Between the various asinine bailout proposals being debated in DC, and now this, Fannie and Freddie are surely going to end up being nationalized in the next 1-4 years.
By Paul J Davies and Norma Cohen in London and Anousha Sakoui in Vienna
Published: May 15 2008 23:37 | Last updated: May 15 2008 23:41
The European Central Bank on Thursday voiced its high concern at growing evidence that banks are exploiting its efforts to unblock the frozen funding markets by using its liquidity scheme to offload more risky assets than it envisaged.
OT, but has anyone seen any analysis of how much of an impact the housing bubble had on the markets performance from say 02' to 07'? If all the garbage was backed out, consumer spending via MEW, the ungodly amounts made by the financials, etc. What would the markets have looked like without J6P feeling like he's doing okay just by owning a home(s)?
OT -- Do you think the names George, Ben, Hank, Chuck, Bob, and Angelo will fall to the bottom of the baby name list over the next few years? I think Satan and Ugly should be more popular than these brands of incompetence.
Heard this fool advertising on the radio today in SoCal. Says that your loan documents may contain language of predatory lending that will be used to change into a low fixed rate loan when attorney goes after lender. Nice Freshstart Lite program where you get to stay in your home rent free as it is transferred to some California corporation until after foreclosure.
I agree owning common stock right now in anything say for mining stocks who have hard assets to back up shares is ill advised. Earnings are getting slashed and shares are being diluted or used like weak paper currency to buy failing businesses. I think the safest place right now is TIPS even though DC lies about inflation. Need to be long stock but 5-10 years calls on the dow.
The available pool of borrowers with pristine credit was "mined out" years ago-- that resulted in the mess we have now. (Liar Loans, Fog a Mirror loans,NINJA loans.. etc. etc. Please oh please do not tell me they are attempting to start it all over again (BEFORE ITS OVER!!)
Under the new policy that is taking effect next month, Fannie will have the same maximum loan percentages across the country for people purchasing single-family homes that they intend to occupy,
So the logical thing would be to have a large downpayment across the board. Any guesses as to the uniform requirement?
Snide remarks aside, what does it sound like Fannie is telling us here? Is their business so beat-down that they are going down the tubes faster with this sensible policy in place than if they just open the doors and try to jumpstart the party again? Are they realizing how screwed we really are? Is this a clear-as-day indicator that the Federal Government will be making explicit backing of Freddie and Fannie's books any day now?
Why have any loan limits at all? Bring back no doc, Ninja and all the other BS. These clowns are BK and everyone knows it. The taxpayer is going to get stuck bailing this mess out so WTF.
Is it legal to lie in the testimony to congress?
"A lot of money is changing hands very quickly. In that one week alone, $44 billion was extended to the now merged enterprise of Bear Stearns/JP Morgan Chase. We are expected to believe that Ben Bernanke had no inkling of these transactions when he lunched at the NY Fed on 11th March, as he testified later to Congress that he knew nothing of the troubles at Bear Stearns until 13th March." RGE - Looting the Vaults at the Central Banks
On a recent trip I took a compilation of Art Buchwald columns ("The Buchwald Stops Here") from the late '70's. Some topics...
Santa Claus' elves being upset over outsourcing of toymaking to Asia,
Kickbacks to bankers (from Bert Lance) for shakey loans,
Chase-Manhattan marketing NYC bonds (which defaulted) while unloading their own portfolio,
An infinite loop of kiting loans among banks,
Loss of US$ value relative to rest of the world (if only he had known!),
and my favorite,
the sad tale of Rootin' Motors who replaced most of their workers with robots and then discovered that there were no buyers for their cars since eveyone else had done the same.
Sorry that I can't put his beautiful acerbic spin on it but as I said, "The more things change..."
You can do that but all that is going to replace them is more of the same. The system is rotten, and lobbyist don't run for elected office. The same lobbyist who write most of the laws.
Tim-
I don't know, I suspect discounters and businesses with low exposure to commodities (like IBM,) are OK to own, at least in a 3-6 month time frame.
Remember, the stock market is not the economy.
All that 2% money has got to go work soon. Flight to safety is fine for awhile, but as the market grinds higher that dead money will start to pour in. Every negative expert is calling this the eye of the hurricane. All that universal agreement is enough to make me suspect.
