modification metrics are going to be atrocious because of selection bias. when do we start rolling the Q1 4.5% refi's into the loan modification performance metrics?
Looking at the plot, the rate of re-default will most likely be ticking over 50% for the 3rd quarter mods at 9 months...and interesting that the 4th quarter point is in the middle of the range for 3 months
New Hampshire gov. signed the budget bill today. Still no income tax, no sales tax, so far no enhanced gambling, some extra taxes but nothing major, and some spending cuts (I don't have all the details), I believe some personnel cuts.
CONCORD, N.H.—Legislators finishing a new New Hampshire budget voted Thursday for more layoffs or unpaid furloughs for state employees in non-critical jobs.
"modification metrics are going to be atrocious because of selection bias. when do we start rolling the Q1 4.5% refi's into the loan modification performance metrics?"
Here are some real facts (or FAQs).
Many of these refis are not undergoing any meaningful underwriting, so the refinance is effectively their modification. i.e. the HARP program is basically a mod program for current loans.
If/when they default, there won't be much more room to improve the rate.
Those lenders SURE don't want to write down thier books! No wonder the toxic assets are eating through the bank vaults, but they refuse to mark to anything but fantasy.
Someday this war is going to end like Vietnam. To the roofs! Copters on the way.
I will now start a new meme, along with my rotted house and no-deficiency-judgment-aint-gonna-happen memes.
That is:
Ta-dah.
It's too late for these types of mods.
It's too late baby, it's too late, and it's almost too late for small to medium principal reductions.
These mods might have worked of the lenders were proactive and offered them to people who
called up and said they couldn't afford future payments, starting in early to mid '07. They weren't
granted so prices dropped more, and now people are gonna not believe any more that they are ever gonna
have any equity. Forever is a long time, so let's say 15-20 years.
They will start offering small reductions, prolly in 6 months to a year--I predict anyway. Then it
will be to late. In fact, small ones are too late right now. Medium to huge principal reductions
would be necessary to stop the downward spiral.
Reminds me of the scene in Cool Hand Luke where the convicts rush to cover the tarred road with sand and finish it with 2 hours daylight left. The bosses didn't have any idea how to handle that situation either.
This is completely insane. These modifications will only increase negative equity and keep people harnessed to a sinking asset - unless of course they just walk away, which is probably what they'll do. Who crafted these idiotic modifications? I totally agree lowering the interest rate and extending maturities makes more sense. The current approach is just loan-sharking and will backfire (the re-default rates show this is already the case).
On a behavioral level, people will react like lab rats, a frenzy of undirected activity, a noticeable change in hostility level, fear will do strange things and desperate people will do desperate things.
My experience is you get one of two types of people asking for these mods:
a) greedy bastards who could get a market rate refi but want as low a rate as possible (99% of these guys get handed off for a refi anyway, the other 1% selectively defaults so they can get a lower rate - no kidding).
b) people who are hoping for a miracle.
"CONCORD, N.H.—Legislators finishing a new New Hampshire budget voted Thursday for more layoffs or unpaid furloughs for state employees in non-critical jobs."
Just to put it in perspective -- more people in Santa Clara County (half the Silicon Valley) than all of NH.
Splendid--lowering the interest rates and extending the term might have made sense long, long ago, like early
to mid 07. Might have stopped the downward spiral. Too late now.
If you are 100k to 150 k or more underwater on a house with a 300k loan--very typical here in South Florida, an
interest rate cut isn't gonna do it. An interest rate cut and 10% off the principal balance isn't gonna do it either.
I'm not so sure what I'd advise someone whose lender offered to cut 75k off a 300k mortgage when the
property is now worth 150k, and also made the interest rate 3% for 5 years. I think I would tell them it's not
enough. Not that any lender has offered anything this generous, except B of A on a 2nd (taxable) offer one time. I told him to take it, but he
would have paid taxes on the amount slashed. Doing a short sale, or trying to, now.
Money quote:
“[The increase] means that on the average $8,500 balance, the monthly payment will rise from $170 to $425, or just about what is necessary to bankrupt a whole new batch of people. Should you fall in that unfortunate category, please do not forget to call and thank your congressman for once again using both of his/her neurons to look after your welfare.”
"@ghostfaceinvestah - I am guessing you mean Q1 2009?
Who are you suggesting is still loose when it comes to underwriting?"
No, I don't think you understand the HARP program, which is what a lot of people are using to refi into low rates today.
Under HARP, there is almost no underwriting. In fact, in order to get around the GSE charters, there can't be, since Lockhart is allowing the GSEs to treat these as "modifications" (a very nice interpretation in order to break the law, by the way).
So, yes, a standard refi (say from an Alt A to an agency loan) is being underwritten strictly. But an agency-to-agency refi is usually going through HARP, and is not being re-underwritten. those DTIs are not less than 38% (and in MANY cases, DU waived income verification in the first place, so many were originally SIVAs and SISAs).
So, we have people who were underwritten poorly through DU, say in 2006, they "refi" (or modify as Lockhart would have you believe) in 2009, but they are no more creditworthy, except now they have a lower rate, which gives a mod less room to work.
if/when they default, there won't be much more that can be done for them. effectively, a HARP refi IS their mod.
Tanta hated when I put it in these terms but modifications have but one goal; to recover as much cash and cash flow from the broken deal possible. That almost always means no reduction in principal as that violates those boundaries. Sometimes that means no mod and getting as many payments as possible and then foreclosing. sometimes it means tacking fees onto the principal and stretching out the ultimate number of possible payments. Sustainable loan criteria have no place in these types of negotiations.
It was a collaboration between the industry and Treasury/FDIC/FHA.
The Admin knows there would be a huge uproar if they allowed principal reductions if the govt paid for it, and the banks aren't willing to pay for it.
A lot of this program is just smoke and mirrors to hope homeowners pay an underwater mortgage if it is made more affordable. It isn't working, but the plan wasn't meant to work, just kick the can down the road. The govt know the S will really HTF if underwater borrowers rationally exercise their default option. So they hope that a lower interest rate will entice people to make a non-economic decision.
The FDIC had plenty of experience with IndyMac, they know these types of mods don't work.
If principle reductions take place who really takes the lose? The Bank? The investor? The government? Nope every one in in the form of higher bank fees and operating cost, Investors will demand higher returns or won't play in the future freezing credit. The government will pass it along in higher taxes compounded with debt fees. The Fools who bought win.
We gotta buy italianate granite
Custom kitchen stupidities
We gotta own chrome refrigerators
We gotta have those plasma TV’s
Look a’ here
This ain’t workin’ that’s the way you do it
You push the limits on your LTV
This ain’t workin’ that’s the way you do it
Money for nothin’ and your digs for free
Money for nothin’ and digs for free
Money for nothin’ and your digs for free
~
Look at that, look at that
~
Money for nothin’ and your digs for free
I push my, I push my, I push my LTV
Money for nothin’ and digs for free
Agreed dawg, but now things are so bad that they are actually shooting themselves
in both feet, by not reducing principal. They can't get move for the house than it's worth
from a new buyer, they could get a smidge more from somebody who is already there and
likes the house & neighborhood. The question is hardly breaking even, the question is
how do you lose less? Failure to reduce principal means the downward spiral will
go farther and faster.
