Warp 9,the banks eat the helocs.these are secured loans and the "security" was the equity which might have been in the property.They are recourse loans in many cases,but trying to collect money from people who do not have it is difficult.and since these are cases that have to be pursued through superior court there are significant up front costs involved...deficiency balances are notorious for low recovery rates even if the debtors don't buy a nolo press do it yourself BK book.

Coupla points.

The secondary market for MBS products that aren't in the first position will crumble.

There's no way the HELOCs that default will be pursed by foreclosure. The lender would have to pay off the primary lienholder thus increasing their potential loss exposure.

I truly am shocked that the SEC hasn't come in and forced these banks with exploding Allowance accounts to restate their financial statements back to when they made these loans....and for once that's not sarcasm. There must be really heavy lobbying going on for these restatements to fall by the side.

No, but they can forfeit them due to unpaid property taxes.

If your broker or bank will not sell your security, what is it's worth? Zero?
Bloomberg.com 

Blitzers Grassy Knoll Prayer G writes:

You guessed it you dumbass retards, all these territories are going to benefit from increased gas prices and the associated tax revenues generated by the proportional increase in tax revenues!

I have always been under the impression that most if not all gasoline taxes are calculated at a $/gallon rate, not a $/$ rate, and that the current Federal excise tax is $0.18/gallon. I am not saying I have been right, I just want you to prove to me that my perception has been wrong. Please enlightenment me by providing a link to a government source that supports your assertion that gasoline taxes are based on a $/$ calculation.

Feed not the troll.

Thoughts on how the market opens tomorrow? Futures are up, but I have to think that the PPT is playing a role. When the market opens to J6p tomorrow, I have to think that we slide some more....

"Only problem -- the gas tax is so many cents per gallon, not a percentage of the total sales price."

In California there is a sales tax also. So there is a tax on a tax.

So, what are the dollar losses if we just assume 12% is gonzo???

If anyone feels like pulling 30 call reports and adding it up, here is the list of 30 largest institutions (by assets). The number behind the bank name is the FDIC certificate #.

Total assets for the 30 largest banks is roughly $8,289 Billion.

JPMorgan Chase Bank, National Association - 628
Bank of America, National Association - 3510
Citibank, National Association - 7213
Wachovia Bank, National Association - 33869
Wells Fargo Bank, National Association - 3511
Washington Mutual Bank - 32633
U.S. Bank National Association - 6548
HSBC Bank USA, National Association - 57890
SunTrust Bank - 867
FIA Card Services, National Association - 33318
National City Bank - 6557
State Street Bank and Trust Company - 14
Regions Bank - 12368
Branch Banking and Trust Company - 9846
RBS Citizens, National Association - 57957
PNC Bank, National Association - 6384
The Bank of New York - 639
Countrywide Bank, FSB - 33143
Capital One, National Association - 4297
Keybank National Association - 17534
Sovereign Bank - 29950
Citibank (South Dakota), N.A. - 23360
ING Bank, fsb - 35489
Chase Bank USA, National Association - 23702
LaSalle Bank National Association - 15407
The Northern Trust Company - 913
Wachovia Mortgage, FSB - 27076
Comerica Bank - 983
Manufacturers and Traders Trust Company - 588
Fifth Third Bank - 6672

NY Fed chief urges global bank framework [Let Barney Frank & Sheila Bair run the world.]
"Banks and investment banks whose health is crucial to the global financial system should operate under a unified regulatory framework with “appropriate requirements for capital and liquidity”, according to Timothy Geithner, president of the Federal Reserve Bank of New York."
FT.com / US / Economy & Fed - NY Fed chief urges global bank framework

Barney Frank and Sheila Bair? Hmmm..
What is "Dancing with the Stars"?

A lot of those regionals bought MBS, too.
tj & the bear | 06.08.08 - 10:15 pm | #

Oh ya - and then there are those CRE loans the regionals pigged out on, how are they lookin'?

AllenM writes:
Alright folks, facing a potential layoff, I am tempted to write my heloc lender and see if they are willing to take 12k on a 28k heloc on an underwater rental property.

