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Mass Home Refinancing Rumor Rejected, And Why Even If It Was True It Would Not Help BAC

Tyler Durden's picture


Looking for a reason why the surge of BAC has been abruptly halted after hours? Look no further - as predicted earlier, when we commented on the periodic reincarnation of the always false global refi rumor which served among other things to push BAC higher by almost 10%, the rumor was found to be false... all over again. In other words no refi, no benefit to TBTF, and all of today's gains are based on what Bloomberg noted was a report issued yesterday by a Jaret Seiberg, who until recently was an employee of MF Global, and has since been acquired with his entire Washington Research Group by none other than Guggenheim partners, which just happens to be run by former Bear Stearns exec Alan Scwhartz. From Bloomberg, here is the official denial (which came literally seconds after market close):

  • White House Has No Plan for Mass Home Refinancing, Person Says

Incidentally, even if the rumor was true, here is JMP explaining why it would have no real impact on Bank of America

Bank of America (BAC, $6.28, Market Perform):  Market Overly Optimistic About the Impact of a Hypothetical $1 Tril. Refinance Program, in Our View


Shares of BAC were up 8% today as rumors swirled that President Obama may enact a $1 trillion refinance program.  Granted, BAC shares were trading at a big discount to book (0.4x), and the investment community--now with several months of runway--seems to be going "risk on". But the big upward move on this news seems more a grasp for "validation", and we don't believe it will stick.


We must point out that BAC is up big, while JPM and Citi are only up with the broader bank index.  This suggests that the market is focused on the mortgage-loss exposure specifically as this is uniquely troubling at BAC.  Were the market focused on the big potential one-time benefits of mortgage production fees (in our view, the lone positive), they would all be up big, but this is not the case.  Meanwhile, servicing revenue should obviously be a zero-sum game.


Thus, we focus our discussion on the loss exposure.  The key risk to BAC is the looming threat of material mortgage putbacks (reps and warranties).  These are not new losses but losses already locked in and incurred by others that are merely redistributed to BAC retroactively via the legal systemNo refinance program will undo these losses for which, in most cases, the foreclosure has been completed.


As for the matter of avoiding new losses by saving currently wobbly homeowners, we question the efficiacy of a refinance program when the key issue is jobs--where the homeowner has no income nor liquid asset buffer, a lower payment isn't going to matter.  More generally, as we have seen with prior attempts, these programs are more about kicking the can down the road, so it's more about delaying future losses than avoiding them altogether.


Many homeowners could already materially lower their payment (or avoid a looming balloon) via refinancing but can't do so because of the LTV.  Thus, we presume any big refinance program would have to include the U.S. government providing mortgage insurance to the lenders/investors, which creates incremental risk for the U.S.


We will leave it to the political analysts to opine about whether or not President Obama can even get away with enacting a $1 trillion program that incurs large amounts of financial risk to the U.S. government.  Our view is that, even if this comes to pass, the impact on BAC's putback risk is negligible, so the stock continues to deserve a steep discount and today's move is likely to prove fleeting.


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Thu, 01/05/2012 - 17:33 | 2036998 lolmao500
lolmao500's picture

Right... it was just leaked too early. The election is in November you see, and the average joe has the attention span of a redfish.

Thu, 01/05/2012 - 17:52 | 2037103 trav7777
trav7777's picture

All I read was "White House has no plan"


Thu, 01/05/2012 - 18:00 | 2037142 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

The only way to regenerate the economy is to reinvigorate the housing market. We all know that. The problem is buyers lack confidence, certainty, the feel good factor. Thus housing needs to be protected from market forces. Why not guarentee 15% compounded increases in house prices? Sure that may be inflationary, but we could counteract this by capping commodity prices to more fair levels - where they would be if it wasn't for the preditory speculators. Tougher crackdowns on speculators would be welcome too.

Thu, 01/05/2012 - 18:12 | 2037171 ucsbcanuck
ucsbcanuck's picture

(sarc on)

And while we're there, let's make this the national anthem of US/Canada/Europe:

If you think this is a good idea, why was it rejected in Eastern Europe and USSR all those years ago?

(sarc off)

Thu, 01/05/2012 - 18:17 | 2037202 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

you may laugh, but Russia has some of the finest women in the world! Look at what western decadence and mcdonalds and coca cola fulled capitalism have done to your western women!

Thu, 01/05/2012 - 18:51 | 2037330 ucsbcanuck
ucsbcanuck's picture

Look what communism did to your economies. People loved it sooo much they wanted to get rid of it. Just ask China how much better it's doing after shifting to a capitalist-based economy.

Thu, 01/05/2012 - 19:12 | 2037393 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

And look how that worked out for you decadent westerners! You've left yourself pray to the predetory capitalists, they took everything. Now young people are flocking to wall street in an attempt to reverse the trend. May God send them stregth, we need to get back to order and proper government controls.