FT-Change is in the air for financial superclass
"Of the worlds elites, none has flown higher than those who have led the financial community. The re-engineering of international finance has been one of the transformational trends of our times in just a quarter-century, capital flows became massive, instantaneous and controlled by a new breed of traders representing a handful of major financial institutions from a few countries. Their rewards have transcended any in history as shown by an estimate by Alpha Magazine that the top hedge fund manager last year made $3bn." FT.com / Comment / Opinion - Change is in the air for financial superclass
Here in Florida, I don't anybody making loans to anybody, except pristine borrowers (hardly any exist), and hard equity lenders at extremely high interest rates.
I am going to the Attys Fund Convention during the day, and none of the attys I ask have any business. One said he is working to pay his overhead. Another said he'sdoing a lot of work for a municipality who has to check title for a lot of its assets. Some are doing estate planning. Oh, this is a convention for real estate lawyers.
I eagerly await what an economist is going to tell us.
The Fund charged a lot less and isn't even providing coffee at the breaks.
As someone said above, "good luck getting MI." It doesn't matter if Fannie relaxes their policy right now, since the MI companies all have these policies in place. This just shifts the legal risk of a discrimination suit. Let the MIs get sued. If no MI will write the policy, Fannie can't buy the loan no matter what their declining markets policy is.
I know of a bankruptcy attorney in the East SF Bay area. He has never been busier. A lot has to do with the fact that there isn't a lot of bankruptcy lawyers nowadays (Laws changed a few years ago). Some of his clients have about 200K in cash debt and 1 million in liabilities. Just a note people want to keep their car more than their home.
I don't think they will be nationalized. Their debt maybe but I think the Egos of Congressmen will win out and a entirely new entity will be created that is closer and must answer to the gov't directly. Political appointees and all. The name of Fannie and Freddie will be too tainted in a few years and will be scrapped.
"Conjure Cave- for the couple who has sex on the set first, therefore christening it, during the run of the show. It can be claimed any time between Opening Night and Closing Night (midnight). If multiple couples wish to claim Conjure Cave the then first couple usually wins although it is the Stage Manager final decision. The Stage Managers decision can be based on when it was claimed or style (as in the second couple was very cleaver and thus more deserving). This plate is always to be given out last. If no one claims Conjure Cave then the plate is ripped in two."
Just so everyone knows, The GSE's just released the new guidelines effective June 1st. They are not good. This is UNRELATED to the declining market hits being removed.
They've lowered the LTV requirements by 5% on ALL LOAN TYPES in ALL CATEGORIES. Also the minimum FICO score is now 620 for a RRT refi and below 75% LTV. Cash out above 75% LTV requires 700 FICO now!
The previous FICO requirements were 580.
So they remove the 5% LTV hit for declining markets, yet institute new guidelines across the board which decrease the LTV by 5%.
Freddie and Fannie are full of political hacks, and they know they will be dead meat after Nov 7 unless they can keep the party going until then. And if their political bosses do get kicked out, then why not live it up now, increase their bonus, and turn the mess over to the Dems this fall.
Faced with some of America's highest energy costs, Alaska Gov. Sarah Palin proposed a plan on Thursday to provide state residents with special debit cards good for $100 of fuel every month.
Leaders of the U.S. Senate Banking Committee said on Thursday they have agreed to the underpinnings of a housing rescue plan that will create a federal backstop for failing loans.
US Rep Frank 'Hopeful, Not Confident' On Housing Bill
["I'm trying hard. We're staying in touch. I've been talking to people," Frank said. "We're acting as if it's possible."
Frank made the remarks at a speech at the National Association of Realtors midyear meetings in Washington, DC.]
What about existing lenders taking a haircut to 85% od appraised value? Is that still in the bill, over banking industry objections? I doubt it, if Frank and Dodd, the pawns of the banking industry, are involved.
Expect a monster short squeeze on this bill. Tough sledding to bet against the PPT. Better to short the dollar. That's something they can't fix with bailout.
A year ago the discussion had not even touched on a total federal bail out of Housing. It was not even possible to imagine and now we are almost there. What will the next year bring?
We have retraced 2/3 of the market decline since October in just about 1.5 months. So much for the "greatest financial crisis since the G.D.". Shame on everyone who used such exaggerations, causing needless panic with the unsuspecting.