Would you take the deal? If you wouldn't why not? I'd play that thought experiment a number of times & polish your offer.

My guess is they would say 'no' - make you walk away instead. Financial chicken.

BTW - if the lay off went from potential to actual I think your bargaining position gets a lot better real fast (credibility of the threat).

Let us know what happens.

Oh, goddess, here we go again. Mtg lenders whether first or second virtually NEVER ask for deficiency judgments.

2nd mtgees don't either. Typically, they lose everything.

It's not worth the money to try. They know they'll never collect it.

Years ago(like 20?), there was a second mtg, I was filing suit to eliminate, as the wife hadn't signed it, and I think there were other defects. I was being paid a grand. I said, look, I'll give you the grand to release the mtg, or I'll pay myself to get it wiped out entirely. They wouldn't take the money, and I wiped them out.

Makes no sense.

2nds are even less likely to go for deficiencies. Recourse vs non is just a hypotheical right. And the judges are getting to know how stupid the lenders were. Why should they alienate voters who vote them in when it is so easy to be nice?

And besides, Carthage must be destroyed.

Well, in Fla, you can foreclose, but you'd better get a guardian appointed first. Which will cost more than the whole foreclosure.

I think people used to hide mental illness more. And frankly, there didn't used to be a heck of a lot you could do for it anyway.

OT, but there was an NPR thing on people in California who were living in trailers. Better, I suppose than living in cars, and 2 steps up from the street. Apparently, there is an area suitable for parking your trailer. There was a local dope dealer--nothing to do with the trailer folks, who was interviewed because he was there. He said he wasn't making so much money anymore, because his customers didn't have any money. Times must really be tough!!!

A lot of mentally ill people have been able to qualify for mortgages before they were diagnosed or even after

As in, "You folks gotta be crazy to pay that much for that house."

AllenM,
I suggest taking out all the copper pipes and wiring before you make this offer on the HELOC rental. Oh, and maybe you should also get some cell tower easements on it.

A note as to mental illness among the young.

Better diagnosis, etc. Who knows? What we do know is that these young generations are much more highly plugged into the high-tech and hence out of the "high-touch" world. And when you grow in a semifantasy world and are introduced to reality, you don't cope terribly well.

I'm an electronics nazi. A little bit is fine - I'm not Amish. But I have to make a real effort to keep the idiot box off and the Skullcandy buds out of the kid's ears. Life is what you do, not see or hear.

AllenM,
Good luck, and I hope you can keep your job.
I recommend that you talk to them Tuesday. They probably will say No, but what do you have to lose? Unless you quit making payments they aren't going to do much to you.

If you lived in Virginia, I think they'll say No. However, they might stretch out payments. If you default, they'll probably sell your note to a bill collection agency. If you lose your job the bill collectors will probably get the loan cheap and you might have negotiating room. If you still have your job, the bill collectors are pros and they will not cut you a lot of slack.

You got it, TJ:

Laguna Ridge, Elk Grove, CA

Allen M, good luck, and don't feel its you. Everyone gets downsized, I did. Nothing last forever, even bad times.

Shoot, that last link was to the empty field with street lights. This is Monterey Village:

Monterey Village

Gavshire Hathaway wrote:
Thoughts on how the market opens tomorrow?... I have to think that the PPT is playing a role. When the market opens to J6p tomorrow, I have to think that we slide some more....

Milkman wrote:
Does the PPT have enough ammunition to rescue the market again?

hey camon guys

the PPT IS the ammunition.

their motto "liquidity R US"

question is , do they wanna.

i don't know what the market will do tomorrow but with the PDCF (primary dealer credit facility) in full swing the fed can make the market dance on the head of a pin.

our entire financial system has become a hall of mirrors.

if the PPT can pull it off (if) the market will be allowed to drop after all the important players have positioned themselves

From interfluidity

"... Some argue that the US economy is structurally immune from the wrenching spikes in unemployment that used to accompany recessions, because employment has transitioned from volatile manufacturing to more mellow services. See, for example. this excellent analysis from Calculated Risk. CR chooses 8% unemployment as his threshold for a "severe" recession. But the US economy need not lose a single job more to bring unemployment to that level. If participation rose back to the levels of the late 90s without a commensurate increase in new jobs, we'd be there already. ..."