Thu, 01/05/2012 - 21:15 | 2037651 DeadFred
DeadFred's picture

It looks like someone got off the hyperspace bypass at the wrong planet again. A novel concept though, if you think about it, governments that can control the banks instead of the other way around. Hmmm.

Thu, 01/05/2012 - 21:15 | 2037653 Central Bankster
Central Bankster's picture

Only if government determines who gets to live and who gets to die and who gets what resources and which women.  Also, I should be in charge.  /sarcasm

Thu, 01/05/2012 - 18:19 | 2037212 homersimpson
homersimpson's picture

Anyone hear the Canadian anthem right now? Or whatever anthem of a heavily socialized country..?

Thu, 01/05/2012 - 18:49 | 2037321 ucsbcanuck
ucsbcanuck's picture

Dude, even we're not that stupid. Guaranteed 15% a year appreciation - what a load of crock.

Thu, 01/05/2012 - 23:58 | 2038018 FEDbuster
FEDbuster's picture

When they open the fiat floodgates, 15% a day won't keep up with the cost of living.  Just waiting for Uncle Ben to get a fat finger on his zero key. 

2012 the year all my rental properties will go to month to month leases, and maybe week to week?  Long term leases are like 30 yr. fixed rate mortages, foolish.

Thu, 01/05/2012 - 18:32 | 2037267 Ragnar24
Ragnar24's picture

I must just be missing the sarcasm -- otherwise I can only assume that Simple Jack is responsible for your post.

Thu, 01/05/2012 - 18:49 | 2037325 thewhitelion
thewhitelion's picture

And make everyone above average in looks and intelligence!

Thu, 01/05/2012 - 21:18 | 2037663 Central Bankster
Central Bankster's picture

As long as everyone has equal living standards as decided by a bureaucrat who can than make decisions for said parties to equalize any inequalities.  Now that comrades, is humanity.

Thu, 01/05/2012 - 20:49 | 2037619 Buck Johnson
Buck Johnson's picture

Here's something to consider, if they did do something like this refinancing how much you want to bet that they would have language in that govt. refinancing that would make you liable for the mortgage if you decided to walk away or can't even afford the refinacing.  

Thu, 01/05/2012 - 23:56 | 2038012 Larry Dallas
Larry Dallas's picture

Exactly: you beat me to it.

These loans would be structured identically to student loans from a personal liability standpoint. However, the smokescreen it would cast would be that it would reinvigorate the secondary mortgage market, and the candidates running in 2016/2020 would have to promise debt forgiveness to get re-elected. In the meantime, Congress would be able to wipe their brow ensuring a debt driven housing price increase (read: not bubble), and re-election.

How else would you encourage the TBTF to make loans without this lifetime guarantee.

Going out on a limb here, considering it would be mostly the baby boomers refinancing to live off of their equity, expect a "dynasty-guarantee", meaning their heirs would be liable. And yes, I'm surprised they haven't done it yet with reverse mortgages.

They could say that Fannie, Freddie and all other GSE's are in good operating shape and focus would shift from them.

Fri, 01/06/2012 - 04:22 | 2038352 StychoKiller
StychoKiller's picture

So, throwing out 500 years of Common Law re: Property Title carries no weight with you?  The more you look under the Fraudclosure rock, the scarier (and bigger!) the creatures get!

Thu, 01/05/2012 - 17:52 | 2037104 vintageyz
vintageyz's picture

There's no reason to insult a redfish.

Thu, 01/05/2012 - 21:21 | 2037669 Central Bankster
Fri, 01/06/2012 - 08:13 | 2038615 andrewp111
andrewp111's picture

The President's bold test of his recess appointment powers is the prelude for replacing the director of the FHFA. He needs to structure the program so the refis are applied for in the summer and fall, but are actually completed AFTER the election. That way the voter has no choice but to vote for Obama. He is already doing the same thing with mass student loan forgiveness (apply now, actually happens in 2013-2014), and will do te same thing for illegal alien amnesty.

Thu, 01/05/2012 - 17:32 | 2036999 CalibratedConfidence
CalibratedConfidence's picture

screw this stock

Thu, 01/05/2012 - 17:33 | 2037008 JR
JR's picture

“Giving debt relief to people that really need it, that’s what foreclosure is…” – Jamie Dimon

Thu, 01/05/2012 - 17:34 | 2037013 valley chick
valley chick's picture

is this the first official rumor of 2012?

Thu, 01/05/2012 - 17:36 | 2037020 Dr. Engali
Dr. Engali's picture

Wow the inbreading at Wall street never stops.

Thu, 01/05/2012 - 17:43 | 2037057 knukles
knukles's picture

Nope.  Can't mess with them credentials.  Like Triple Crown thoroughbred horses, they be.  Amazing.
Surprised they all don't work for BoA.

