Nice that Paulson is being honest and is apparently knowledgeable about the nature and scope of the foreclosure problem. Doesn't seem that this plan will do much, but distressed home owners at least have someone/someplace to turn to. I wonder what percentage of the people 3 months behind can actually work something out.

tedzbear - when a lender releases a lien for less than the amount owed - that is known as a 'short-sale'.

If someone wants to sell their home for less than what they owe on their mortgage(s), they will either have to:

A. pay the difference out of pocket at closing, or

B. get the lender(s) to agree to a short sale. Which may usually requires, among other things, a complete fiancial(sic) colonscopy.

That's it - there is no 'passing' a lien to the new owner.

[What is implied here is that servicers are, in fact, staffed up to do these time- and labor-intensive modifications that include real examination of the borrower's circumstances, real counseling, and loan changes that are much harder to process than just a teaser freeze.]

They already couldn't handle the volume. They were already bitching about how much the call volume had risen with the HOPE charade.

Mods are already taking 6-8-10+ weeks for the lenders to process. I'm still waiting for a lender to complete a mod on a file we submitted in early SEPTEMBER.

Let's get real: nearly everyone involved in this "crisis" has been lying since day 1. Why would they start telling the truth now?

When you see these announcements, try to remember a time when the feds SOLVED a problem. Hmmm... the War on Drugs... the War on Cancer... Social Security... Medicaid... the tax code... and now, the War on FORECLOSURE.

Q to Paulson: "Is the worst over?"

Paulson: "The worst is just beginning."

Please, please, please post a link to the audio of this. It would just make my morning!

[ask if lenders would be willing to forgive principal.]

This idea was broached at an MBA conference last spring.

One particular lender has been doing this for about a year, but they buy all of their paper at steep discounts.

But if you open this up on a wide scale, how can you control it?

Tanta, the link will be here. Right now it says:

"The on-demand version of this event will be posted shortly"

I hope someone excerpts a few good parts (like Paulson's comments and the reporter's question) and puts it on youTube.

Best to all.

I defy anyone to listen to Alphonso Jackson natter on for ten minutes and still have any basic mental skills left at the end of it.

Piece of cake. All I have to do is focus. I'll visualize a solid connection from by brain to my fingers. Tubular highgrade steel. Impenetrable even to the waves of stupity that emanate from officials of this administration. fLawless insyde and cheese out. No c ane pri;lkrguy8- nq;lkj;..asoisuiefgl

CalculatedRisk going commando without a spell checker. Who would have known?

"Let's have a contest to name the next program Paulson comes up with. My vote: Operation Life Support. Then when that doesn't work - what then?"

Mortgage Morgue.

Operation Free Pony?

Operation Don't Walk Away

C-span?! It's better than American Idol!

Operation Hope Knows Not Everyone is Salvagable!

OH KNOES!

All, can someone with the video tool and skill excerpt the Q&A (at about 27 minutes) about reducing mortgage size and the BofA answer and put it on YouTube? And the Paulson Q&A at about 34 minutes (The worst is just beginning quote).

That would be cool.

Best to all.

Hey hank, its Angry saver here. We don't really need these mortgage work outs. Why don't the banks just go short the Case Shiller index. Or better yet, just short their own stocks. Homeowners can go short too.

Angry Saver, that kind of exploitation is reserved for sophisticated and important people. You'll have to trust me on this one. I've made a fortune doing just that.

chubasco - how does "Operation Euthanasia" sound?

Hank, is true that internally the banks call the new plan "Project Life Support"? I'm beginning to worry about the security of my savings in various banks.

You really are a loser Angry Saver. Once again, Ben, George and I are taking your savings via negative real interest rates and a stimulus plan to give to the banks and under water borrowers. That way, your savings WILL be safe. Is it that hard to understand you ungrateful pin head?

In addition the 90-day delinquent loan can't be:
-in active bankruptcy
-in active foreclosure with sale date less than 30 days,
-where the homeowner has indicated they want to give up their home (?)
-investment properties
-vacant properties.

At the information session following the event, reporters took to calling this a "carrot" for borrowers to contact servicers... though it was pointed out servicers have always paused foreclosure if a modification is in process - resulting in a nothing but a "PR Carrot."

also "Homeowners" must:
-call their servicer within 10 days of receiving the letter,
-tell them they have received the letter and want to stay in their home and are willing to seek counseling,
-provide updated financial information.

What if you call, provide updated financials but don't mention the letter? No pause?

Or failing all this, the Banks can just offload the debt recovery process onto somebody else, for a reasonable 70% collection fee.