O-Joe
O-Joe, you're so right. No great financial crisis here. The Fed just decided to hand out all its solid assets in exchange for garbage because it seemed like an exciting and bold thing to do....you know, just for kicks, see?
Oh and pay no attention to the negative real interest rates in the face of dramatic energy, commodity and food inflation.
Shame on you for your pathetic comments.
I can only hope that you are long stocks with your life savings right now.
Would all the Ben Steins out there who believe that this whole crisis and recession (or not) is psychological kindly explain to me the economics of someone buying a home for over four times their income?
Is this like that idiot whose book was on Oprah? If I just think positive thoughts, I can afford anything I want.
Fannie and Freddie are public institutions supported by my fricking taxes. I do not want to pay for this bubble. Make Wall Street pay, give back their bonuses, shut down their banks. Why is losing Merrill Lynch or Bear Sterns a big deal? Who cares?
If housing is so important and so crucial that it requires massive socialist policies, then why not simply give every American $250k to buy a home. And mandate that prices must increase every year.
Ahhhh, this country sucks so badly that it's becoming painful.
the unsuspecting were the employees of BSC, thata subset that believed in there bosses, who commuted via n,q and 6 train from places like the bronx, queens and brooklyn, working long and hard for a shot at a decent retirement. The maring clerks , the p&s department, the systems maintenance group, etc...
is this what you meant?
yes , panic is what they should have done. and the panic would have taken them out of the equity position that held there retirement nest egg.
So Fannie/Freddie are safe even though they are highly leveraged because they have better underwriting and mortgage insurance. The MI companies are going away so now its FHA if you want anything risky. Fannie/Freddie buy risky FHA loans because of the insurance and that is their charter... then FHA has a risky mortgage bailout plan and Fannie/Freddie promise the use their capital to backstop it...
Geez, O-Joe, if you read any history at all you'd have realized this is just how it played out before.
tj & the bear | 05.16.08 - 2:06 am | #
I was just reflecting today (well, yesterday at this point) that the Second Great Depression will probably be called to have started last year in March or thereabouts when the first subprime blowup hit, and we're 14 months into it.
We have retraced 2/3 of the market decline since October in just about 1.5 months.
O-Joe, your math is a bit off. The S&P hit 1565 on a closing basis back in October. The March low was a bit under 1270, so that's about 300 bps.
We closed at 1424 yesterday, so 1424 -1270 = 154 bpts. More like a 50% retrace. Not unusual for bear market rallies, either.
However, lets assume the market continues to rally for another couple weeks, hitting your 2/3rds retracement. Even so, if you listened to cheerleaders like Larry Krudblow and "loaded up the boat" with index funds last Oct, you'd still be down 33%.
Suddenly I don't feel so bad about that cruddy 4.5% return I got in my BoA CD.
I was just reflecting today (well, yesterday at this point) that the Second Great Depression will probably be called to have started last year in March or thereabouts when the first subprime blowup hit, and we're 14 months into it.
I'm not so sure. Somebody was posting the other day about 28-29 and how bad everything BUT the stock market was then. We may well have a "Black Wednesday" next year that is regarded as the beginning of of GD-II.
As to shorting the GSEs because they're going to be nationalized. I think there's a good chance that as some point there will be a real short squeeze when the stronger one is forced to buyout the weaker one. Just like BS, nobody really WANTS to think that the failing one is worthless, there will be great pressure to overpay. And lots of optimists pumping up the value of the buyer because "This will end the crisis."
One step closer to government funded, taxpayer backed toxic loans for all.
Coming soon: no down payment requirement, and eventually no income documentation either since "in the new economy, so many people are working mulitple jobs or startups that it would not be fair to make them be honest about their incomes" or something like that.
This the is goal: prop up the housing market by taking money from everyone who still has it (people with jobs, savers, etc.) and giving it to speculators and crooks.
I'm a real estate lawyer, too. Ain't it great having all this extra time to troll the internet chats?
After the last several years, I finally am beginning to feel like a human, and not a machine, again. A much lower income human, yes, but still, and I paid off all my debts--house, cars, everything--with the bounties of the boom.