Oh, you mean HARP refis! I know PLENTY about HARP refis. Or, should I say the lack thereof.
which is what a lot of people are using to refi into low rates today.
Only if you consider less than 1 percent of the refis done so far this year to be "a lot". (That is 12,710 closed HARPies among about 3 million other refinances)
Maybe if Mike and Joy Gallante ever get theirs pushed through and then default, it will totally make the numbers look bad as you predict.
"A constant in all these mods is that ~30% of them lead to no more than two timely payments after modification."
As I said, for the borrowers part, it is usually a Hail Mary hoping that they will get some relief.
I am with Liz, I expect we will get small principal reductions next - maybe part of the money going to the servicer will be re-directed to the principal, so the govt will be able to claim "the cost of the program hasn't increased".
it won't matter much, if you are >25% underwater you should just bail.
From the last thread:
"Update: Former U.S. Secretary of State Warren Christopher has sold his Connecticut farmhouse-style home in the Beverly Hills area for $2.15 million, according to the MLS."
If I'm not mistaken Warren Christopher is the Secretary of State about whom a story involving Deng- shao-ping is told.
While in conversation with Deng in China, Christopher (if it was he) emphasized forcefully that the free movement of peoples and free emigration were principles of the utmost importance to the US.
Deng, unfazed, replied: Sure, how many Chinese would you like? Ten million? Twelve million? We can have them for you by Thursday.
The govt has essentially bet that consumers will be much more stupid overall than banks. They will squeeze whatever blood they can out of people, give them all sorts of confusing not in their best interest deals, just to keep some payments coming in, and to avoid actually having to make a final decision. It's kick the can...spread the pain out as long as possible. And above all, make sure as little of the pain accrues to the banks as possible. (since they are insolvent and really cant be bothered.)
i've heard of banks performing principal reduction when the mortgages are on their books. When the mortgage is part of a RMBS, under the Indenture Trust Act, the bank as servicer can not alter the principal absent a specified majority vote of the bondholders.
lawyerliz (profile) wrote on Tue, 6/30/2009 - 2:41 pm
Agreed dawg, but now things are so bad that they are actually shooting themselves
in both feet, by not reducing principal. They can't get move for the house than it's worth
from a new buyer, they could get a smidge more from somebody who is already there and
likes the house & neighborhood. The question is hardly breaking even, the question is
how do you lose less? Failure to reduce principal means the downward spiral will
go farther and faster.
I was screaming three years ago that we were headed here. We are making new entirely different mistakes and still repeating the experience of the great depression. Next step is grudgingly grant small principal reductions of the too little too late variety.
It won't happen but the Federal govt could slow the bleeding by making loan principal reductions by borrowers a tax favorable behavior. unfortunately we are still stuck with trying to get out of too much debt by encouraging more debt.
so.. it would appear modifying a grossly unaffordable loan to an almost unaffordable loan with a longer term on a property worth 30% less than the loan amount doesn't seem to work. Which Nobel prizing winning genius economist figured that one out.
Why is the term economist becoming synonymous with entrail readers, and about as valid a 'science' ?
"i've heard of banks performing principal reduction when the mortgages are on their books. When the mortgage is part of a RMBS, under the Indenture Trust Act, the bank as servicer can not alter the principal absent a specified majority vote of the bondholders."
~~~~
Exactly why we needed mortgage cramdowns ... to cut through all the crap ...
It was the banks that fought cramdowns tooth and nail ... f'-em
Ok a couple other anecdotes, an appraiser I talked to, who hasn't paid in well over a year, and
is still not kicked out, or apparently close to it, tho I am NOT defending him, all he did in defense
is hide from the process server told me that whereas he paid 325k for his house, houses in his
neighborhood are buying and selling for 80k, yep 80k. Single family, old but nice neighborhood.
This is a price from more than 10 years ago.
So maybe I'm wrong. Not bottomed out yet at 25 cents on the dollar.
The house next door had no sign for sale or anything, but was multilisted for a short sale for 110k,
and he thinks it was purchased earlier and less expensively at, say 265k. No takers at 110k.
I hope we are in overshoot. I hope.
The stuff I am hearing is just getting worse and worse.
Real mods will keep two earner households with one on unemployment in the house.
The capitalization of missed payments and feespushes up the balance. Waste of time- it will just yield higher defaults down the road.
Interest rate reductions to 2 or 3 percent are key- they keep folks in the house and current provided they are still employed.
The unemployed are simply squatting while searching for a job.
The amount of foreclosures to be generated by the unemployment surge since last fall is huge.
I am with LawyerLiz, banks and investors haven't been proactive enough, and they will fail- by these stats a huge amount of the mods were done by frickin First Fed.
New exchange-traded securities linked to home prices Investors can now bet for or against a recovery in the residential real estate market with new exchange-listed securities designed to mimic the movement of U.S. home prices.
Wait a minute, dawg - you mean the government could explore a policy that encourages more responsible behavior instead of rewarding past reckless behavior? That's crazy talk.
volker the viking (profile) wrote on Tue, 6/30/2009 - 5:28 pm replyIgnore userOn a behavioral level, people will react like lab rats, a frenzy of undirected activity, a noticeable change in hostility level, fear will do strange things and desperate people will do desperate things.
My friend who owes $6k has not (yet) received a minimum payment increase. Of course, his interest rate is 24% so milking him is probably to the bank's benefit. I seem to recall that your interest rate was quite low.
Also...on one of his "dead" cards that he quit paying on recently, just got an offer to pay half and they'll call it even. Any suggestions on a negotiating strategy?
so.. it would appear modifying a grossly unaffordable loan to an almost unaffordable loan with a longer term on a property worth 30% less than the loan amount doesn't seem to work. Which Nobel prizing winning genius economist...
That's "Nobel-like prize winning"... There is no real Nobel in Economy.
volker the viking (profile) wrote on Tue, 6/30/2009 - 2:52 pm
so, Rob Dawg (whom I never doubt) what's the time line to capitulation in your estimation?
Trust but verify. My sources still say morning of the 15th.
A bit of history. It has been a decade since a budget was passed on time. My legislator back in the early 90s actually got a bill passed that suspended legislator pay in the event of a budget delay. Doesn't matter. What matters is balance of current accounts. We run out of real money on the 14th no mater what. I am talking bounced checks for constitutionally prioritized spending. That's what is different this time. In past years there were account balances to draw down for months if necessary. Not this time.
"Only if you consider less than 1 percent of the refis done so far this year to be "a lot".
I see a lot of HARP loans in the refi pipeline, locked at pretty low rates. the program only rolled out in early March, and it is taking 90 days for a lot of companies to close any refi these days. They will come.
Besides HARP loans, last I checked you don't need a 38DTI for an FHA loan, they will take up to 54.9% with AUS approval. and with FHA being 35% of the market, odds are good that a lot of recent vintage loans are not capped at 38DTI.
I should also mention that a 38DTI only applies to manual underwrites - DU will approve above 38DTI.
Which is all to say, today's originations are not as "crystal clean" as some would have you believe.
