Nothing they couldn't have learned beforehand if they hung around here.

CRAMDOWNS !

The White House didn't even lift a finger to get them through Congress ....

Had to take care of their bankster buddies ...

Now they are crying ? .... Sounds like crocodile tears ....

Anybody watching the public records knows just how far the banks are bending for borrowers. It is REALLY far.

Why modify when you can turn the loan over to the FRB at face value in exchange for cash? Modding the loan would reduce the face value, no?

"Anybody watching the public records knows just how far the banks are bending for borrowers. It is REALLY far. "

~~~

sarcasm ?

lawyerliz is all over this ...

She says we need principle reductions ... big time ...

the only way to get this done is a cramdown law ...

CR

"but why are we paying for a modification that will most likely lead to re-default?"

~~~~

It's useless because it doesn't go any where near far enough ...

In more from our great leaders, "The complexity of over-the-counter derivatives contracts and industry growth let corporations take on excessive risk and caused a “very damaging wave of deleveraging” that exacerbated the global credit crisis, Geithner said".

We all know that overleveraging was the real problem, and most of us know that Geithner and Summers and Krugman and Frank and our other leaders see more leverage as the solution. It's interesting to see someone like Geithner just come out and say that deleveraging is a problem that needs to be avoided.

CalculatedRisk,

Do they think that they can reinflate housing?

"Good for Peter Schiff. He has to know more than the asshat from Minnesota."

Surely more than anyone on the banking/finance committee. The looks of stunned cluelessness and inept questions that Paulson faced when pimping TARP will stick in my mind for quite a long while.

Cramdowns are a terrible idea when the US government owns most of the mortgages. Respectfully, but cramdowns at this late date will only hurt the taxpayer. Especially when Barny Frank decides who gets crammed, and who gets foreclosed. (No pun intended.)

China Fails to Attract Enough Buyers in Bill Sales (Update1)
China Fails to Attract Enough Buyers in Bill Sales (Update3) - Bloomberg.com

By Bloomberg News

July 10 (Bloomberg) -- China failed to attract enough bidders in a government debt sale for a second time this week on speculation that policy makers will rein in money supply to avoid any pickup in inflation. The Ministry of Finance sold 25.1 billion yuan ($3.7 billion) in bills of the 35 billion yuan it had sought, according to traders at China Postal Savings Bank and Industrial Securities Co., who asked not to be identified. It sold 12.48 billion yuan of 91-day bills at 1.15 percent and 12.65 billion yuan of 273-day bills at 1.25 percent.

I'm with TJ and the Bear. The government shouldn't be providing safety nets in this arena.

@mmckinl on health care entitlements for all: "Young people making little wouldn't notice the difference ...and they would be free to start families, a business or new work without fear of medical bills ...."

All you need for that is for the insurers to be forced to offer all plans for a single price. It doesn't require a government program. The problem right now is that unless you're in a group plan it costs you an arm and a leg just to have the doctor check out your arms and legs!

The trouble with Government Medical is that now young people would also be free to wreck their knees skiing, wreck their wrists skating and snowboarding, and have the taxpayers pay for all the high-risk "Extreme Sports" anyone could dream up. They'd be free to collect venereal diseases at taxpayer expense. And I imagine the abortion wars would be even more tense. The moral hazard risk associated with a government entitlement in this area is pretty high. The risk of "entitlement creep" is enormous. And then there's the whole Big Brother issue of having the government know your full medical history.

There are some kinds of government-provided public health care that make sense. Flu shots, for instance. But I don't think the country can afford another inefficient entitlement program. Perhaps a better way to get those young kinds doing entrepreneurial work is (a) stop taxing their labor at 50% marginal (all inclusive), and (b) keep interest rates low and the stock market falling so that the oldsters who actually want to retire with an income need to find fresh young tigers to invest in, instead of just feeding the S&P fraud machines...

I had blogged tonight about another giveaway in the works. HR 3068, $6.2 billion in giveaways.