In Florida things are supposed to be bad, but I can say that even here in Alabama, supposedly immune to subprime and price declines because we didn't party as much as Florida, Cali, etc., things are not good. I recently had a closing where the seller brought $20,000 to sell her $157,000 house. Ouch!
No worry, FNMA, Freddie, FHA, GNMA, FHLB are all furiously printing money at the fed's behest to prop things up. I'm sure that'll all work out fine.
I can't believe what dumb policies our leaders are coming up with. It makes me want to SCREAM. We're so massively over-investing in real estate and UNFAIRLY to boot.
Oh yes, Alabama is entirely immune. I was assured of this repeatedly at a Christmas party in my brother's McMansion neighborhood near Birmingham. Apparently I didn't understand Birmingham was different and besides my opinions were too colored by my residence in Bubbleland, California.
At this point the only thing FNM and FRE have to lose is the value of their common stock.
It appears the bonds, preferred stock, and managements jobs will all be bailed out by us(the US tax payer).
Now there's a good idea, no-down loans
We're all in a "declining market" now.
This means that instead of putting lending limits on only the worst-hit areas, all of us will see underwriting guidelines tighten up even more.
Let me check...home owners who bought recently or maxed out thier HELOCs ... yep... they are still f+++ed.
Ahhh so if the action causes big problems, repeat action!
I love this thinking!
Take us dow
Right, a mortgage crisis is an inconvenience. Let's not have it and instead have a dollar crisis in a few months or maybe a year at the outside.
So moved.
So is Fannie going to tighten lending based upon the increased risk of not having this policy?
Between the various asinine bailout proposals being debated in DC, and now this, Fannie and Freddie are surely going to end up being nationalized in the next 1-4 years.
Short them at will ...
FT.com / Europe - ECB concern over liquidity scheme
ECB concern over liquidity scheme
By Paul J Davies and Norma Cohen in London and Anousha Sakoui in Vienna
Published: May 15 2008 23:37 | Last updated: May 15 2008 23:41
The European Central Bank on Thursday voiced its high concern at growing evidence that banks are exploiting its efforts to unblock the frozen funding markets by using its liquidity scheme to offload more risky assets than it envisaged.
Is this good news ?? Seems to me that it is not ??
"banks are exploiting its efforts to unblock the frozen funding markets by using its liquidity scheme to offload more risky assets than it envisaged"
Bankers exploiting their central bank. My my, now who could have guessed that?
I can haz hous and ponies, for nothin!
ok, i'd like the one in sf next to that yellen b***h, she cool
Sweet.
I've got a contract on a building i'm selling. From what i can tell the buyer is using FHA and will not be putting any money down.
If you can't beat 'em, join 'em?
down payments are for suckers.
OMG, byzantine! Do ya think that means that banks are exploiting the situation or that some of them may be - GASP! - dishonest?
Nah, couldn't be.
Shocked! I say. Shocked!, to think that those horrible bankers would offload those risky assets!
We know we said they could, but we never in our wildest dreamings think that they would take us up on the offer.
And then, to really get our goat, they have the temerity to not even use their new good money to loan out like we thought they would.
Shocked! We are very Shocked!
I weep for my children.
Also, when is the swearing in ceremony for the next president? I'm going to have a huge party that day.
Banker,
Where have you been. There is no such thing as bad news.
OT, but has anyone seen any analysis of how much of an impact the housing bubble had on the markets performance from say 02' to 07'? If all the garbage was backed out, consumer spending via MEW, the ungodly amounts made by the financials, etc. What would the markets have looked like without J6P feeling like he's doing okay just by owning a home(s)?
OT -- Do you think the names George, Ben, Hank, Chuck, Bob, and Angelo will fall to the bottom of the baby name list over the next few years? I think Satan and Ugly should be more popular than these brands of incompetence.
Political underwriting?
Keeping the Keys
Heard this fool advertising on the radio today in SoCal. Says that your loan documents may contain language of predatory lending that will be used to change into a low fixed rate loan when attorney goes after lender. Nice Freshstart Lite program where you get to stay in your home rent free as it is transferred to some California corporation until after foreclosure.
I'd say good luck getting MI but Congress will just loosen up FHA to add in stated income.
Shocked! I say. Shocked!, to think that those horrible bankers would offload those risky assets!
We know we said they could, but we never in our wildest dreamings think that they would take us up on the offer.