Thu, 01/05/2012 - 17:50 | 2037088 SimpleandConfused
SimpleandConfused's picture


What's that?  Are they mixing cookie dough and marble rye over there on Wall Street?

Just joking; I hate the grammer police as well ;)

But BAC lost its 4 handle and bumped, now it must learn the lesson of the immortal Joe Tex:

"Ain't gonna bump no more with no big fat woman..."

Thu, 01/05/2012 - 17:55 | 2037120 jcaz
jcaz's picture

Actually, would be the spelling police.....

Thu, 01/05/2012 - 19:21 | 2037412 SimpleandConfused
SimpleandConfused's picture

I stand corrected.  So, at least I stand for something:)

Fri, 01/06/2012 - 00:19 | 2038048 GMadScientist
GMadScientist's picture

No, you don't.

Ya screwed up both (he's a natural!).

Thu, 01/05/2012 - 18:18 | 2037207 Dr. Eldon Tyrell
Thu, 01/05/2012 - 17:37 | 2037022 Jlmadyson
Jlmadyson's picture

What a bullshit market we live in. Where the heck are you S&P. Don't wait for Friday close.

Thu, 01/05/2012 - 17:40 | 2037035 lolmao500
lolmao500's picture

SP will wait till close. And what's more, they won't even downgrade France by two notches.

Thu, 01/05/2012 - 17:37 | 2037023 LawsofPhysics
LawsofPhysics's picture

This should make for some friday fun.

Thu, 01/05/2012 - 17:39 | 2037031 ZeroPoint
ZeroPoint's picture

And what about those of us who didn't take out a loan they couldn't afford, didn't try to buy a house that was only worth 50% of it asking price? Some of us rented, and we did it on the wrong side of the tracks so we could save. What do we get? Is that tumbleweeds I hear?


Thu, 01/05/2012 - 18:03 | 2037153 Osmium
Osmium's picture

Don't forget about those who bought a house in need of repair, spent many long hours fixing it, and mangaged to pay off the loan.  We wouldn't get squat either.

And I think those are crickets you hear.


Thu, 01/05/2012 - 21:22 | 2037672 DeadFred
DeadFred's picture

Did you vote for Obama? I didn't think so.

Thu, 01/05/2012 - 21:25 | 2037681 Central Bankster
Central Bankster's picture

Think about it this way- you are right, but the central planners have decided you are wrong.  it's like shorting the stock market.  Sure, it's all lies and it should crash because many of the components have little or no real book values, but the central planning authorities have decided it must go higher and so you lose!  Free markets be damned!

Thu, 01/05/2012 - 17:39 | 2037032 justanothernerd
justanothernerd's picture

So -- all of these swings up giving shorts a way to profit when it comes back down? Whatever, I'll take it. 

Thu, 01/05/2012 - 17:41 | 2037047 AldoHux_IV
AldoHux_IV's picture

Here we go again with more bullshit rumors to entice risk and lull investors/traders (if any left other than the momo crowd) into thinking all is right again with the ponzi... until the reality of one of the biggest reversions to the mean in socio-economic and political influences is going to ensue.

Thu, 01/05/2012 - 17:47 | 2037075 Cdad
Cdad's picture

There are no "investors" left in the US.  There are terminators...and the sheeple who have yet to get the memo that the capital markets in this country are in ruins.

Fri, 01/06/2012 - 04:29 | 2038385 StychoKiller
StychoKiller's picture

I prefer to call them the Ignorati, but yer right, investors have turned into these:

Thu, 01/05/2012 - 17:42 | 2037052 NOTW777
NOTW777's picture

yes, but it helped uncle warren - look at sale on close

Thu, 01/05/2012 - 17:47 | 2037078 NOTW777
Thu, 01/05/2012 - 18:39 | 2037287 SilverRhino
SilverRhino's picture

That's probably EXACTLY who it was designed to help. 

Thu, 01/05/2012 - 17:43 | 2037056 SheepDog-One
SheepDog-One's picture

Well if a 'person' said it, then it must be true. SO! Back to 'carrot and stick' market moving method for a while....tomorrow it will probably be murmurings of 'QE' around open, to be rejected sometime after close.

Fri, 01/06/2012 - 04:30 | 2038401 StychoKiller
StychoKiller's picture

Why does everyone ignore it when a Robot sez it?  Stupid meatbags...bite my splintery, wooden @ss!

Thu, 01/05/2012 - 17:45 | 2037065 apberusdisvet
apberusdisvet's picture

Martin Armstrong, in one of his last commentaries from Ft Dix, wrote that the final housing turnaround might be in 2032.

Looking at all the MSM false hopium and the government lies on economic statistics, this might be the most prescient comment ever made about the housing bubble.

Thu, 01/05/2012 - 18:32 | 2037268 CrashisOptimistic
CrashisOptimistic's picture

People are completely oblivious to the reality of oil and how is MUST inform every comment and every thought.