How about Barney Franks plan to take the TARP money that has been repaid.. and instead of applying to the deficit helped create.. give $2 billion of it to borrowers to pay their mortgage. Fannie & Freddie already tried these loans to help pay the mortgage. It didn't work and just resulted in the borrowers being deeper in debt.

Here is the text of the bill: Read The Bill: H.R. 3068 - GovTrack.us

Lenny Dykstra: 'Bank Fraud' Led to Bankruptcy
CNBC Exclusive Interview With Dykstra - CNBC

By: Jane Wells, Correspondent | 09 Jul 2009 | 06:44 PM ET

Lenny Dykstra sat down with CNBC at his $24 million hilltop estate behind the gates of Sherwood Country Club. In our exclusive interview, he wanted to explain why he filed for Chapter 11 this week, which stopped a planned foreclosure of the mansion scheduled for today. "Bottom line...this case is about bank fraud," he says. We are posting the entire interview. To understand certain parts, here is a thumbnail sketch of what Dykstra claims happened. He says when he bought Wayne Gretzky's estate two years ago, a broker from Washington Mutual promised him a single $17.5 million loan, but delivered only $12.5 millionDykstra says he was urged to go get a second $8 million mortgage, to complete the $17.5 million and allow him to have some extra cash, as the house, Dykstra says, appraised for $25 million. Dykstra says the broker promised he could refinance both mortgages into one affordable payment after 60 days. But the baseball legend claims the mortgage broker disappeared.

Effective Demand, giving money to homeowners does 'work' in the sense that when you give enough, they become well-off and able to pay for expensive cars, expensive houses etc. The question is, "Is it fair?" Let's not hide behind the "it doesn't work" theme. It does work if you do enough of it. But that impoverishes the rest of us. is that fair?

Wisdom speaker, I remember Obama suggesting the idea of community health centers to provide basic preventative health care. I do not know if they were thinking of outpatient clinics as well. Some type of model built around government clinics and with free or cheap universal access may be a good middle ground. Throw in regulation that allows individuals to buy group policies based on location (like with car insurance in CA) and strengthens safe guards against denial of coverage and Obama could actually improve health care.

I believe that a good argument against a policy is to make fun of an extreme caricature of that policy.

Wisdom Speaker (

@mmckinl on health care entitlements for all: "Young people making little wouldn't notice the difference ...and they would be free to start families, a business or new work without fear of medical bills ...."

All you need for that is for the insurers to be forced to offer all plans for a single price. It doesn't require a government program. The problem right now is that unless you're in a group plan it costs you an arm and a leg just to have the doctor check out your arms and legs!

The trouble with Government Medical is that now young people would also be free to wreck their knees skiing, wreck their wrists skating and snowboarding, and have the taxpayers pay for all the high-risk "Extreme Sports" anyone could dream up. They'd be free to collect venereal diseases at taxpayer expense. And I imagine the abortion wars would be even more tense. The moral hazard risk associated with a government entitlement in this area is pretty high. The risk of "entitlement creep" is enormous. And then there's the whole Big Brother issue of having the government know your full medical history.

~~~~

Your moral hazard argument makes no sense ... high risk behavior will just be charged to everybody under any plan ...

As far as privacy that can be accomplished very easily through a separation of name and history that can only be linked at the doctors office ...

All the other G7 countries have some form of single payer and it works for everybody at 60% of the cost here ...

[leaving many borrowers with significant negative equity]

Curable by walking away. People are beginning to realize that it will take much longer to recover lost equity than it would to rebuild damaged credit.

Walk Away, everyone's doing it - It's a WIN WIN!

I wish people who see Barney Frank's economics as ruinous, as I do, would not paint the bulls-eye of homophobe on their otherwise intelligent arguments.

Lucifer,
I saw part of that interview with 'Nails' Dysktra, to me he sounded like your clueless
dumb jock. Maybe he can move in with Straw and Doc and relive those golden days
of blow.
...
edit:
'baseball legend'? in what precisely? name me one stat that even gets him on the road
leading into Cooperstown. I think you mean 'character'.

So let me get this straight - the redefault rate is high, so we want to do more of them? Yeah, that makes sense.

As for the last thread on low doc loans, here is one thing to remember when analyzing the mortgage industry - loan originators will say and do anything to originate more loans, they are scumballs in that regard (and I am actually friends with some of them). They get paid on pure commission (sometimes it is YSP, sometimes it is borrower fees, but it is basically transaction-based - thus, commission).

they could give a sh*t whether the people they put in homes can pay their mortgage.

I am fairly libertarian in my political beliefs, but there are "market failures" that need govt intervention, and this is one of those situations. These scumballs will lie through their teeth to push toxic loans, as long as there is a buck in it for them.

All mortgages should have a minimum of 5 years fixed interest rate, should be amortizing over no more than 30 years, should require full documentation, and should require 20% down. Simple as that.

This is a really old story and better off not posted, but it seemed related to loan modifications at some point (before the coma).

Moody’s: Rapid Amortization on HELOCs a Concern
Page not found : HousingWire || financial news for the mortgage market

And now part two, w/ Financial Security Assurance Inc June 2009, 1st qtr earnings:

The onset of rapid amortization results in the sponsor being contractually required to fund
new borrowings (draws) by existing borrowers from sources outside the transaction.
While the structures vary, the onset of rapid amortization generally results in additional
support for the transaction, with some or all of the new draws funded by the sponsor
effectively providing additional credit support.

Oh well, goodnight and my apologies.

"Wow. For every bad idea there is Barney Frank has a bill for it."