"Good story, Pavel. I'll assume that it's true, since you told it."
Comrade Terry, thanks for your confidence in me, but it's a story I heard, not something I witnessed myself. Someone I knew who worked for State had also heard it, but he wasn't there either.
What makes the story piquant is that Deng was tiny, under five feet tall, but very sharp and full of mustard.
OT: Looks like BA is shutting down to try and slow things down...
Buenos Aires mayor declares emergency to fight flu
Tue Jun 30, 2009 3:59pm EDT
BUENOS AIRES, June 30 (Reuters) - The mayor of the Argentine capital, Buenos Aires, declared a health emergency on Tuesday to help control an outbreak of the deadly H1N1 flu strain.
Mayor Mauricio Macri urged residents to stay at home as much as possible. Argentina's Health Ministry says 26 people have died from the new flu strain, the third highest death toll after Mexico and the United States. Buenos Aires mayor declares emergency to fight flu
| Reuters
Buenos Aires mayor declares emergency to fight flu
BUENOS AIRES (Reuters) - The mayor of Argentina's capital, Buenos Aires, declared a health emergency on Tuesday to help control an outbreak of the deadly H1N1 flu strain that has killed 26 people in the country.
Mayor Mauricio Macri urged city residents to stay at home as much as possible, saying the health emergency would remain in place through Friday. He said the measure would help different public services coordinate to combat the virus.
The Argentine government has confirmed 1,587 cases of the new strain of virus, also known as swine flu, which is spreading during the southern hemisphere winter.
Argentine authorities also said on Tuesday they were suspending classes for millions of children as a precaution.
Shnaps (profile) wrote on Tue, 6/30/2009 - 2:55 pm
Wait a minute, dawg - you mean the government could explore a policy that encourages more responsible behavior instead of rewarding past reckless behavior? That's crazy talk.
Sorry, I just checked the IV drip. The Happimeds™ line was kinked. I'll be better soon.
volker the viking (profile) wrote on Tue, 6/30/2009 - 3:03 pm
Dawg, okay for CA but nationally? Will CA cause a cascade event?
Could the world economy adsorb the failure of France? More important, could the US economy on its own adsorb the failure of France? Economically, California is France.
We really can't know if the Federal Gov't will step in to bailout CA without knowing how GS is positioned.
If Goldman's derivatives book is set to profit from California's demise, then their will be no federal life line. In that case, the Golden State will become the Goldman Sachs State - GS will buy it up on the cheap after the bust.
Govenator, meet your new handler. All for the greater glory of GS.
This thing is getting legs in China, I posted a link earlier to day where a Chinese Ministry of Health official used the word "inevitable" with respect to the flu getting rolling there...and I am certain of that word's meaning.
So, compound the 10th largest economy going TU with a pandemic spliced together by a coup on our doorstep and a geo-political thingie in ME and coming from NK. What could go wrong!?
Ok, further disaster thoughts. This was suggested by the appraiser I mentioned earlier.
He sez that around his house ("his" being used broadly) there are a lot of vacant houses,
presumably foreclosures with stuff outside. Could be junk, could be lawn furniture, could
be tree branches. Anyway, this stuff is NOT gonna be picked up by the lenders. Comes
even a minimal Cat 1 storm, all that stuff is gonna blow around. The lenders aren't gonna
board up or anything. Normally, when a hurricane approaches EVERYBODY at least picks
up stuff from the outside, even in bad neighborhoods.
I smell oodles and oodles of lawsuits. Not that the Court system can handle them.
The Kirchners are in trouble, and so is the Argentine Peso.
It looks like the Peronists might make a comeback.
There is speculation that the Kirchners might try for some street protests again.
HollywoodHack (homepage, profile) wrote (in reply to...) on Tue, 6/30/2009 - 3:07 pm
Rob, any guesses on how the politics of who gets to the kitty first will play out? I'd imagine that Chippies and guards will still get real dollars
Education first.
The LE contingent will accept scrip and make out like the bandits they are.
Debt payments will be made at first. Invoices will see a slowdown.
Medical or should I say; MediCal will make the headlines as "slow-pay" causes service closures.
This isn't very funny anymore. California spends too much and the things they pretend are spending cuts won't address the issues.
The municipalities should be working overtime moving all potential debris from vacant homes and
liening the properties. But. . . I guess they can't afford to do it.
How come we stopped talking about hurricane season, and what that is going to do to the price of oil soon? May as well compound the disaster scenario with a little more help from Mother Nature, right?
lawyerliz (profile) wrote on Tue, 6/30/2009 - 3:21 pm
No fear on the street yet, Dawg?
This isn't Rodney King. There's a complete disconnect. The middle class hasn't seen tangible benefits of California taxation for decades. The upper class hasn't felt any sting, the lower class has been disempowered regardless. Nobody knows where the budget goes.
Close down the State and the short term effect would be higher average freeway speeds and less congestion. Some disaster.
"pavel,
We should've taken Deng up on his offer. Would've saved a lot of hot air over what to do about ag workers... Smile"
K.F.P., I think it's about putting us in our place. Anyone who'd been through what Deng had been through would have had scant time for silliness. No doubt many more Chinese would like to come to the US than can do it.
"So are you saying there's no Nobel price for economics ?"
Not "saying" but "reporting. " You are confusing "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel" with the actual Nobel Prizes.
A little anecdote of national relevance coming out of Pennsylvania :
"Some 20,000 Pennsylvanians are expected to exhaust their jobless benefits in mid-July.
The state Labor Department expects them to be the first large wave of people who have gone through as many as 72 weeks of unemployment benefits. Labor and Industry Department Deputy Secretary Patrick Beaty said there is no letup in applications for benefits, and the agency does not expect the rising state unemployment rate to ease in the coming months."
This is another factor that people seem to forget about. CR mentions it indirectly when he talks about the UI claims number and the continuing claims. Fact is, claims run out. And when they do, you go from something to a whole lot less.
I dont know what plans are under way in the second half to compensate for this, but it certainly aint a green shoot as it stands now.
On the swine flu in the souther hemisphere.....Here in Chile we're nearing the treshold of an 'intersting' scenario.
So far, lots of people (I would say up to 5% of the population) have gone through swine-flu-like symptoms and have been promptly treated with Tamiflu or similar medications.
The health care providers have been stretched but coping so far. But today my wife's surgery schedule (she's a medic) was suspended, because there were no nurses available to staff the surgeries. Even private (expensive private) health care providers are best described as chaotically overbooked.
If and when admission to a doctor's office or hospital is rationed, this could become ugly. But so far, no panic, and most people are back at work after seven days.
Finally, what made matters worse is that other seasonal viruses have attacked earlier and harder than previous years. If we can overcome these in the next few weeks, the drain on resources will abate.
From the last thread:
"Update: Former U.S. Secretary of State Warren Christopher has sold his Connecticut farmhouse-style home in the Beverly Hills area for $2.15 million, according to the MLS."
If I'm not mistaken Warren Christopher is the Secretary of State about whom a story involving Deng- shao-ping is told.
While in conversation with Deng in China, Christopher (if it was he) emphasized forcefully that the free movement of peoples and free emigration were principles of the utmost importance to the US.