No one in the entire world should be talking about anything in 2032.

Thu, 01/05/2012 - 17:46 | 2037067 Cdad
Cdad's picture

Yeah...sure...we will rumour, lie, and print dollars to....prosperity.  Every single day in our clearly failing Republic is just another adventure into the surreal.  Despite how equities can continue to disconnect from reality and float, there is simply NOTHING to buy here.  

That move on BAC stunk from the very first morning trades, and the sympathy trades in WFC and such smelled even worse.  There was simply never a moment when that move was believable or justified.

We are well beyond that point when even I can believe that all of this lying and rumoring is designed to actually create a false confidence in markets.  Clearly, these things are being done to destroy confidence...a plan that is working quite well considering fund flows out of the markets.

And comes next...the jack booted thugs, I expect.  The next much needed fund intervention as the markets implode again...or whatever version of this is yours.

It is truly sad to see this once great nation, on its knees, gasping for air, swarmed upon by banking and political and crony capitalistic thieves.  

We are lost.

Thu, 01/05/2012 - 17:53 | 2037109 SheepDog-One
SheepDog-One's picture

And it wont even take nukes to bring it all down, all it will take is China or someone finally fed up one morning, and dump a few hundred billion worth of their UST's on the market. Frankly, Im really surprised they havent already. 

Thu, 01/05/2012 - 17:56 | 2037126 Cdad
Cdad's picture

Anyone who believes that any of this can seriously delusional.  And you're won't take much to knock this entire Republic over.

In the AH, of course, some enterprising criminal syndicate Wall Street firm with a really sweet computer just dumped 1 million shares of BAC.  Oddly enough, this firm was able to do this pretty much near the high of the day.

Thu, 01/05/2012 - 17:57 | 2037136 SheepDog-One
SheepDog-One's picture

Apparently the FED is still there to sop up Buffets shares higher...ER UM I mean 'someones' shares.

Thu, 01/05/2012 - 18:03 | 2037156 Cdad
Cdad's picture

Also apparently, Wall Street is all in the equity market with zero protection...if we are to believe that the VIX actually measures anything at all, like the cost of puts compared to the cost of calls.

Just pathetic...the entire ball of wax just shot to hell as desperate criminal bankers flail about in a last ditch effort to not be the one pink slipped.

It has been written of this group of people that they are psychopaths.  Clearly so.

Thu, 01/05/2012 - 19:37 | 2037453 Everybodys All ...
Everybodys All American's picture

I agree with all of your commentary here. I wonder at what point do you think the US stock market went from being at least somewhat free to what right now is all out organized crime.

Thu, 01/05/2012 - 20:01 | 2037503 Cdad
Cdad's picture

I wonder at what point do you think the US stock market went from being at least somewhat free to what right now is all out organized crime.

Some would say going back to Jekyll Island.  The early 1980s was when the moral rot of Wall Street really became visible to the masses.

But the proper answer to your question, the one you are probably looking for, is Oct 3, 2008...TARP

Thu, 01/05/2012 - 20:08 | 2037518 Everybodys All ...
Everybodys All American's picture

Agree again. Speaking of morals. I wonder if you saw that Corzine it is being reported was looking at buying a chateau in France in the weeks leading up to the MFG collapse. We are talking some unreal morals of what that may imply. I will be extremely interested to see how that story plays out.

Thu, 01/05/2012 - 21:24 | 2037678 DeadFred
DeadFred's picture

Experience has taught me this can continue, maybe not forever, but MUCH longer than I thought it could.

Thu, 01/05/2012 - 19:09 | 2037384 chump666
chump666's picture

They are doing something else interesting, dumping their currency and buying USDs.  The Chinese (creditors) are begining to horde.  Which means crackpot Obama cannot keeping raising the debt ceiling.  Why? Well the Chinese may not sell UST's, but they WON'T buy anymore.  The Chinese don't buy, then the world won't buy.  Should force US interest rates up because if the Asians are hording USDs they don't want a devaluation anytime soon. Or you could be right, they sell a ton of UST's drive rates up and force austerity on the US.  Stop the Obama debt binge. 

Fri, 01/06/2012 - 01:39 | 2038184 FeralSerf
FeralSerf's picture

The Fed will just buy them and then the treasuries they have left will just be worth less.  They can't win on that one.  They should just be satisfied they had jobs for all those Chinaproles even if they aren't going to get paid.

Thu, 01/05/2012 - 17:46 | 2037070 AldoHux_IV
AldoHux_IV's picture

Why aren't the MFG people behind bars and instead hiding behind the doors of another institution that just as well may go down?

Thu, 01/05/2012 - 17:47 | 2037076 Reform1776
Reform1776's picture

Ha! I bought some cheap $7 otm bac jan 2012 speculative contrarian calls a couple of weeks back.