Redux to 1997?

'Hot money' fleeing Philippines

Portfolio investments continued to flow out of the financial market this month as foreign investors withdrew into the US and other developed markets where they consider their funds to be safer.

Although officials expected investors to differentiate among emerging markets, monetary authorities said the Philippine market was not deep enough for this rule of thumb to work.

The Bangko Sentral ng Pilipinas (BSP) reported over the weekend that portfolio investments, also known as hot money, showed a net outflow of $189.9 million as of the third week of May, marking a steady departure of foreign funds from the capital market.

In contrast, data from 2007 covering the same period showed a whopping $1.587 billion inflow, with investors getting increasingly optimistic about their prospects in the market.

Hot money refers to investments in the stock market and the money market that are relatively easier to take in or out of a country.
...

Lehman Aims to Raise More Capital

Second-Quarter Loss Likely to Be Greater Than Was Expected

By SUSANNE CRAIG
June 9, 2008
Wall Street Journal

Lehman Brothers Holdings Inc. is close to raising more than $5 billion of fresh capital from an array of investors including the New Jersey Division of Investment, according to a person familiar with the matter.

The move comes as the firm is set to report a second-quarter loss of more than $2 billion, this person said. Until recently, most analysts who follow Lehman have been predicting a loss of about $300 million.

On Sunday afternoon, the firm was still pulling together final details of the capital raising, which could be announced Monday or Tuesday. Additional capital raisings are sure to follow for other banks.

...

From Sudden Debt:

Monster Employment Index

AllenM, I'd be wondering if giving them 12K would be throwing good money after bad. The time to pay off debts was five and ten years ago. Now, it seem wiser to be in cash, PM's, food, and guns. Unless you can pay off all your debts in the very near term. I'd rather have 12 gold eagles right now than one less HELOC debt.

It's possible we're facing TEOTWAWKI.

Bloomberg reporting that Lehman sold $120 bn of assets this quarter.

Lehman Cuts $130 Billion of Assets to End Bear Stigma (Update4) - Bloomberg.com

Lehman unloaded at least $120 billion of holdings in the second quarter, said people with direct knowledge of the matter. At least $18 billion of the assets were tied to mortgages and leveraged-buyout loans that plummeted in value, said one of the people, who declined to be identified because the figures haven't been disclosed.

They're doing all the right things, such as de-leveraging aggressively, but these are stressful times, and they don't always get the credit they deserve,'' said UBS AG analyst Glenn Schorr, who has aneutral'' rating on Lehman. ``Although Lehman is very different than Bear, there's one similarity, and that's what could undo all the other positives: perceptions can become reality.''

I would say when you firesale 120 billion dollars in a quarter, the danger is reality becomes reality and you are wingin' it entirely on perceptions.

Oh yeah, and that link posted anonymously up above shows BoA suddenly potentially on the hook for 1.5tn in def. swaps? Is that right?

"... It's just not time to it yet," says Michael Cohn, of Atlantis Asset Management. "You have to wait for the housing to stabilize, which I think is going to happen this summer."

Remind me to stay away from that company and avoid that person.

But I'd like to meet his drug supplier.

Lehman does seem to be in a lot of trouble though. The only way they can make profits (with their model) is to lever up. However, it's their leverage that go them into all this trouble.

If they reduce leverage (which they have really done in a significant way) then they reduce profits. where's the money gonna come from?

and how is this different than any other investment bank?

the IB's really got out of control, much of it due to their great 'inventions'. those 'innovations' made the IB's huge. now that all the innovative inventions are imploding, one would think that there's no reason to have people in those positions, no?

I'm guessing a much leaner much leaner wall street for quite a while. that doesn't bode well for the markets...

I think it was the head of Blackstone who gave a speech saying that he expects the credit crunch to go 2-4 more years.

Elvis,

The answer to your query about the vulnerability of WFC to HELOCs may or may not be here:
e10vq
at pages 22 and 23.