Deng, unfazed, replied: Sure, how many Chinese would you like? Ten million? Twelve million? We can have them for you by Thursday.
Thanks Pavel... I just blew some very nice hefeweizen out my nose & onto my screen as a result of that post... [very funny and probably still true].
I remember Joseph Mason saying that modified mortgages re-default with 35 to 40% probability,
and that's in good economic times. In bad times, it can potentially go up to 70%.
The figures here will be soon approaching 60%. Maybe, 70% may not be too far off after all.
Credit officers know that prior late payments and prior loan defaults are very good indicators of future loan payment behavior. It is why late payments and defaults so negatively affect credit scores. Reasons for the late payments and defaults are unimportant variables. It can be due to job loss, medical or other unexpected expenses, over extension of credit, behavioral attitudes towards debt repayment, forgetfulness, vacation, etc.
To get into a mortgage modification program, one has to be a defaulter or late payer. Even if the borrower justifies the defaulting behavior as necessary to get into a modification program, not every borrower will become a late payer or defaulter to qualify. Those that do, whether it is due to insufficient funds or behavioral characteristics, are in the pool of individuals likely to default again.
It is no surprise that these modified mortgages re-default. The only way to prevent it would have been to modify all mortgages so that the pool of modifiers did not include those with characteristics that predict re-default.
The reports and figures reported by the Office of Thrift Supervision are only as good as the reporting sources.
An example would be the Home Mortgage Disclosure Act which requires certain loan mortgage loan information
be disclosed to the OTS by their member banks. When I pointed out in March 2009 that their member bank the
Am Trust Bank in Cleveland Ohio had errored in the reporting of their mortgage denial information that OTS refused to comment.
I really do not believe any information coming from the lips of the OTS are viable. The OTS has yet to display any professional competence
in any area of their operations.
Michael LittleBig
Cleveland Ohio
Suggests?
"This suggests modifications have not been very effective."
There should be an annual award for mastery of understatement.
CR would take it home home every year.
It could be called the "CR Cup"
how about reduction of the principal
nah, too easy right?
lipstick on a mortgage pig, still a mortgage pig
IOWs
We will have a wave of redefaults along with the normal defaults ...
And for this the servicer is getting paid $1000 for each mod, and the investor gets $1500.
Your tax dollars at work.
modification metrics are going to be atrocious because of selection bias. when do we start rolling the Q1 4.5% refi's into the loan modification performance metrics?
" Those modifications implemented in the fourth quarter of 2008 have re-defaulted at a slightly lower rate than the preceding quarter"
things are improving
Looking at the plot, the rate of re-default will most likely be ticking over 50% for the 3rd quarter mods at 9 months...and interesting that the 4th quarter point is in the middle of the range for 3 months
"things are improving "
exactly, why can't folks see the second derivative here? small minds.
another point, under the Obama plan, the interest rate steps up every year. very weird feature.
Redefaults from 2008 approaching 50%? shakes head
when do we start rolling the Q1 4.5% refi's into the loan modification performance metrics?
Never, since those weren't underwritten with front-end ratios above 31%.
Even if they were, anything that closed after 1/1/09 isn't eligible, period.
Sounds more like a pig backfire. Modifications are nothing more then stalling the inevitable.
How far can we kick the can? Till inflation takes hold? That's the goal ya know.
I wonder what the re-re-default rate will be? 100%?
After the re-re-defaults, then we can put new moratoriums in place. Will inflation have kicked in by then?
"Modifications are nothing more then stalling the inevitable. "
~~~~
Without cramdowns ... yep !
When will then be now?
Soon
"How far can we kick the can? "
~~~
We're running out of road ...
"Never, since those weren't underwritten with front-end ratios above 38%. "
I hope you don't really believe that.
I'm sure we could always be looking at 5 th generation redefaults in 5 years ...
How many bites at the apple are there ?
New Hampshire gov. signed the budget bill today. Still no income tax, no sales tax, so far no enhanced gambling, some extra taxes but nothing major, and some spending cuts (I don't have all the details), I believe some personnel cuts.
Just reporting in.
We're running out of road ...
Roads? Where we're going we don't need roads. (Dr. Emmett Brown)
Does it blow anyone else's mind that hotel REITs were up today?
Hotel REITs Index (*REITT) at tickerspy.com
CONCORD, N.H.—Legislators finishing a new New Hampshire budget voted Thursday for more layoffs or unpaid furloughs for state employees in non-critical jobs.
odd index, host is almost 10x the size of everyone else
When you chose to address the symptoms and not the disease it is unreasonable to expect the patient to improve.
In my view "preventing" default is akin to denying the patient a medically necessary amputation.
"modification metrics are going to be atrocious because of selection bias. when do we start rolling the Q1 4.5% refi's into the loan modification performance metrics?"
Here are some real facts (or FAQs).
Many of these refis are not undergoing any meaningful underwriting, so the refinance is effectively their modification. i.e. the HARP program is basically a mod program for current loans.
If/when they default, there won't be much more room to improve the rate.
https://www.efanniemae.com/sf/mha/mharefi/pdf/refinancefaqs.pdf
1.8 percent included a reduction of principal
Those lenders SURE don't want to write down thier books! No wonder the toxic assets are eating through the bank vaults, but they refuse to mark to anything but fantasy.
Someday this war is going to end like Vietnam. To the roofs! Copters on the way.
I will now start a new meme, along with my rotted house and no-deficiency-judgment-aint-gonna-happen memes.
That is:
Ta-dah.
It's too late for these types of mods.
It's too late baby, it's too late, and it's almost too late for small to medium principal reductions.
These mods might have worked of the lenders were proactive and offered them to people who
called up and said they couldn't afford future payments, starting in early to mid '07. They weren't
granted so prices dropped more, and now people are gonna not believe any more that they are ever gonna
have any equity. Forever is a long time, so let's say 15-20 years.
They will start offering small reductions, prolly in 6 months to a year--I predict anyway. Then it
will be to late. In fact, small ones are too late right now. Medium to huge principal reductions
would be necessary to stop the downward spiral.
I wonder what the re-re-default rate will be? 100%?
This particular dial goes above 100.
We're running out of road ...
Reminds me of the scene in Cool Hand Luke where the convicts rush to cover the tarred road with sand and finish it with 2 hours daylight left. The bosses didn't have any idea how to handle that situation either.
"things are improving"
yeah, just look at those graphs
This is completely insane. These modifications will only increase negative equity and keep people harnessed to a sinking asset - unless of course they just walk away, which is probably what they'll do. Who crafted these idiotic modifications? I totally agree lowering the interest rate and extending maturities makes more sense. The current approach is just loan-sharking and will backfire (the re-default rates show this is already the case).
On a behavioral level, people will react like lab rats, a frenzy of undirected activity, a noticeable change in hostility level, fear will do strange things and desperate people will do desperate things.
Hmm... looks like the rate of re-default decays roughly geometrically - half as many each quarter.
@ghostfaceinvestah - I am guessing you mean Q1 2009?
Who are you suggesting is still loose when it comes to underwriting?
"It's too late for these types of mods."