Thu, 01/05/2012 - 18:52 | 2037339 ucsbcanuck
ucsbcanuck's picture

Sell em soon - move won't last. No one ever went bankrupt taking a profit.

Thu, 01/05/2012 - 17:50 | 2037089 SheepDog-One
SheepDog-One's picture

Its HILLARIOUS to me that anyone actually BELIEVED 'The White House' would refinance all existing mortgages! Look how insane this country has become! But there was Limbaugh, Hannity, Beck all totaly buying into it....I hope they feel like IDIOTS now! OMFG, island in the south pacific time.

Thu, 01/05/2012 - 17:57 | 2037135 Mark123
Mark123's picture

In this crazy fascist crony-capitalist corrupted dumbed-down world why not believe it???  The government already has taken over the entire mortgage market (at least assumed all downside risk)....



Thu, 01/05/2012 - 18:21 | 2037216 Raskolnikoff
Raskolnikoff's picture

why is it so outlandish to think the President wouldn't refinance everyone's mortgage? where have you been the past few years? Under a rock? LOL, I remember buying SRS thinking that the Fed couldn't possibly buy up all those mortgaged stip malls and office buildings built during the commercial RE bubble these past fews years, and guess what...LOL, just WTF have you been lately???????

Thu, 01/05/2012 - 18:25 | 2037241 Cdad
Cdad's picture

Funny thing...some of us do not live up the Banana Republic Tree.  Some of us know that the market has no real measureable value...when the government makes it a non market.

In case you had not noticed, all the FED tintering these last four years has done NOTHING to improve the real economy.  So you go ahead and parrot the BS spewed by DC...and you will be the first fitted with your silver choke collar by President Zero, himself.

Fri, 01/06/2012 - 01:46 | 2038195 FeralSerf
FeralSerf's picture

Where do you live that's not "up the Banana Republic Tree"?  It can't be the good ol' USofA.  Mars?

Lots of us have noticed that the Fed tinkering hasn't improved our lots.  That doesn't mean we have any control over that tinkering.

Thu, 01/05/2012 - 18:39 | 2037290 you enjoy myself
you enjoy myself's picture

you know, i had finally managed to repress my nightmares of SRS and 2009.   i'm now looking at my screen with a thousand-yard stare and can swear i smell napalm.

Thu, 01/05/2012 - 18:24 | 2037236 yabyum
yabyum's picture

Beck, Hannity & Limbaugh feeling like idiots? Naw, those dicks are immune.

Thu, 01/05/2012 - 19:42 | 2037465 Everybodys All ...
Everybodys All American's picture

Everyone was reporting it. WSJ had an intraday. Bernanke wrote a report yesterday.

It took all day for the WH to reject it? I believe this was planned for Uncle Warren. Can't wait for the filings.

Thu, 01/05/2012 - 17:51 | 2037101 tmosley
tmosley's picture

Sorry, I thought a denial was the same thing as a confirmation.

Not like I care.  I paid off my mortgage long ago.  Wish I had bought silver instead.  Oh well.

Thu, 01/05/2012 - 17:53 | 2037110 trav7777
trav7777's picture

you would have bought at $49 "with both fists" and been as bankrupt as all those bagholders you created who are now scouring the internet for your home address

Thu, 01/05/2012 - 17:54 | 2037115 Mark123
Mark123's picture

I wonder what rumor will be used tomorrow?  Geitner is shaking his magic ball as we speak...."will the ECB print?"....what answer will the magic ball give???


Thu, 01/05/2012 - 18:10 | 2037175 Jlmadyson
Jlmadyson's picture

No rumor needed. 500K jobs print for December. Boom

Thu, 01/05/2012 - 18:16 | 2037197 blu
blu's picture

Don't be ridiculous . For really important questions on montary policy he uses cow pie bingo.

Good Lord. I used to live near Ferndale. 

Thu, 01/05/2012 - 21:32 | 2037699 DeadFred
DeadFred's picture

It makes a great charity event and the lawns love it.

Thu, 01/05/2012 - 17:55 | 2037119 YesWeKahn
YesWeKahn's picture

I hate to say that this type of daily bullshit need to stop. Bernanke has been changed from a FED chairman to a rumor master.

Thu, 01/05/2012 - 17:55 | 2037121 rawsienna
rawsienna's picture

The stock sucks but a refi program that taragets existing GSE loan (not non-agency) reduces credit risk to the government. The government is on the hook for losses on GSE loans, BOA is on the hook for putr backs of loans they sold to the GSE that were fraudualent. 


Thu, 01/05/2012 - 18:05 | 2037160 slewie the pi-rat
slewie the pi-rat's picture

if they shoot down prez0's "trillion-dollar re-fi plan" will they continue w/ FED QE for mortgage instruments from crony banksters [in europa]?  and how about banks renting out homes they ended up "owning" tho no one really knows quite how, at this point?

do they actually think that the people of the US want them to "tinker" around w/ this anymore?  well, WE DON"T YOU STYOOOPID MOTHERFUKING ASSWIPES!!!!

