 05/05/2015 - 21:44 | 6064213 stocktivity
stocktivity's picture

I'd guess the parents gave the kid the money to get them out of the house.

Tue, 05/05/2015 - 18:34 | 6063581 Korea98
Korea98's picture

The author argues that the last crises was due to corrupt bankers and THIS one will be due to the government.  

We need a history lesson here.  While corrupt bankers played their role in the last housing bust, the government was the cause of that one as well.  Banks had to loan to unqualified folks because not to do so would be racist and they banks would not be able to borrow from the FED if they did not impliment loose lending proctices the government commanded.  The bankers jumped on board of course but again, it was the government policy that started it all.  

 

Once this housing market bubble bursts this time, I'm sure the bankers will yet again get all the blame just like last time.  

Tue, 05/05/2015 - 19:17 | 6063702 Oldwood
Oldwood's picture

Those who make the rules and enforce them are always to blame.

Unfortunately that reality has been dismissed in favor of MSM's need to maintain Americans "confidence quotient". The big banks took the blame if not the fall last time because they were given protection. AS long as they didn't start pointing fingers at our government, they would be shown leniency in the courts and only abused in the public eyes.

There two basic themes of operation for those in government. Either do as Obama does, and constantly deny that he knows anything about anything that happens under his watch, even at the highest levels (and the media nods in approval of his innocence) or they accept full responsibility for the failures (immediately calling for further investigation to get to the bottom of it) and then shortly thereafter announce their candidacy for president.

Blame is irrelevant if there is no accountability.

Tue, 05/05/2015 - 19:24 | 6063727 chunga
chunga's picture

Nailed it right here Oldwood my friend.

Blame is irrelevant if there is no accountability.

Nobody got in trouble the last time and won't this time. The money is looking for people because the yield on fraud is the highest out there and there is no accountability.

Tue, 05/05/2015 - 20:15 | 6063933 Sages wife
Sages wife's picture

"yield on fraud". Clever.

Tue, 05/05/2015 - 22:03 | 6064270 ThroxxOfVron
ThroxxOfVron's picture

It's called 'Control Fraud'.

http://en.wikipedia.org/wiki/Control_fraud

 

It is almost never punished...

Tue, 05/05/2015 - 18:48 | 6063620 taint
taint's picture

Bought 2 houses in the last 24 months. Lending prudence and due diligence has gone way up.....or maybe they treat my large comp and good to excellent credit differently than everyone else. I've seen nothing but rigorous standards and detailed attention to paperwork.

Tue, 05/05/2015 - 19:03 | 6063666 g speed
g speed's picture

they are crossing their "Ts" and dotting their "Is" cause they think you have deep pockets,   For a deadbeat they don't care cause they aren't paying anyway--

Tue, 05/05/2015 - 19:06 | 6063678 Oldwood
Oldwood's picture

Yes very big on paperwork, everything crossed and dotted and signed where appropriate. Everyone is scared shitless of getting crosswise with the government. But they have continued to lower the standards to stimulate the market. We are back to near zero down in some cases. This subprime event will not fall back on the appraiser and banks. Big gov owns this one to the grave.

Tue, 05/05/2015 - 18:58 | 6063646 Thalamus
Thalamus's picture

 "In their frantic effort to generate the appearance of economic recovery"  No, absolutley not--bad premise.  The housing market represents death to the banking industry if housing prices drop.  This is one of many ways the economy collapses, so they need to keep it pumped up until...__?.  

Tue, 05/05/2015 - 19:01 | 6063655 Oldwood
Oldwood's picture

Our great and wonderful progressive government sees us as all falling into three groups;

The poor (completely stupid people who barely can wipe their own ass correctly)

The middle and upper income people (who are still stupid but simply try harder)

The elite (who are the smart ones who are just naturally rich without really trying and as such feel responsible for ruling the world)

They have incredible disdain  for the poor and the middle, but especially the middle. The poor are stupid, but smart enough to not even try. The middle are still stupid, but because they expend the effort, they actually acquire some wealth, and start thinking that what they think actually matters. This does not please the elite...at all. They see these "posers" as worse than stupid, actually a little it insane, as why would a sane person even try against such a stacked deck? But they also understand that without them, no real work would be done. So they tax them and worse, accuse them and indoctrinate their children that they are guilty OF success, for even trying. Are they greedy? What could possess them to do such insane things? The simple fact that those in the middle continue to try only reinforces their bias.

Only now, they are actually enjoying the fruits of their agenda. It's a two edged sword for them, much as it was to impose stiff taxes on tobacco...big bucks for a while but eventually participation falls off (which was their supposed desire from the start) and watch as their revenues fall off as well. We are witnessing people are leaving the work force by the millions. They are saying fuckit, I may be stupid, but I'm NOT crazy!

The progressives are beside themselves with joy at this, but also realize that their cash flow will be damaged, so they resolve to print. Basically another tax on earners. But their plan and their hope is that by the time that all of this shit falls in on itself, they will have stolen enough wealth and invested it into technologies and foreign third world slave holds, that they really won't need us anymore.

Is this the grand reset so many are hoping for?

Yes, I am crazy.

Tue, 05/05/2015 - 21:20 | 6064108 chunga
chunga's picture

Nah I don't think you're crazy.

They are financial predators, and we -- everybody whose net worth is less than eight figures -- are their prey. Since they can't literally eat us alive instead they eat our money, our livelihood, our hopes, and our dreams.