My experience is you get one of two types of people asking for these mods:
a) greedy bastards who could get a market rate refi but want as low a rate as possible (99% of these guys get handed off for a refi anyway, the other 1% selectively defaults so they can get a lower rate - no kidding).
b) people who are hoping for a miracle.
"CONCORD, N.H.—Legislators finishing a new New Hampshire budget voted Thursday for more layoffs or unpaid furloughs for state employees in non-critical jobs."
Just to put it in perspective -- more people in Santa Clara County (half the Silicon Valley) than all of NH.
lawyerliz
Yep ... massive principle reductions are needed ...
and there are still those waiting to be unemployed ...
Splendid--lowering the interest rates and extending the term might have made sense long, long ago, like early
to mid 07. Might have stopped the downward spiral. Too late now.
If you are 100k to 150 k or more underwater on a house with a 300k loan--very typical here in South Florida, an
interest rate cut isn't gonna do it. An interest rate cut and 10% off the principal balance isn't gonna do it either.
I'm not so sure what I'd advise someone whose lender offered to cut 75k off a 300k mortgage when the
property is now worth 150k, and also made the interest rate 3% for 5 years. I think I would tell them it's not
enough. Not that any lender has offered anything this generous, except B of A on a 2nd (taxable) offer one time. I told him to take it, but he
would have paid taxes on the amount slashed. Doing a short sale, or trying to, now.
Thank you Liz for your in the trenches reporting.
Coming just in time for the next October meltdown:
JPMorgan Tightens the Screws on Debtors
Money quote:
“[The increase] means that on the average $8,500 balance, the monthly payment will rise from $170 to $425, or just about what is necessary to bankrupt a whole new batch of people. Should you fall in that unfortunate category, please do not forget to call and thank your congressman for once again using both of his/her neurons to look after your welfare.”
"@ghostfaceinvestah - I am guessing you mean Q1 2009?
Who are you suggesting is still loose when it comes to underwriting?"
No, I don't think you understand the HARP program, which is what a lot of people are using to refi into low rates today.
Under HARP, there is almost no underwriting. In fact, in order to get around the GSE charters, there can't be, since Lockhart is allowing the GSEs to treat these as "modifications" (a very nice interpretation in order to break the law, by the way).
So, yes, a standard refi (say from an Alt A to an agency loan) is being underwritten strictly. But an agency-to-agency refi is usually going through HARP, and is not being re-underwritten. those DTIs are not less than 38% (and in MANY cases, DU waived income verification in the first place, so many were originally SIVAs and SISAs).
So, we have people who were underwritten poorly through DU, say in 2006, they "refi" (or modify as Lockhart would have you believe) in 2009, but they are no more creditworthy, except now they have a lower rate, which gives a mod less room to work.
if/when they default, there won't be much more that can be done for them. effectively, a HARP refi IS their mod.
lawyerliz
apppreciate your news and commentary from THE FRONT LINES ...
You are welcome, Gnome, Mmck, everybody.
And for this the servicer is getting paid $1000 for each mod, and the investor gets $1500.
Your tax dollars at work.
Yep, we're just paying the lender & servicer a "deferred foreclosure" fee.
It's like money for nothing
and your chicks for free...
OH it's money for nothing
and your chicks for free.
sm_landlord
Wow !
Higher taxes, fewer services and now ...
higher principle payments ...
let the good times roll !
Tanta hated when I put it in these terms but modifications have but one goal; to recover as much cash and cash flow from the broken deal possible. That almost always means no reduction in principal as that violates those boundaries. Sometimes that means no mod and getting as many payments as possible and then foreclosing. sometimes it means tacking fees onto the principal and stretching out the ultimate number of possible payments. Sustainable loan criteria have no place in these types of negotiations.
Perhaps mentioned; I just popped in...
A constant in all these mods is that ~30% of them lead to no more than two timely payments after modification.
Indicates desparation on the part of the borrow and/or poor vetting on the part of the servicer.
"Who crafted these idiotic modifications? "
It was a collaboration between the industry and Treasury/FDIC/FHA.
The Admin knows there would be a huge uproar if they allowed principal reductions if the govt paid for it, and the banks aren't willing to pay for it.
A lot of this program is just smoke and mirrors to hope homeowners pay an underwater mortgage if it is made more affordable. It isn't working, but the plan wasn't meant to work, just kick the can down the road. The govt know the S will really HTF if underwater borrowers rationally exercise their default option. So they hope that a lower interest rate will entice people to make a non-economic decision.
The FDIC had plenty of experience with IndyMac, they know these types of mods don't work.
If principle reductions take place who really takes the lose? The Bank? The investor? The government? Nope every one in in the form of higher bank fees and operating cost, Investors will demand higher returns or won't play in the future freezing credit. The government will pass it along in higher taxes compounded with debt fees. The Fools who bought win.
We gotta buy italianate granite
Custom kitchen stupidities
We gotta own chrome refrigerators
We gotta have those plasma TV’s
Look a’ here
This ain’t workin’ that’s the way you do it
You push the limits on your LTV
This ain’t workin’ that’s the way you do it
Money for nothin’ and your digs for free
Money for nothin’ and digs for free
Money for nothin’ and your digs for free
~
Look at that, look at that
~
Money for nothin’ and your digs for free
I push my, I push my, I push my LTV
Money for nothin’ and digs for free
(Fade)
I push my, I push my, I push my LTV
Agreed dawg, but now things are so bad that they are actually shooting themselves
in both feet, by not reducing principal. They can't get move for the house than it's worth
from a new buyer, they could get a smidge more from somebody who is already there and
likes the house & neighborhood. The question is hardly breaking even, the question is
how do you lose less? Failure to reduce principal means the downward spiral will
go farther and faster.
Oh, you mean HARP refis! I know PLENTY about HARP refis. Or, should I say the lack thereof.
which is what a lot of people are using to refi into low rates today.
Only if you consider less than 1 percent of the refis done so far this year to be "a lot". (That is 12,710 closed HARPies among about 3 million other refinances)
Maybe if Mike and Joy Gallante ever get theirs pushed through and then default, it will totally make the numbers look bad as you predict.
"A constant in all these mods is that ~30% of them lead to no more than two timely payments after modification."
As I said, for the borrowers part, it is usually a Hail Mary hoping that they will get some relief.
I am with Liz, I expect we will get small principal reductions next - maybe part of the money going to the servicer will be re-directed to the principal, so the govt will be able to claim "the cost of the program hasn't increased".
it won't matter much, if you are >25% underwater you should just bail.
Thanks for doing the DIRE STRAITS justice over my weak attempt.
From the last thread:
"Update: Former U.S. Secretary of State Warren Christopher has sold his Connecticut farmhouse-style home in the Beverly Hills area for $2.15 million, according to the MLS."
If I'm not mistaken Warren Christopher is the Secretary of State about whom a story involving Deng- shao-ping is told.
While in conversation with Deng in China, Christopher (if it was he) emphasized forcefully that the free movement of peoples and free emigration were principles of the utmost importance to the US.
Deng, unfazed, replied: Sure, how many Chinese would you like? Ten million? Twelve million? We can have them for you by Thursday.