~~~~~

Democrats want to create more bureaucracy ...

Republicans want to create more billionaires at everyone's expense ...

We are so f'cked ...

Duke of Con Dao,

We live in a country where we reward the vile (banksters), shysters ("businessmen"), fluffers (MBAs) and the clueless (celebrities)..

Dykstra's problem was not with the loans but with the freaking appraisal. Just because you live down the road from Murdock doesn't mean his place is a comp.

Sherwood Lake

Dykstra's place $8m tops.

The real fun begins when they realize that they have nothing!

//"People are beginning to realize that it will take much longer to recover lost equity than it would to rebuild damaged credit. "//

Try getting some facts ...

I have plenty, it's you that's operating on mis-placed faith.

Passive Aggressive Resistance

Talk of collapse blowing over is overblown. Things are still in decline / decay everywhere you look. Sure, the rate of decline has slowed here and there but the point is things are still dropping. All the stats I read are worsening. The great shitball is snowballing.

Can the illusion of unlimited compound growth on a finite planet persist forever? Whatever. It’s already Portlandistan outside my door every day. Already see bicycle nomads in caravans with bike trailers. Sleeping bags on the sidewalks. Every trash can gleaned all day. The powers that be are losing heaps of respect by the millisecond as all their fixes fall flat.. We are going wild west.

The American Psyche is warped by 40+ years of saturation marketing of the Bernays variety. People are deluded these days by mass psychosis instilled with media hypnosis. US cattle wish to believe what they see on TV. They have invested their whole lives in the lies of the glowing blue Hypnosis Machine. Next time you go to the airport sit under the TV looking at the TV watchers. Watch the same expression form on every face. You will see mass hypnosis.

Marketing spawned our Culture of Denial. Marketing by definition is manipulation. All media is marketing and media is omnipresent. Our system is all manipulation. A system that enshrines the trick and rewards the shiftless manifests passive aggression. It has become a nasty part of the US personality type. People here fuck eachother over silently while they get smoothly fucked over in every corporate and government interaction.

Since a major personality trait of the US consumer citizen is passive aggressive, any possible Mass Reaction to the collapse will likely display passive aggressive characteristics. These include passive resistance to demands for acceptable fulfillment of social and occupational obligations, obstruction of other’s efforts, deliberately inferior effort, and evasion and abdication of accountability and personal responsibility.

Passive aggression is seen in boycotts, road rage, banks refusing to lend, investors on strike, ruthless defaults, and multitudinous other silent fakes, quiet refusals, and lies of omission played to game the trick system. A pervasive “no snitches” attitude would be another example.