And then, to really get our goat, they have the temerity to not even use their new good money to loan out like we thought they would.
Shocked! We are very Shocked!
+1
On topic, you gotta be kidding me. Who in their right mind would be long FNM at this point?
MarkS
I agree owning common stock right now in anything say for mining stocks who have hard assets to back up shares is ill advised. Earnings are getting slashed and shares are being diluted or used like weak paper currency to buy failing businesses. I think the safest place right now is TIPS even though DC lies about inflation. Need to be long stock but 5-10 years calls on the dow.
The available pool of borrowers with pristine credit was "mined out" years ago-- that resulted in the mess we have now. (Liar Loans, Fog a Mirror loans,NINJA loans.. etc. etc. Please oh please do not tell me they are attempting to start it all over again (BEFORE ITS OVER!!)
Elvis you are wonderful. You should write for SNL!
12% I wouldn't spend the money for your no-down sale till the check clears. Just a thought.
Under the new policy that is taking effect next month, Fannie will have the same maximum loan percentages across the country for people purchasing single-family homes that they intend to occupy,
So the logical thing would be to have a large downpayment across the board. Any guesses as to the uniform requirement?
Alan should be at the bottom too! Maybe Angelo can arrange some concrete shoes.
Wasn't it Benjamin Franklin who said that one definition of insanity is to do the same thing over and over again and expect different results?
Perhaps we should just resign ourselves to the nationalization of the housing market in the not too distant future.
Polticians sell out to special interest.
Vote'em all out.
It's time for these freeloading politicans to find a real job working for a change instead of kissing some one's @$$.
Snide remarks aside, what does it sound like Fannie is telling us here? Is their business so beat-down that they are going down the tubes faster with this sensible policy in place than if they just open the doors and try to jumpstart the party again? Are they realizing how screwed we really are? Is this a clear-as-day indicator that the Federal Government will be making explicit backing of Freddie and Fannie's books any day now?
Why have any loan limits at all? Bring back no doc, Ninja and all the other BS. These clowns are BK and everyone knows it. The taxpayer is going to get stuck bailing this mess out so WTF.
Is it legal to lie in the testimony to congress?
"A lot of money is changing hands very quickly. In that one week alone, $44 billion was extended to the now merged enterprise of Bear Stearns/JP Morgan Chase. We are expected to believe that Ben Bernanke had no inkling of these transactions when he lunched at the NY Fed on 11th March, as he testified later to Congress that he knew nothing of the troubles at Bear Stearns until 13th March."
RGE - Looting the Vaults at the Central Banks
The more things change...
On a recent trip I took a compilation of Art Buchwald columns ("The Buchwald Stops Here") from the late '70's. Some topics...
and my favorite,
Sorry that I can't put his beautiful acerbic spin on it but as I said, "The more things change..."
aarlrenter,
Believe it was Einstein that made that quote. Applicable none the less!
"Vote'em all out."
You can do that but all that is going to replace them is more of the same. The system is rotten, and lobbyist don't run for elected office. The same lobbyist who write most of the laws.
Wake me up when Fannie and Freddie are nationalized.
Tim-
I don't know, I suspect discounters and businesses with low exposure to commodities (like IBM,) are OK to own, at least in a 3-6 month time frame.
Remember, the stock market is not the economy.
All that 2% money has got to go work soon. Flight to safety is fine for awhile, but as the market grinds higher that dead money will start to pour in. Every negative expert is calling this the eye of the hurricane. All that universal agreement is enough to make me suspect.
FT-Change is in the air for financial superclass
"Of the worlds elites, none has flown higher than those who have led the financial community. The re-engineering of international finance has been one of the transformational trends of our times in just a quarter-century, capital flows became massive, instantaneous and controlled by a new breed of traders representing a handful of major financial institutions from a few countries. Their rewards have transcended any in history as shown by an estimate by Alpha Magazine that the top hedge fund manager last year made $3bn."
FT.com / Comment / Opinion - Change is in the air for financial superclass
"We have met the enemy, and he is us" - W. Kelly
Here in Florida, I don't anybody making loans to anybody, except pristine borrowers (hardly any exist), and hard equity lenders at extremely high interest rates.