Lobbyist Ben Dover
Yep, the banksters screwed the pooch ...
And now ....
they are screwing the pooch again ...
The Tax Payers pooch ...
I say nationalize them all, don't wait ... do it today ...
liz: and the downward action will accelerate exponentially and coma as a 'complete surprise' right?
BTW: It's the anecdotal, in the world info I appreciate most.
The govt has essentially bet that consumers will be much more stupid overall than banks. They will squeeze whatever blood they can out of people, give them all sorts of confusing not in their best interest deals, just to keep some payments coming in, and to avoid actually having to make a final decision. It's kick the can...spread the pain out as long as possible. And above all, make sure as little of the pain accrues to the banks as possible. (since they are insolvent and really cant be bothered.)
"We gotta buy italianate granite...."
Nicely done, enjoyed that.
what is the ongoing taxpayer burn rate on FRE/FNM, anyhow? anyone know?
i've heard of banks performing principal reduction when the mortgages are on their books. When the mortgage is part of a RMBS, under the Indenture Trust Act, the bank as servicer can not alter the principal absent a specified majority vote of the bondholders.
"what is the ongoing taxpayer burn rate on FRE/FNM, anyhow? anyone know? "
~~~~
as much as the banksters can off-load on them ...
lawyerliz (profile) wrote on Tue, 6/30/2009 - 2:41 pm
Agreed dawg, but now things are so bad that they are actually shooting themselves
in both feet, by not reducing principal. They can't get move for the house than it's worth
from a new buyer, they could get a smidge more from somebody who is already there and
likes the house & neighborhood. The question is hardly breaking even, the question is
how do you lose less? Failure to reduce principal means the downward spiral will
go farther and faster.
I was screaming three years ago that we were headed here. We are making new entirely different mistakes and still repeating the experience of the great depression. Next step is grudgingly grant small principal reductions of the too little too late variety.
It won't happen but the Federal govt could slow the bleeding by making loan principal reductions by borrowers a tax favorable behavior. unfortunately we are still stuck with trying to get out of too much debt by encouraging more debt.
so.. it would appear modifying a grossly unaffordable loan to an almost unaffordable loan with a longer term on a property worth 30% less than the loan amount doesn't seem to work. Which Nobel prizing winning genius economist figured that one out.
Why is the term economist becoming synonymous with entrail readers, and about as valid a 'science' ?
"i've heard of banks performing principal reduction when the mortgages are on their books. When the mortgage is part of a RMBS, under the Indenture Trust Act, the bank as servicer can not alter the principal absent a specified majority vote of the bondholders."
~~~~
Exactly why we needed mortgage cramdowns ... to cut through all the crap ...
It was the banks that fought cramdowns tooth and nail ... f'-em
Ok a couple other anecdotes, an appraiser I talked to, who hasn't paid in well over a year, and
is still not kicked out, or apparently close to it, tho I am NOT defending him, all he did in defense
is hide from the process server told me that whereas he paid 325k for his house, houses in his
neighborhood are buying and selling for 80k, yep 80k. Single family, old but nice neighborhood.
This is a price from more than 10 years ago.
So maybe I'm wrong. Not bottomed out yet at 25 cents on the dollar.
The house next door had no sign for sale or anything, but was multilisted for a short sale for 110k,
and he thinks it was purchased earlier and less expensively at, say 265k. No takers at 110k.
I hope we are in overshoot. I hope.
The stuff I am hearing is just getting worse and worse.
so, Rob Dawg (whom I never doubt) what's the time line to capitulation in your estimation?
Real mods will keep two earner households with one on unemployment in the house.
The capitalization of missed payments and feespushes up the balance. Waste of time- it will just yield higher defaults down the road.
Interest rate reductions to 2 or 3 percent are key- they keep folks in the house and current provided they are still employed.
The unemployed are simply squatting while searching for a job.
The amount of foreclosures to be generated by the unemployment surge since last fall is huge.
I am with LawyerLiz, banks and investors haven't been proactive enough, and they will fail- by these stats a huge amount of the mods were done by frickin First Fed.
Someday this war's gonna end...
@ Basel
Trust Indenture Act of 1939.
Trust Indenture Act of 1939 - Wikipedia, the free encyclopedia
Thanks.
When the mood strikes me, I twist up an old tune and post the results on my blog. There's more there if you're in the mood: randominium
Serfdom Restoration Act, England, 2015
Liz: if history is a teacher 90% is the bottom.
New exchange-traded securities linked to home prices
Investors can now bet for or against a recovery in the residential real estate market with new exchange-listed securities designed to mimic the movement of U.S. home prices.
Investors can now BET....
That poor pooch. How many times does he get screwed. Its enough to spoil a dog's decade.
Wait a minute, dawg - you mean the government could explore a policy that encourages more responsible behavior instead of rewarding past reckless behavior? That's crazy talk.
"Serfdom restoration act England, 2015"
20 years too soon. It takes time for social control through technical means to be perfected.
Anyway, serfs have no money, so what good is serfdom?
volker the viking (profile) wrote on Tue, 6/30/2009 - 5:28 pm replyIgnore userOn a behavioral level, people will react like lab rats, a frenzy of undirected activity, a noticeable change in hostility level, fear will do strange things and desperate people will do desperate things.
can't wait
@Allen
Update on CC minimum payments...
My friend who owes $6k has not (yet) received a minimum payment increase. Of course, his interest rate is 24% so milking him is probably to the bank's benefit. I seem to recall that your interest rate was quite low.
Also...on one of his "dead" cards that he quit paying on recently, just got an offer to pay half and they'll call it even. Any suggestions on a negotiating strategy?
Joke told during the Soviet era:
Two women visit the zoo and stop in front of the gorilla. One woman says to the other: "Could you marry him?"
The other woman says "Uh uh, not for me."
"Why not? Look at him. He's not bad."
"No, I wouldn't. "
"But why not?"
"He has no money."
Pavel,
"Serfs have no money"
So the banks gave them credit, Hows that working?
Offer half of what they want and work up to a third. the longer he is delinquent the lower they'll go.
25 cents on he dollah.
I think you have to pay taxes on the slash. Basel?
"Sure, how many Chinese would you like?"
Good story, Pavel. I'll assume that it's true, since you told it.
splat (profile) wrote on Tue, 6/30/2009 - 2:52 pm
so.. it would appear modifying a grossly unaffordable loan to an almost unaffordable loan with a longer term on a property worth 30% less than the loan amount doesn't seem to work. Which Nobel prizing winning genius economist...
That's "Nobel-like prize winning"... There is no real Nobel in Economy.
volker the viking (profile) wrote on Tue, 6/30/2009 - 2:52 pm
so, Rob Dawg (whom I never doubt) what's the time line to capitulation in your estimation?
Trust but verify. My sources still say morning of the 15th.
A bit of history. It has been a decade since a budget was passed on time. My legislator back in the early 90s actually got a bill passed that suspended legislator pay in the event of a budget delay. Doesn't matter. What matters is balance of current accounts. We run out of real money on the 14th no mater what. I am talking bounced checks for constitutionally prioritized spending. That's what is different this time. In past years there were account balances to draw down for months if necessary. Not this time.