Americans are trained that the only way they can affect their universe is by altering their purchasing habits. Owners of corporations are trained that they can abandon their responsibilities with no liability by going bankrupt. Consumers will be acting like corporations with regards to their financial responsibilities. The corporations are the Gods of the consumers. Consumers will emulate their Gods.

But the sheeple believe otherwise.

//YOUR health care history is NOT private currently in any shape or form.//

TJ and The Bear

Try getting some facts ...

I have plenty, it's you that's operating on mis-placed faith.

~~~~~

The facts are that all other G7 countries operate their health care systems at 60 % of the cost that we do ...

and they cover ALL of their citizens !

The facts are that Medicare costs per person are NOT going up as fast as private insurers per person ...

"I think they were trying to get banks/servicers to do loan modifications PRIOR to March (Bush Administration)."

Servicers have been working on mods forever, but really focused on it starting in summer 2008.

The stories I could tell. Obviously, there is the issue of borrowers not being able to afford the mortgage at any interest rate, and/or not wanting to pay on an underwater mortgage.

Then there is the issue of contacting the borrowers. Many people will not respond to lender letters, they think they are solicitations, or, if they are behind on their loans, they don't want to open the mail.

So, just call them up, right? Well, the problem there is many of the originators didn't put the borrowers real phone number in the file, since they didn't want the bank to be able to sell their client list to other originators (i.e. wholesale brokers worried about internal bank folks soliciting their clients, internal originators worried about the call center soliciting their clients, etc).

And collecting email addresses is not standard practice on mortgage apps (though it is becoming more common).

It's a jungle out there.

"Not saying I agree with it, just saying I bet it will happen."

Can you imagine the wave of defaults when the public figures that out?

Tom Stone, I visit CR for housing and economic research and news and analysis. I go elsewhere for other topics. I just wish others would do the same. I am pretty sure 90% of people who criticize Frank for his sexual proclivities vote predictably right of center, and those who support Frank even if they hear credible evidence of bad things in his personal life vote left of center. It's a pointless, mindless, merry-go-round, and I wish it were taken elsewhere, so we can get back to economics and housing here.

"He says when he bought Wayne Gretzky's estate two years ago, a broker from Washington Mutual promised him a single $17.5 million loan, but delivered only $12.5 millionDykstra says he was urged to go get a second $8 million mortgage, to complete the $17.5 million and allow him to have some extra cash, as the house, Dykstra says, appraised for $25 million. Dykstra says the broker promised he could refinance both mortgages into one affordable payment after 60 days. But the baseball legend claims the mortgage broker disappeared."

I don't doubt this is true. Most brokers are scumballs.

And of course, despite this, Fannie/Freddie are talking about ways to support warehouse lenders, which are essentially brokers with a line of credit.

There is a reason warehouse lines are not available - because most warehouse lenders and brokers are criminals.

I see the numbers - there is easily 10X the fraud from third party originations than in-house originations. First payment defaults are much higher. Churning is much higher.

No lender wants to touch this crap. Most major lenders have cut off warehouse lines, and wholesale operations, for good reason.

@rich, barfly

Thanks. "The Fog of War" should be required viewing by Obama's cabinet.

Then there should be a quiz.

edit: Hell, what am I saying? Every American should be required to watch it, and take a quiz after.

"Most major lenders have cut off warehouse lines, and wholesale operations, for good reason."

But that leads to deleveraging, and we know that we must avoid that.

The facts are that all other G7 countries operate their health care systems at 60 % of the cost that we do ...
and they cover ALL of their citizens !
The facts are that Medicare costs per person are NOT going up as fast as private insurers per person ...

I think what some on this board are saying is that they don't trust the US government to implement a healthcare plan effectively and cost efficiently. Given that it has been dine basically succesfully in socialized 1st world countries around the world that is a pretty damning indictment of the US. You are basically saying it will turn out worse than socialist countries.

It's a pointless, mindless, merry-go-round, and I wish it were taken elsewhere, so we can get back to economics and housing here.

It's a political merry-go-round without which discussions of housing and economics would not exist.