Thu, 01/05/2012 - 18:10 | 2037174 blu
blu's picture

So Eric Holder will be investigating this latest incident right along with the other blatant market manipulations, right?

Thu, 01/05/2012 - 18:15 | 2037192 Raskolnikoff
Raskolnikoff's picture

maybe he can provide those investors with the latest firearm technology just for fun like he did with the Mexican drug cartel. we need to conduct more studies and appoint more special committees 

Thu, 01/05/2012 - 18:24 | 2037234 ghostfaceinvestah
ghostfaceinvestah's picture

Thanks to that jaret seifred or whoever I was able to short one of the insolvent mortgage insurers, mtg, at a really nice price (sorry Kyle Bass, but you are dead wrong on that name).

And yes, those rumors really are endless, seem to pop up without fail every 6 months.

Thu, 01/05/2012 - 18:26 | 2037243 navy62802
navy62802's picture

None of it's going to matter when the dominoes fall in Europe. Been waiting for quite a while now, and we may have to wait a while more. But they'll fall eventually. And when they do, it doesn't matter what kind of financial gimmics or rumors are going around. US banks will be torpedoed.

Thu, 01/05/2012 - 18:26 | 2037244 Georgesblog
Georgesblog's picture

Of course any government refi plan should be downplayed. They can't answer the question. "Who's going to pay for it?" The taxpayers are way too fed up with the nonsense to get stuck with the bill. That kind of Bait-And-Switch would have politicians selling apples and pencils on street corners. the other option would require the banks to bite the bullet and back off the throttle on the Ponzi train.  That's not likely to happen. As we have seen, there are no bailoutsw for the public, that don't end up in ther banks balance sheet.

Thu, 01/05/2012 - 18:39 | 2037289 Quinvarius
Quinvarius's picture

We already paid for it when we bought the loans off of the asshat bankers.  We might as well get some benefit.  Besides, they have to do it before they allow rates to rise to stop ARM resets.

Thu, 01/05/2012 - 18:36 | 2037276 ghostfaceinvestah
ghostfaceinvestah's picture

Of course the real irony is Obummer not two weeks ago signed a bill that paid for the two month payroll tax cut extension by raising mortgage rates. And how do you think they are going to pay for the full year extension?

These guys (Rs and Ds together) really have no plan, they are making it up as they go.

Fri, 01/06/2012 - 01:52 | 2038205 FeralSerf
FeralSerf's picture

<<how do you think they are going to pay for the full year extension?>>

Psst -- Bernake's going to print a few extra billion.  Don't tell anyone.

Fri, 01/06/2012 - 04:40 | 2038461 StychoKiller
StychoKiller's picture

Billion?  Yer a few zeroes short there, pal! :>(

Thu, 01/05/2012 - 18:37 | 2037280 Quinvarius
Quinvarius's picture

They denied it.  Which means it is about to happen.  Just like when Merkel said she wanted a strong Euro on New Years eve.

Thu, 01/05/2012 - 18:48 | 2037315 Snakeeyes
Snakeeyes's picture

What is the real story? The Obama Adminsitration is HOPING that a principal reduction pump of $1 trillion would jumpstart the economy by lowering mortgage payments. Problem: DeMarco won't go for it

Can Obama replace DeMarco? No. HERA defined the protocol for replacing the FHFA Director. It either has to be someone who has been a deputy for 90 days (they haven't put someone there) or someone he nominated (which he hasn't done).

But Obama doesn't really want to do mass principal writedowns since it would enrage millions of voters. Including me.

It's a brilliant ploy. Get people talking about, then blame DeMarco. Best of both worlds. Obama loves to demonize the Republicans and DeMarco was a Republican appointee.




Thu, 01/05/2012 - 21:45 | 2037728 giddy
giddy's picture

Global refi plan should focus on borrowers cash-flow problem, not equity.  Who the fuk knows what properties are worth?  Doesn't matter unless someone is trying to sell.  At that point its game, set, match anyhoo. 

Two things impede refi -- LTV and Employment.  Lowering interest rates on all mortgages will increase homeowners cash flow and help increase sustainability.  Better than only bailing-out underwater mortages which also includes the people living gratis (no mortgage payments) for the last several years.  They've had plenty of taxpayer financed "cash-flow" already.      

Fri, 01/06/2012 - 02:00 | 2038223 FeralSerf
FeralSerf's picture

The plan is not to write down the principal.  The interest is to be reduced to the current rates and therefor the payments go down, but only for those current with their loans.  Maybe they won't need to move then if their payments aren't much more than rent.