Wednesday July 1, 2009 ...
The meltdown picked up steam today as state, county, city and schools from coast to coast announced
massive layoffs, cuts in services and slashed direct social payments ...
pico- offer 50% of the last balance- screw the fees and interest tack ons.
Why are they interested in paying at all? If they are grumpy they should offer 25 cents on the dollar.
if the taxpayer is insolvent when the CC debt was discharged, then the IRS does not treat it as income.
"Only if you consider less than 1 percent of the refis done so far this year to be "a lot".
I see a lot of HARP loans in the refi pipeline, locked at pretty low rates. the program only rolled out in early March, and it is taking 90 days for a lot of companies to close any refi these days. They will come.
Besides HARP loans, last I checked you don't need a 38DTI for an FHA loan, they will take up to 54.9% with AUS approval. and with FHA being 35% of the market, odds are good that a lot of recent vintage loans are not capped at 38DTI.
I should also mention that a 38DTI only applies to manual underwrites - DU will approve above 38DTI.
Which is all to say, today's originations are not as "crystal clean" as some would have you believe.
Dawg, okay for CA but nationally? Will CA cause a cascade event?
"Good story, Pavel. I'll assume that it's true, since you told it."
Comrade Terry, thanks for your confidence in me, but it's a story I heard, not something I witnessed myself. Someone I knew who worked for State had also heard it, but he wasn't there either.
What makes the story piquant is that Deng was tiny, under five feet tall, but very sharp and full of mustard.
OT: Looks like BA is shutting down to try and slow things down...
Buenos Aires mayor declares emergency to fight flu
Tue Jun 30, 2009 3:59pm EDT
BUENOS AIRES, June 30 (Reuters) - The mayor of the Argentine capital, Buenos Aires, declared a health emergency on Tuesday to help control an outbreak of the deadly H1N1 flu strain.
Mayor Mauricio Macri urged residents to stay at home as much as possible. Argentina's Health Ministry says 26 people have died from the new flu strain, the third highest death toll after Mexico and the United States.
Buenos Aires mayor declares emergency to fight flu
| Reuters
Buenos Aires mayor declares emergency to fight flu
BUENOS AIRES (Reuters) - The mayor of Argentina's capital, Buenos Aires, declared a health emergency on Tuesday to help control an outbreak of the deadly H1N1 flu strain that has killed 26 people in the country.
Mayor Mauricio Macri urged city residents to stay at home as much as possible, saying the health emergency would remain in place through Friday. He said the measure would help different public services coordinate to combat the virus.
The Argentine government has confirmed 1,587 cases of the new strain of virus, also known as swine flu, which is spreading during the southern hemisphere winter.
Argentine authorities also said on Tuesday they were suspending classes for millions of children as a precaution.
Classes will be canceled in Buenos Aires and four other provinces from Monday as officials bring forward winter vacation periods originally scheduled to start later next month.
Argentine officials declare emergency flu measures
| Reuters
Deng was not long returned from exile by the Red Guard, mustard must have been what he was growing alongside the tomatoes.
Shnaps (profile) wrote on Tue, 6/30/2009 - 2:55 pm
Wait a minute, dawg - you mean the government could explore a policy that encourages more responsible behavior instead of rewarding past reckless behavior? That's crazy talk.
Sorry, I just checked the IV drip. The Happimeds™ line was kinked. I'll be better soon.
Rob, any guesses on how the politics of who gets to the kitty first will play out? I'd imagine that Chippies and guards will still get real dollars.
The principal will be reduced on the courthouse steps.
"Buenos Aires mayor declares emergency to fight flu"
This is an economics story, as well as a public health story. It will likely be so here in the northern hemisphere in a few months.
volker the viking (profile) wrote on Tue, 6/30/2009 - 3:03 pm
Dawg, okay for CA but nationally? Will CA cause a cascade event?
Could the world economy adsorb the failure of France? More important, could the US economy on its own adsorb the failure of France? Economically, California is France.
We really can't know if the Federal Gov't will step in to bailout CA without knowing how GS is positioned.
If Goldman's derivatives book is set to profit from California's demise, then their will be no federal life line. In that case, the Golden State will become the Goldman Sachs State - GS will buy it up on the cheap after the bust.
Govenator, meet your new handler. All for the greater glory of GS.
"Sorry, I just checked the IV drip. The Happimeds™ line was kinked."
So when are you going to share the formula with the rest of us?
Is it a mixture of puppy uppers and doggie downers?
"The principal will be reduced on the courthouse steps. "
~~~~~
Monday thru Weds .... Thurs-Fri closed due to budget cuts ...
"Deng was not long returned from exile by the Red Guard, mustard must have been what he was growing alongside the tomatoes."
Yeah. Deng is considered the man who saved China from a Russian-style debacle. He's a hero there.
Nah, the vultures only bid really low; the banks will bid $100 and take most properties back.
The vultures are dealing with there own money, or the money of someone who will be
very unhappy if they overbid.
And after they take the property back, it's tooooooo laaaaate.
This thing is getting legs in China, I posted a link earlier to day where a Chinese Ministry of Health official used the word "inevitable" with respect to the flu getting rolling there...and I am certain of that word's meaning.
"This is an economics story, as well as a public health story."
See also the recent internal political developments. A case could be made for wanting to shut the country down (or nearly so).
"See also the recent internal political developments. A case could be made for wanting to shut the country down (or nearly so)."
No doubt. But I don't think those could be used as a pretext for unnecessary measures, not by those who understand what this beast is about.
So, compound the 10th largest economy going TU with a pandemic spliced together by a coup on our doorstep and a geo-political thingie in ME and coming from NK. What could go wrong!?
Rent control in NY was passed as an emergency measure because the alternative was hundreds of thousands of evictions of squatters or "holdovers".
Court workers were facing eviction.
Jail guards were facing eviction.
Subway workers were facing eviction.
Ok, further disaster thoughts. This was suggested by the appraiser I mentioned earlier.
He sez that around his house ("his" being used broadly) there are a lot of vacant houses,
presumably foreclosures with stuff outside. Could be junk, could be lawn furniture, could
be tree branches. Anyway, this stuff is NOT gonna be picked up by the lenders. Comes
even a minimal Cat 1 storm, all that stuff is gonna blow around. The lenders aren't gonna
board up or anything. Normally, when a hurricane approaches EVERYBODY at least picks
up stuff from the outside, even in bad neighborhoods.
I smell oodles and oodles of lawsuits. Not that the Court system can handle them.
"I smell oodles and oodles of lawsuits. Not that the Court system can handle them. "
Not that the lender will be around in current corporate form to pay the judgments.
pavel,
We should've taken Deng up on his offer. Would've saved a lot of hot air over what to do about ag workers...
Liz: icing for the cake now being baked.
The Kirchners are in trouble, and so is the Argentine Peso.
It looks like the Peronists might make a comeback.
There is speculation that the Kirchners might try for some street protests again.
HollywoodHack (homepage, profile) wrote (in reply to...) on Tue, 6/30/2009 - 3:07 pm
Rob, any guesses on how the politics of who gets to the kitty first will play out? I'd imagine that Chippies and guards will still get real dollars
Education first.