I am going to the Attys Fund Convention during the day, and none of the attys I ask have any business. One said he is working to pay his overhead. Another said he'sdoing a lot of work for a municipality who has to check title for a lot of its assets. Some are doing estate planning. Oh, this is a convention for real estate lawyers.
I eagerly await what an economist is going to tell us.
The Fund charged a lot less and isn't even providing coffee at the breaks.
On a recent trip I took a compilation of Art Buchwald columns ("The Buchwald Stops Here") from the late '70's. Some topics...
Sounds like a good book for practicing the Zen of nostalgia.
OT?
Conjure has begun construction of a "Conjure Cave."
I can see it now: "Conjure Cave Communiques."
As someone said above, "good luck getting MI." It doesn't matter if Fannie relaxes their policy right now, since the MI companies all have these policies in place. This just shifts the legal risk of a discrimination suit. Let the MIs get sued. If no MI will write the policy, Fannie can't buy the loan no matter what their declining markets policy is.
To mw:
Please oh please do not tell me they are attempting to start it all over again (BEFORE ITS OVER!!)
Great, isn't it? Bubble is the new norm.
Trump snares $100 million contract on oceanfront estate
West Palm Beach Business: News, stock quotes, financial, Real Money, health care, real estate | The Palm Beach Post
I know of a bankruptcy attorney in the East SF Bay area. He has never been busier. A lot has to do with the fact that there isn't a lot of bankruptcy lawyers nowadays (Laws changed a few years ago). Some of his clients have about 200K in cash debt and 1 million in liabilities. Just a note people want to keep their car more than their home.
What odds would you give at this time for FNM and/or FRE to be nationalized within the next 3 years?
KindaScared
I don't think they will be nationalized. Their debt maybe but I think the Egos of Congressmen will win out and a entirely new entity will be created that is closer and must answer to the gov't directly. Political appointees and all. The name of Fannie and Freddie will be too tainted in a few years and will be scrapped.
OT - Google result for "Conjure Cave":
"Conjure Cave- for the couple who has sex on the set first, therefore christening it, during the run of the show. It can be claimed any time between Opening Night and Closing Night (midnight). If multiple couples wish to claim Conjure Cave the then first couple usually wins although it is the Stage Manager final decision. The Stage Managers decision can be based on when it was claimed or style (as in the second couple was very cleaver and thus more deserving). This plate is always to be given out last. If no one claims Conjure Cave then the plate is ripped in two."
Just so everyone knows, The GSE's just released the new guidelines effective June 1st. They are not good. This is UNRELATED to the declining market hits being removed.
They've lowered the LTV requirements by 5% on ALL LOAN TYPES in ALL CATEGORIES. Also the minimum FICO score is now 620 for a RRT refi and below 75% LTV. Cash out above 75% LTV requires 700 FICO now!
The previous FICO requirements were 580.
So they remove the 5% LTV hit for declining markets, yet institute new guidelines across the board which decrease the LTV by 5%.
The net effect is bad news for homeowners.
A couple of thoughts....
1. The PMI companies haven't said anything about being willing to "go back."
The devil is in the details.....
Tom
"Conjure Cave- for the couple who has sex on the set first, therefore christening it, during the run of the show."
Gee, I knew he was theatrical, but not that theatrical.
mp writes:
"Conjure Cave- for the couple who has sex on the set first, therefore christening it, during the run of the show."
This doesn't have anything to do with Mike and Greg Brady, does it?
$400,000 of Deposits at a Failed Bank, First Hand Experience at ANB Financial
Bank Deals - Best Rates and Deals: $400,000 of Deposits at a Failed Bank, First-Hand Experience at ANB Financial
Freddie and Fannie are full of political hacks, and they know they will be dead meat after Nov 7 unless they can keep the party going until then. And if their political bosses do get kicked out, then why not live it up now, increase their bonus, and turn the mess over to the Dems this fall.
Faced with some of America's highest energy costs, Alaska Gov. Sarah Palin proposed a plan on Thursday to provide state residents with special debit cards good for $100 of fuel every month.
Gov. proposes to give Alaskans $100 a month for gas
| Reuters
Leaders of the U.S. Senate Banking Committee said on Thursday they have agreed to the underpinnings of a housing rescue plan that will create a federal backstop for failing loans.
UPDATE 7-Senators say have accord on US housing rescue
| Reuters
Step right up ladies and Gentlemen. Don't miss your chance to suck on that government teat.