'Bama don't care whether you're pissed, btw.  His handlers don't believe you're going to vote for him in any event and besides that they plan on counting the votes and besides that they have all the campaign money and besides that the Republicans don't have anyone to run against him.

Fri, 01/06/2012 - 07:48 | 2038602 andrewp111
andrewp111's picture

Why do you think Obama is stretching the limits of his recess appointment powers? The word is they will put a "housing advocate" in that position.

Thu, 01/05/2012 - 18:48 | 2037320 illadeljim
illadeljim's picture

Morons. They should be talking about reforming federal personal bankruptcy code to allow consumers to file bankruptcy but with a very generous homestead exemption and backstop it with some solid laws preventing abuse.

Thu, 01/05/2012 - 21:28 | 2037686 pods
pods's picture

You really don't get it do you?

They don't work for US.


Thu, 01/05/2012 - 21:35 | 2037703 nmewn
nmewn's picture

They should be talking about how much they suck from the system with every purposeful move they make.

But that would be self defeating for them.

Fri, 01/06/2012 - 07:55 | 2038607 andrewp111
andrewp111's picture

Bama does not care about what is the right thing to do. He wants to be reelected. Period. He needs to put in place a program that distributes benefits, but he has to make sure that the benefits will only be distributed after he is reelected. He has to give voters a financial incentive to reelect him. He is doing this with student loan forgiveness (it won't take full effect until 2013), and he has to structure a mass refi plan along the same lines. The same thing is true for a mass illegal alien amnesty. It is the Chicago way - give them an offer they can't refuse.

Thu, 01/05/2012 - 18:50 | 2037328 fonzanoon
fonzanoon's picture

Here is another example of BAC looking out for the little guy, and by that I mean getting rid of the little guy.

But the changes being made by Bank of America Merrill Lynch this year constitute more than a tweak and could have a substantial impact on broker trainees, small-market advisers and low-end producers at the firm.

The big change is the raising of the minimum account size from $100,000 to $250,000. The firm will continue to pay out 20% on existing accounts of that size, but if more than 20% of an adviser's book is comprised of these smaller clients, he or she will not get paid for any new accounts they take on below that threshold.

Thu, 01/05/2012 - 18:53 | 2037342 Quinvarius
Quinvarius's picture

It is an election year.  The only reason they did not do it 3 years ago was this year is an election year.  A mass refi is the ony thing they can do to actually address the problem of consumer debt.  If they don't do it, they are stupid. 

Thu, 01/05/2012 - 19:13 | 2037396 chump666
chump666's picture

US downgrade payback coming soon.  C'mon China get frisky with Obama, the guy has lost his brain.  Needs a wake up call.

Thu, 01/05/2012 - 19:18 | 2037405 rockraider3
rockraider3's picture

Of course this rumor is bogus, they haven't even rolled out the expanded HARP program that was passed in October/November 2011. In fact, my lender says this won't even roll-out until March 1st because Fannie and Freddie have to update their systems to account for the new LTV% and other changes.

So wouldn't make sense to throw out another mortgage fix until the last fix goes into effect and they see what the impact is on the consumer.

Thu, 01/05/2012 - 19:23 | 2037417 banksterhater
banksterhater's picture

Borrowers would need to be CURRENT or have 3 months TO GET CURRENT! THAT MEANS SQUATTERS MUST PAY THE AVE 31 MONTHS they got in "FREE RENT" ! So, how many does this help?

Fri, 01/06/2012 - 08:02 | 2038609 andrewp111
andrewp111's picture

And why would a squatter bother to participate at all? They will stay until the bank either enforces the rent, or throws them out. A mass refi is not for  them. It is designed to give a lush benefit to the ones that are current - and vote. It will also up consumer spending by the same amount that isn't going to loan payments.

Bernanke's plan to turn foreclosures into rentals is for the borrowers who will never be current.

Thu, 01/05/2012 - 19:28 | 2037428 Seasmoke
Seasmoke's picture

why would anyone refinance when the servicer does not own the underwater mortgage and cannot foreclose, at best this is unsecured debt......i have yet to see a refinance that beat ZERO dollars per month

Thu, 01/05/2012 - 21:30 | 2037693 pods
pods's picture

Don't watch THAT hand, watch the other one!


Thu, 01/05/2012 - 19:36 | 2037449 devo
devo's picture

Market forces always win.

Thu, 01/05/2012 - 19:44 | 2037473 bankofvol
bankofvol's picture

Or may be the real story in BAC has no link with this Refinance false rumors. May be the real story is Bernanke  letter and the white paper from the fed to use balance sheet to rent out the foreclosed home held by the banks, and simply sector rotation from winners of last year into losers of last year hoping for them to rebound. If this is the case expecte this the continue as people will be shorting the move thinking it is due to the Refi Rumors and these rumors are false stock must go down, and the more they will be shorting the more they will see banks squeeze up, this is the typcal squeeze scenario, short short the stock for one reason and the bulls push it up for another reason not understood by the shorts, it happens both ways though (some time short know and bulls think they know) and  give raise to the strongest movement until one side understand what the otherside is about and capitulate.