CORRECT: Oxford Funding buys mortgages at 70% discount - MarketWatch

Why do i have the feeling that the people with large tattoos and brass knuckles just organised themselves a hedge fund?

To get 90 days late, a person has ignored, ohhh, at least a dozen nasty notes from their servicer, along with maybe 10-20 live or robocalls demanding payment.

But this one last letter will make all the difference!!!
I suspect that 95% won't be read. Another 4% will read and ignore. The last 1% won't be eligible.

try to remember a time when the feds SOLVED a problem

Elián González?

"Operation Foreclosure Freedom"

That's where they use troops to take over the loan servicing duties when they become unmanagable. Like the Nat Guard during Katrina.

Highlights of the actual plan v.s. reality:

1. Call your mortgage servicer

(Provided you still have phone service, please call us now. Yes we are the same people who have been calling you, leaving you nasty messages for 3 months now.)

1. Tell the servicer you received a letter, you want to stay in your home and you are willing to seek counseling, if necessary.

(Admit that after all the previous letters you've ignored that yes you do read your mail. Admit that you need counseling, both financial and psychological since you were crazy to think you could afford this house in the first place.)

1. Provide updated financial information so the servicer can explore a suitable solution.

(Give them the information you should have given them when you got the loan, thus admitting that you committed a felony and confirming that there is no way you can afford your house, ever.)

1. If appropriate, any pending foreclosure will be ‘paused’ for up to 30 days during the review process until a formal decision is made and a plan is created.

(This may be the only true benefit, an extra 30 days to live free and save for first and last month's rent)

1. If a workout plan is established and the homeowner follows the plan for three consecutive months, their loan will be formally modified as they have demonstrated their ability to meet the requirements"

(Forget number 5. It happens about as often as winning the lottery. But if you win the lottery you may actually be able to stay in your home forever).

If this doesn't work, the next letter could be disguised in a Publisher's Clearinghouse envelope: Project Hope Springs Eternal. Recipients enter a lottery and advise their lenders in one easy step. There is a drawing and one of the respondents wins loan forgiveness.

Or the big newspapers could carry an FSI with a coupon for 4% off your resetting mortgage interest rate (if you qualify and redeem within 30 days): Project Hope for Better.

For a moment there I was thinking that there's no way servicers have the capacity for this, echoing FDIC's Bair that more systematic mods are needed to deal with the refi/modification wave.

But then the servicers put me at ease(?), assuring us that since there are only 1.6 M loans 60-days or more delinquent, and that 90-days or more is a smaller number than that, and those who qualify for a modification will be a smaller subset still, there's no need to worry.

Although, they have "no idea" how many letters will be sent until the little letter writing machines actually do their job.

AP reporter asked: If I write that 500 thousand people will be eligible, would that be wrong?

WAMU representative: Don't write that!

Operation Grappling Hook

There is a $9 billion U.S. bank in trouble. FDIC staff reviewing insured deposit downloads. Which one would that be?
FFDIC

9B in deposits or market cap or ? I can try and smoke it out if you told me which metric we are discussing here; Keycorp(KEY) has a market cap of 9.6B, there's nothing in the price action today ! Such secrets aren't kept - no wayyy ! So it must be someone else.

-K

Even during the market rally we are seeing selective buying. The DOW is up but the others are either in the negative or flat.

According to my speedy Google research, it doesn't even make the top 50.

FDIC: Summary of Deposits Disabled 

Nothing to see here, move along...

Well, using the FDIC site, there are 17 banks with assets between 8 and 10 B. Looking at just the domestic institutions, and what I know of the at-risk banks, CORUS and Fremont are my favorites. CORS shows nothing in terms of stock price, nor does FMT -I'd still bet on FMT though.

Other possibilities are : FNFG, TRMK and a couple of others.

-K

Maybe he has a bungalow on Bush's new ranch in Paraguay.

Anyone see the story on Latrell Sprewell? His yacht was repo'd and auctioned off and his house is in foreclosure. This is the same guy who turned down a 3 year $21 million contract extension saying "I've got my family to feed,"

Latrell loses house and yacht

O/T but interesting:

February 12, 2008 3:07 PM EST

NEW YORK--(BUSINESS WIRE)--

Fitch Ratings has downgraded 28 tranches of total rate of return (TRR) collateralized loan obligations (CLOs). All classes remain on Rating Watch Negative. Approximately US$125 million of securities affected by these actions are from transactions which have breached their total return swap (TRS) termination/liquidation triggers, and for which Fitch has received confirmation from the trustee, banker, or asset manager that the TRS counterparty has elected to terminate the swap and liquidate the collateral

Is there a place where I can view banks by assets in a sortable table?