Here is the WSJ link:
Fannie Is Poised to Scrap Policy Over Down Payments - WSJ.com
The devil is in the details.....
I hear you eat an elephant one bite at a time.
"they have agreed to the underpinnings of a housing rescue plan that will create a federal backstop for failing loans."
No need for bond insurance now.
US Rep Frank 'Hopeful, Not Confident' On Housing Bill
["I'm trying hard. We're staying in touch. I've been talking to people," Frank said. "We're acting as if it's possible."
Frank made the remarks at a speech at the National Association of Realtors midyear meetings in Washington, DC.]
No surprise how these bills get juiced up.
US Rep Frank
Elvis- "This doesn't have anything to do with Mike and Greg Brady, does it?"
No idea. I thought you'd left the building.
What about existing lenders taking a haircut to 85% od appraised value? Is that still in the bill, over banking industry objections? I doubt it, if Frank and Dodd, the pawns of the banking industry, are involved.
Expect a monster short squeeze on this bill. Tough sledding to bet against the PPT. Better to short the dollar. That's something they can't fix with bailout.
A year ago the discussion had not even touched on a total federal bail out of Housing. It was not even possible to imagine and now we are almost there. What will the next year bring?
Viewing with alarm, one year ago they were saying that everything was contained, remeber?
Only 1 year ago!
"What will the next year bring?"
Socialism.
So we see what the agreement was. The regulator OFEO lowers capital requirement and Fannie agrees to stop redlining areas. Just great.
My sense is it doesn't matter what Fannie, Freddy, the Fed and the pandering politicians do next.
It's too late, because psychology has changed, and people view a home purchase with fear now, rather than greed.
We have retraced 2/3 of the market decline since October in just about 1.5 months. So much for the "greatest financial crisis since the G.D.". Shame on everyone who used such exaggerations, causing needless panic with the unsuspecting.
O-Joe
O-Joe, you're so right. No great financial crisis here. The Fed just decided to hand out all its solid assets in exchange for garbage because it seemed like an exciting and bold thing to do....you know, just for kicks, see?
Oh and pay no attention to the negative real interest rates in the face of dramatic energy, commodity and food inflation.
Shame on you for your pathetic comments.
I can only hope that you are long stocks with your life savings right now.
Sure Joe hold onto those Citigroup shares for me.
FNMA checks in with the good news and MGIC checks in with the bad.
http://www.mgic.com/pdfs/MGIC_Bulletin_May_02_2008_Final.pdf
No more;
Expanded Criteria / A-minus loans
Reduced Documentation / Alt-A loans
Investment properties
Cash-out refinances
3- to 4-unit properties
Loans with potential neg-am
Nonwarrantable condominiums
blah blah blah
Oh yeah! Lets don't forget declining markets.
The rest will follow in the next week and Fannie can say they tried.
That's a lock-up folks.
Would all the Ben Steins out there who believe that this whole crisis and recession (or not) is psychological kindly explain to me the economics of someone buying a home for over four times their income?
Is this like that idiot whose book was on Oprah? If I just think positive thoughts, I can afford anything I want.
Fannie and Freddie are public institutions supported by my fricking taxes. I do not want to pay for this bubble. Make Wall Street pay, give back their bonuses, shut down their banks. Why is losing Merrill Lynch or Bear Sterns a big deal? Who cares?
If housing is so important and so crucial that it requires massive socialist policies, then why not simply give every American $250k to buy a home. And mandate that prices must increase every year.
Ahhhh, this country sucks so badly that it's becoming painful.
panic with the unsuspecting.
the unsuspecting were the employees of BSC, thata subset that believed in there bosses, who commuted via n,q and 6 train from places like the bronx, queens and brooklyn, working long and hard for a shot at a decent retirement. The maring clerks , the p&s department, the systems maintenance group, etc...
is this what you meant?
yes , panic is what they should have done. and the panic would have taken them out of the equity position that held there retirement nest egg.
you sure are an asshole , ojoe.
This doesn't have anything to do with Mike and Greg Brady, does it?
Nope! Ward and Beaver Cleaver........
Surely the issue is whether the MI cos will go along?
We have retraced 2/3 of the market decline since October in just about 1.5 months. So much for the "greatest financial crisis since the G.D.".