Thu, 01/05/2012 - 20:08 | 2037516 gravedestruction
gravedestruction's picture

They went to Jaret! - uh - wait a minute...

...and MF stands for what is it they say?

Thu, 01/05/2012 - 20:16 | 2037541 Everybodys All ...
Everybodys All American's picture

The BAC story moved the market big time today. We no doubt would have finished lower today without this rumor. SEC was busy Im sure though tracking MFG assets get returned to client accounts.

Thu, 01/05/2012 - 20:27 | 2037563 banksterhater
banksterhater's picture

Gary Chartman B Smith said to buy BAC over the weekend on Fox, I bet anything he had insider scumbag news.

Thu, 01/05/2012 - 20:35 | 2037589 gravedestruction
gravedestruction's picture

And to think this BAC monstrosity morphed from little old Bank of Italy in SF CA...

Located in San Francisco during the great 1906 earthquake when the ensuing fires destroyed most of the city. Immediately after the quake struck the owner of this little bank loaded all the money from the safe to a vegetable cart and moved it to a safe location while the city burned for days. The fires took their course as the other banks burned to the ground and when they had finally subsided (the fires - not the ground) he promptly rolled the vegetable cart to the front of his destroyed building set up shop and began doing business loaning money to businesses that needed cash to operate and to rebuild. He was the only bank open with funds as the other banks had to wait days for their collective fireproof safes to cool down before they could access the funds inside. He made the right move and became the only primary lender open for business to finance the city's recovery process as his small banking business greatly prospered from this man's keen innovation in response to such a huge crisis.

The rest is as they say HISTORY...

Fri, 01/06/2012 - 00:29 | 2038072 GMadScientist
GMadScientist's picture

And they've been just as unable to operate outside of the context of a near-monopoly market position ever since.


Thu, 01/05/2012 - 20:55 | 2037631 DymanicDoug
DymanicDoug's picture

what side of the barracade will you be on when the 57 Trilllion CDO steaming pile of toxic crap BAC holding moved over to BAC NA, blows up, and Joe six pack wont be able to by his Bud with a 50 dollar FR note...whats this paragon of value worth ?? market capitalization ? net worth....

Thu, 01/05/2012 - 20:59 | 2037633 quacker
quacker's picture


Doesn’t matter – if the Bureau of Lying Statistics spits out a number better than 100k tomorrow, all will be forgotten and Crammer will bang a unicorn right on live television.


Fri, 01/06/2012 - 00:32 | 2038073 GMadScientist
GMadScientist's picture

If there's a God, the Unicorn will be "top".

(that oughta throw those talkin' bots for an infinite loop)

Thu, 01/05/2012 - 21:28 | 2037684 AurorusBorealus
AurorusBorealus's picture

I will bet some money that not only does the White House have a plan to dump money onto mortgagers, I will bet it has several plans.  I also bet that these plans are floated one by one into the media, and before the election approaches, congress will ine up behind one of these plans.  The Republicans will make some headfake-political noise, but both parties will fall over themselves to buy the votes of debtors at the expense of everyone else in an effort to stay in office and quell dissent to the status quo.

Fri, 01/06/2012 - 01:56 | 2038216 indio007
indio007's picture

It's pretty frickin said the only thing keeping BoA from declaring bankruptcy are rumors. Last week it was a settlement rumor. This week it's the chance to lock in mark to fantasy accounting . Regardless, I guarantee someone is making money off of the churn....

Fri, 01/06/2012 - 03:18 | 2038304 Watson
Watson's picture

To me:

1. Obama wants to win the next election.

2. If individual, voting, mortgage-holders are somehow 'rescued', his chances of winning that election increase.

3. However, the entire US corporate banking and financial services rescue is very unpopular indeed.

4. Obama is not stupid (and for that matter, neither are most of his political advisors).

5. So, even if an individual mortgage-holder rescue is put together, _it will be explicitly designed to avoid giving, or even appearing to give_ any form of rescue to the financial services industry.

The error with the previous rescue was not keeping J6P's checking account working, it was doing so in a way that enabled the bank running that account to spin the roulette wheel again.

That mistake, for good political reasons, will not be repeated.

Fri, 01/06/2012 - 08:08 | 2038613 andrewp111
andrewp111's picture

He will also structure the program so Congressional approval is not needed, and the full "benefit"  will not be handed to the voter until after the election. To do this, he needs the cooperation of Bernanke. The Republicans have made clear that they would not reappoint Bernanke, so Bernanke has every incentive to help Obama by buying up all the newly issued bonds that contain the refinanced mortgages. It will be done by F/F, financed by Fed purchases, and the big banks won't have much involvement.

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