I went to the FDIC Institution search page and asked for all between $8.5B and $9.5B. The list is short.. 10 banks.

FDIC: Institution Directory 
go to "Size or Performance" and select "by Assets" then type in the range.

Gary,
Yes, by all means, protect that inheritance.

That is correct, sir!

elvis, do you also post at swampland?

Gary,
All your in-laws may want to do is add you and your spouse as joint account holders. FDIC insurance goes up by 200K and everyone is happy

From the WSJ$ comes this:

Citi to Inject $3.3 Billion to SIVs

February 12, 2008 2:40 p.m.
LONDON -- Citigroup is to inject around $3.3 billion into six of the seven structured investment vehicles it took on balance-sheet last year in an effort to shore up their top credit ratings and protect senior creditors, people familiar with the situation said Tuesday.
...
Barclays analysts Tuesday highlighted their concern about the ability of banks such as Citi to execute restructurings of their own SIVs by taking them on balance sheet, following the collapse of Standard Chartered's plan to support its $7 billion Whistlejacket Capital SIV.

While there are no market value triggers on the Citi SIVs that force them into receivership or liquidation, the downgrade on the debt could create forced sellers and lower creditors' ability to recover their investment, the people said.
...

Citigroup Will Support Six SIVs on Its Books - WSJ.com

TCF National Bank
State Farm Bank, F.S.B
Emigrant Bank
Carolina First Bank
Guaranty Bank
First Hawaiian Bank

All the above have 9B in deposits. I like Guaranty bank

Gary,
I do not post in swampland. If there is an imposter Elvis over there, please tell him there is only one King.

One of my favorite comments from Sec. Paulson was that housing prices have increased at an unsustainable rate and there needs to be a correction.

"There are two ways of working yourself out of a correction, one is housing prices decline and the other is the economy keeps growing."

Don't worry guys, inflation will fix it.

All your in-laws may want to do is add you and your spouse as joint account holders. FDIC insurance goes up by 200K and everyone is happy

Ugh...

I've heard of seniors who did that and ended up with a real mess on their hands when one of their children ended up in bankruptcy, being sued, or divorced. There are also tax implications. Its possible that you'd end up turning a tax-free inheritance into a taxable gift.

Also, each depositor if covered up to 100K for each class of account. So, let's assume that you had these accounts with the following balances:

Father & Son (150K)
Mother & Son (150K)

You'd assume that 3 people, 300K in coverage. But, the FDIC looks at like this:

Father, Joint Account, 75K
Son, Joint Account, 75K
Son, Joint Account, 75K
Mother, Joint Account, 75K

The son has 150K in Joint Accounts and isn't covered. But, a higher amount this way is covered:

Father (100K)
Mother (100K)
Father & Mother (200K)

The FDIC looks at it like this:

Father, Single Account, 100K
Father, Joint Account, 100K
Mother, Single Account, 100K
Mother, Joint Account, 100K

Since each account type is covered for 100K the entire amount is covered.

There are higher amounts that can be covered with different configurations and using POD accounts but the max is 600K per person.

OilEquations,

Thanks, I will look that over and see what's new...somewhere in the office at home I have an autographed copy of his book (guest speaker and comp copy at an event sponsored by an independent oil company).

OT - but I just came from voting in VA. In an area that has been Republican since Reagan almost everyone was voting Democrat.

Yup, our overlords learned in August 2007 that running a nationwide "Who Wants to Be a Millionaire" reality TV show wasn't such a good idea in the end.

Re: MR's post at 5:09: "An Associated Press analysis examined the proportion of U.S. home sales in 2007 and 2006 that resulted from foreclosures"......states already into the double digits for percentage of sales resulting from foreclosure are California (natch), Nevada (deal'em), Colorado (that boom'n bust frontier mentality I suppose) and Tennessee.

What the heck is going on in Tennessee?

i vote for what
Bilbo wrote:
Let's call it "No Mortgage Left Behind".
| 02.12.08 - 1:37 pm | #

AND

Misean wrote:
Operation Barn Door.

| 02.12.08 - 4:48 pm | #

as for this turtle...id call it
operation BIG BEN

ask not for whom the bell tolls...it tolls for thee

Cal:

Re your question up thread regarding why OCC would pressure banks not cooperate. The OCC has taken the position that states have no authority over Federally chartered banks. If the Banks provided data to the working group that could set a precedent which undermines that assertion.

Clyde,
It must be the whiskey in TN.