The LE contingent will accept scrip and make out like the bandits they are.
Debt payments will be made at first. Invoices will see a slowdown.
Medical or should I say; MediCal will make the headlines as "slow-pay" causes service closures.
This isn't very funny anymore. California spends too much and the things they pretend are spending cuts won't address the issues.
The municipalities should be working overtime moving all potential debris from vacant homes and
liening the properties. But. . . I guess they can't afford to do it.
No fear on the street yet, Dawg?
the banks will monetize the scrip
ug99
Can you pay Cal tax with scrip?
(Didn't think so)
How come we stopped talking about hurricane season, and what that is going to do to the price of oil soon? May as well compound the disaster scenario with a little more help from Mother Nature, right?
"The Kirchners are in trouble"
I give the argentines some credit, they were the originators of peronism, and lasted a few decades, more or less, in spite of it.
that brand of politics finished off this country in less than a decade.
Rob Dawg
That's "Nobel-like prize winning"... There is no real Nobel in Economy.
So are you saying there's no Nobel price for economics ? That'll be disappointing news for Paul Krugman
we'll all be amazed by what will be accepted as payment
"California spends too much" and hands out too many tax breaks.
It's just a crap shoot - though the folks praying for a hurricane in the Gulf of Mexico are likely long natural gas one way or another...
lawyerliz (profile) wrote on Tue, 6/30/2009 - 3:21 pm
No fear on the street yet, Dawg?
This isn't Rodney King. There's a complete disconnect. The middle class hasn't seen tangible benefits of California taxation for decades. The upper class hasn't felt any sting, the lower class has been disempowered regardless. Nobody knows where the budget goes.
Close down the State and the short term effect would be higher average freeway speeds and less congestion. Some disaster.
Dawg: will the trucks keep coming and going in and out of the San Fernando Valley?
"pavel,
We should've taken Deng up on his offer. Would've saved a lot of hot air over what to do about ag workers... Smile"
K.F.P., I think it's about putting us in our place. Anyone who'd been through what Deng had been through would have had scant time for silliness. No doubt many more Chinese would like to come to the US than can do it.
"So are you saying there's no Nobel price for economics ?"
Not "saying" but "reporting. " You are confusing "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel" with the actual Nobel Prizes.
CA should issue its own currency backed by nubile young blonde girls.
"Medical or should I say; MediCal will make the headlines as "slow-pay" causes service closures."
They must get this straightened out before the fall, latest, for obvious reasons.
"Close down the State and the short term effect would be higher average freeway speeds and less congestion. Some disaster."
And after a few applications of bolt cutters, no more fees to visit state parks.
you people aren't thinking this through
In this case, do not doubt the Dawg!
A little anecdote of national relevance coming out of Pennsylvania :
"Some 20,000 Pennsylvanians are expected to exhaust their jobless benefits in mid-July.
The state Labor Department expects them to be the first large wave of people who have gone through as many as 72 weeks of unemployment benefits. Labor and Industry Department Deputy Secretary Patrick Beaty said there is no letup in applications for benefits, and the agency does not expect the rising state unemployment rate to ease in the coming months."
This is another factor that people seem to forget about. CR mentions it indirectly when he talks about the UI claims number and the continuing claims. Fact is, claims run out. And when they do, you go from something to a whole lot less.
I dont know what plans are under way in the second half to compensate for this, but it certainly aint a green shoot as it stands now.
On the swine flu in the souther hemisphere.....Here in Chile we're nearing the treshold of an 'intersting' scenario.
So far, lots of people (I would say up to 5% of the population) have gone through swine-flu-like symptoms and have been promptly treated with Tamiflu or similar medications.
The health care providers have been stretched but coping so far. But today my wife's surgery schedule (she's a medic) was suspended, because there were no nurses available to staff the surgeries. Even private (expensive private) health care providers are best described as chaotically overbooked.
If and when admission to a doctor's office or hospital is rationed, this could become ugly. But so far, no panic, and most people are back at work after seven days.
Finally, what made matters worse is that other seasonal viruses have attacked earlier and harder than previous years. If we can overcome these in the next few weeks, the drain on resources will abate.
Got pigged! How fitting...
And PIGGED...twice in a day. (Youd think twice in a lifetime, but no.) sigh...
volker the viking (profile) wrote on Tue, 6/30/2009 - 3:30 pm
Dawg: will the trucks keep coming and going in and out of the San Fernando Valley?
Depends on how fast Simi Valley and Bakersfield can set up the border crossings.
Seriously, none of this stuff will happen. There's no advantage to anyone.
I look forward to the agricultural opportunities presented by the grounding of the various county sheriffs helicopter patrols.
Here is a list of recently closed California hospitals. ERs have been closing down for 10 years now. link
Also, Closed ERs since 1998
easy solution for californias woes
instead of the furlough
required each and every state employee to
pan for gold in california rivers
turn the proceeds over to the state
From the last thread:
"Update: Former U.S. Secretary of State Warren Christopher has sold his Connecticut farmhouse-style home in the Beverly Hills area for $2.15 million, according to the MLS."
If I'm not mistaken Warren Christopher is the Secretary of State about whom a story involving Deng- shao-ping is told.
While in conversation with Deng in China, Christopher (if it was he) emphasized forcefully that the free movement of peoples and free emigration were principles of the utmost importance to the US.
Deng, unfazed, replied: Sure, how many Chinese would you like? Ten million? Twelve million? We can have them for you by Thursday.
Thanks Pavel... I just blew some very nice hefeweizen out my nose & onto my screen as a result of that post... [very funny and probably still true].
I remember Joseph Mason saying that modified mortgages re-default with 35 to 40% probability,
and that's in good economic times. In bad times, it can potentially go up to 70%.
The figures here will be soon approaching 60%. Maybe, 70% may not be too far off after all.
Credit officers know that prior late payments and prior loan defaults are very good indicators of future loan payment behavior. It is why late payments and defaults so negatively affect credit scores. Reasons for the late payments and defaults are unimportant variables. It can be due to job loss, medical or other unexpected expenses, over extension of credit, behavioral attitudes towards debt repayment, forgetfulness, vacation, etc.
To get into a mortgage modification program, one has to be a defaulter or late payer. Even if the borrower justifies the defaulting behavior as necessary to get into a modification program, not every borrower will become a late payer or defaulter to qualify. Those that do, whether it is due to insufficient funds or behavioral characteristics, are in the pool of individuals likely to default again.
It is no surprise that these modified mortgages re-default. The only way to prevent it would have been to modify all mortgages so that the pool of modifiers did not include those with characteristics that predict re-default.
The reports and figures reported by the Office of Thrift Supervision are only as good as the reporting sources.
An example would be the Home Mortgage Disclosure Act which requires certain loan mortgage loan information
be disclosed to the OTS by their member banks. When I pointed out in March 2009 that their member bank the
Am Trust Bank in Cleveland Ohio had errored in the reporting of their mortgage denial information that OTS refused to comment.
I really do not believe any information coming from the lips of the OTS are viable. The OTS has yet to display any professional competence
in any area of their operations.
Michael LittleBig
Cleveland Ohio