The US is in a dark place, where the absolutely most reckless, irresponsible bankers -- who made the most reckless, irresponsible decisions -- are receiving massive government subsidies. The price tag will be picked up by future generations...or not.

That is, we are collectively putting our children into deep hoc lest bankers and their enablers suffer the sting of a firm slap by the invisible hand, all the while whining that the free market continues to function. We now should know the invisible hand of the "market" is nothing more that a prosthetic that does a lot of slapping but never slaps anybody at the top.

Bankers, along with their supporters in government, tried to portray the interests of Wall St. and Main St. aligned. They aren't. There hasn't been a "class war" from the middle class towards the rich, but there's been a ferocious one the other direction.

They're fighting you. It's not because they don't like you -- they are crazed sociopaths, .. it's just a game to them. They're playing to win; you don't even know the game is on, much less the rules.

Tue, 05/05/2015 - 19:04 | 6063667 f16hoser
f16hoser's picture

Let's assume, you are a complete dumb-ass president and you want to look smart. In the eyes of dumb-ass American's, how would you do it? Oh, Oh, I know; surround yourself with complete morons dumber than you! Average American Voters fall for it every time!

Tue, 05/05/2015 - 19:27 | 6063744 monad
Tue, 05/05/2015 - 22:19 | 6064311 crisrose
crisrose's picture

Because the average American with an average IQ of 98 is a dumbass.

"In their frantic effort to generate the appearance of economic recovery they are willing to gamble with taxpayer’s money while luring unsuspecting blue collar folks into buying houses they can’t afford."

4-2=2  Anyone who buys a house they "can't afford" is an imbecile and deserves to live in a cardboard box.

Tue, 05/05/2015 - 19:21 | 6063716 monad
monad's picture

DO IT AGAIN TIMMAY!

Tue, 05/05/2015 - 19:52 | 6063829 Dre4dwolf
Dre4dwolf's picture

Mortgages dont even exist, banks counterfeit money hand it out and demand double back . . . thats not a loan thats a bunch of bullshit.

Tue, 05/05/2015 - 19:56 | 6063848 Seasmoke
Seasmoke's picture

There has never been a better time than now to buy an overpriced box with a roof. 

Tue, 05/05/2015 - 20:22 | 6063956 Oldwood
Oldwood's picture

The only thing important is that my box is bigger than yours and in a better location.

We do have standards after all, even if were are a bit shallow.

Tue, 05/05/2015 - 20:43 | 6064017 Temerity Trader
Temerity Trader's picture

A larger property bubble could not exist than in Silicon Valley. No f - - - ing way. Cracker box houses in Palo Alto and nearby areas built in the late 60’s and remodeled a couple of times, have bubbled up in the past 18 months from around $2 mil to $3 mil. Facebook , a company that makes nothing, pays wages that make this bubble a reality. It cannot last and the poor MF who buys the final high-priced 'tulip' will be destroyed. Hundreds of thousands of homes will plunge in value as tech companies fold up.  People will walk away in droves and the banks will demand bailouts or they will fail. It will cascade across the U.S. This bubble has been building for 40 years.  How many f ---ing I-Toys can any one human being own? They have produced enough smart phones in China that if they were placed end-to-end, could to go to the moon and back three times. They will have to give them away soon and lay off all the workers at the Foxconn plant. The tech party, fed by low rates has now reached insanity levels.

Patient bears who have stayed away from this rigged casino may soon see the most spectacular payday ever.

Wed, 05/06/2015 - 05:44 | 6064816 kareninca
kareninca's picture

A bubble that has been building for 40 years can go on for a while longer.  I've been living here 19 years, expecting it to collapse the whole time, and it hasn't.  Why would the "MF who buys the last high-priced tulip" be destroyed, when he can just walk away from the purchase?  I'm thinking that if this actually blows up, it will take down any patient bears just as effectively as it takes down the tech partiers.  Well, we'll see.

Tue, 05/05/2015 - 21:23 | 6064144 Goldilocks
Goldilocks's picture

"To paraphrase H.L. Mencken, anyone who wants the government and Federal Reserve to create a housing recovery, deserves to get it good and hard, like a four by four to the side of their head."

...you're going to feel a slight pressure. whack! shhhhh there there.

Tue, 05/05/2015 - 23:43 | 6064510 luckylogger
luckylogger's picture

The auth or here is kinda a jerk, I had the bestest of the best credit. In 2009 the banks called it all in and I could not pay it. Had the terms stayed the same I would be fine. On top of all that the  insurance carrier did not pay 50k of bills that they were responsible for and on to[p of that ATT decided my monthly bill should go from 150 to 1500. I told them all to fuk off. They make half this shit up and hold your credit score over your head............

Anyhow I did not pay what they could not prove was just and honest charges...

I am now a 580 deadbeat....

Probably a better risk than most everyb ody here....

The issues in the structure are huge individually but as a whole they work well.

There needs to be an arbitrator that settles shit like mine, but the banks do not want it because they can hit you with life destroying interest rates......

I could go on and on but this world is only set up for perfect healthy people with honest insurance companies..........................

Good luck!!!!!!!!!!!!!!

Wed, 05/06/2015 - 04:09 | 6064761 talisman
talisman's picture

Bankers made subprime loans with fiat bogus money,
then crashed the market, foreclosed the real property
and bought it up in bulk for pennies on the dollar....
Now they are going for the rinse, repeat, rinse again cycle

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