Geez, O-Joe, if you read any history at all you'd have realized this is just how it played out before.
"People want to keep their cars more than their homes".
Good news for auto makers.
So Fannie/Freddie are safe even though they are highly leveraged because they have better underwriting and mortgage insurance. The MI companies are going away so now its FHA if you want anything risky. Fannie/Freddie buy risky FHA loans because of the insurance and that is their charter... then FHA has a risky mortgage bailout plan and Fannie/Freddie promise the use their capital to backstop it...
Who is insuring who against what risk?
And Who's on first?
Geez, O-Joe, if you read any history at all you'd have realized this is just how it played out before.
tj & the bear | 05.16.08 - 2:06 am | #
I was just reflecting today (well, yesterday at this point) that the Second Great Depression will probably be called to have started last year in March or thereabouts when the first subprime blowup hit, and we're 14 months into it.
We have retraced 2/3 of the market decline since October in just about 1.5 months.
O-Joe, your math is a bit off. The S&P hit 1565 on a closing basis back in October. The March low was a bit under 1270, so that's about 300 bps.
We closed at 1424 yesterday, so 1424 -1270 = 154 bpts. More like a 50% retrace. Not unusual for bear market rallies, either.
However, lets assume the market continues to rally for another couple weeks, hitting your 2/3rds retracement. Even so, if you listened to cheerleaders like Larry Krudblow and "loaded up the boat" with index funds last Oct, you'd still be down 33%.
Suddenly I don't feel so bad about that cruddy 4.5% return I got in my BoA CD.
I was just reflecting today (well, yesterday at this point) that the Second Great Depression will probably be called to have started last year in March or thereabouts when the first subprime blowup hit, and we're 14 months into it.
I'm not so sure. Somebody was posting the other day about 28-29 and how bad everything BUT the stock market was then. We may well have a "Black Wednesday" next year that is regarded as the beginning of of GD-II.
As to shorting the GSEs because they're going to be nationalized. I think there's a good chance that as some point there will be a real short squeeze when the stronger one is forced to buyout the weaker one. Just like BS, nobody really WANTS to think that the failing one is worthless, there will be great pressure to overpay. And lots of optimists pumping up the value of the buyer because "This will end the crisis."
One step closer, my friends.
One step closer to government funded, taxpayer backed toxic loans for all.
Coming soon: no down payment requirement, and eventually no income documentation either since "in the new economy, so many people are working mulitple jobs or startups that it would not be fair to make them be honest about their incomes" or something like that.
This the is goal: prop up the housing market by taking money from everyone who still has it (people with jobs, savers, etc.) and giving it to speculators and crooks.
Lawyerliz,
I'm a real estate lawyer, too. Ain't it great having all this extra time to troll the internet chats?
After the last several years, I finally am beginning to feel like a human, and not a machine, again. A much lower income human, yes, but still, and I paid off all my debts--house, cars, everything--with the bounties of the boom.
In Florida things are supposed to be bad, but I can say that even here in Alabama, supposedly immune to subprime and price declines because we didn't party as much as Florida, Cali, etc., things are not good. I recently had a closing where the seller brought $20,000 to sell her $157,000 house. Ouch!
No worry, FNMA, Freddie, FHA, GNMA, FHLB are all furiously printing money at the fed's behest to prop things up. I'm sure that'll all work out fine.
I can't believe what dumb policies our leaders are coming up with. It makes me want to SCREAM. We're so massively over-investing in real estate and UNFAIRLY to boot.
Oh yes, Alabama is entirely immune. I was assured of this repeatedly at a Christmas party in my brother's McMansion neighborhood near Birmingham. Apparently I didn't understand Birmingham was different and besides my opinions were too colored by my residence in Bubbleland, California.
"... in my brother's McMansion neighborhood near Birmingham."
Let me guess...Greystone, Liberty Park, Trace Crossings, or maybe, Ross Bridge?
You ought to check out the foreclosures in Greystone, which is the oldest of the McMansionvilles.
These Democrats will not be happy until they have created a Depression.
And, Oh Happy Day, then maybe they will rule the political process for another 25 years, just like before.
Somewhere Jimmy Hoffa is dancing.
THE DEMOCRATS?!?!?!
I want some of what YOU are smokin.