No matter how far house prices in California may fall, no one will buy a house in L.A. for $3,782.

Mass Choice can be exercised to NOT do something like pay your debts, resulting in widespread default and dead banks, or not pay taxes, resulting in dead governments. The possibility exists for the end of modern ponzi finance from fiscal discipline being forced on the banks in a widespread “democratic default” or modern equivalent “tea party” whereby the masses throw off their corporate colonists and cast their debts and other obligations into the sea in such numbers that it ruptures society.

The current US situation is not unique to history. We are a dead empire. The twist was that our empire was corporate colonialism instead of the sovereign colonialism of history. Globalism and free trade were the cover story for corporate colonialism. Credit vending corporate colonialists are now overextended and trying to extract all they can from their colonies. The colonized are rejecting the colonists because they are already full up on credit.

How long before consumers refuse to play by rules that no longer exist all the way to the highest levels of government? Bankers steal, they gamble, they pay bonuses today with money borrowed against future tax dollars of unborn grandchildren. They renege on their debts and bad bets with impunity. Total Ethical Failure of US financial institutions and regulators should be expected to produce blowback. The average TV viewer is slowly beginning to conceive that bankers have captured the government. People may see the way to save their government from the bankers is to not pay the bankers.

Duke,
That looks like a 50 BMG. The spent brass flying out looks dangerous by itself.

So, Tyrone, you're another one of dem dare Republicans?

This is going to provide hours of entertainment

Geithner Seeks ‘Difficult-to-Evade’ Derivatives Laws (Update1)
Geithner Seeks ‘Difficult-to-Evade’ Derivatives Laws (Update4) - Bloomberg.com

By Dawn Kopecki and Robert Schmidt

July 10 (Bloomberg) -- U.S. Treasury Secretary Timothy Geithner is urging Congress to rein in the $592 trillion derivatives market with new laws that are “difficult to evade.” The complexity of over-the-counter derivatives contracts and industry growth let corporations take on excessive risk and caused a “very damaging wave of deleveraging” that exacerbated the global credit crisis, Geithner said in prepared testimony to be delivered today at a joint hearing of the House Agriculture and Financial Services committees in Washington.

I realize you absolutely hate every government program of any kind, but at least inject a shred of logic into your polemics.

BS. There are things the government should do, and they're detailed in the Constitution (and what they shouldn't do is in the Bill of Rights). I don't see healthcare listed there, and I don't want to live in any of those other so-called "G7".

I've managed to pay for my own insurance (self-employed) for most of my working life, too.

The fact that something works somewhere else doesn't mean a damned here, and Medicare is proof positive of that. If they can't make it work in a limited program, why the hell should we trust them with everyone? It's not about administrative expenses, negotiations, groups, etc., it's all about cost containment. In that respect Medicare has failed miserably, as it dictates below-market reimbursement rates and still is killing us.

This idea that any program that works somewhere else will automatically work here is idiotic and naive.

@Duke

I was not aware that McNamara had made this documentary until Rich and Barfly referred it to me earlier this evening.

Halberstam's book I read many years ago, so I should probably go back and read it again.

CameronH

"What it comes down to is that there just aren't enough smart people in the industry to do this kind of work. There never were. In addition, the big servicers are too giant as organizations to have any sense of how best to deploy productive individuals.

Treasury can complain all day, but the hurdles cannot be overcome easily, if at all. "

~~~~

Exactly why we need cramdowns ... BK Judges will figure it out real fast ...

What are the comps ... here is your new mortgage ... done

You are basically saying it will turn out worse than socialist countries.

Yes, because (obviously) socialist programs work well in socialist countries.

More black clouds on the horizon in the PNW:

Key lawmakers warn of Boeing no-strike ultimatum

The company wants the machinists to agree to a no-strike clause before considering building a second 787 line in Seattle. There's a good chance the whole operation could be moved out of state, lock stock and barrel.

We can't even get the death care cartel to reveal their prices until after the services are rendered and after they have had a chance to peruse the sick person's tax returns.

Universal health INSURANCE is a scam to force out the time tested valuable societal practice of indigent care. Forcing people to insure their bodies for catastrophic illness is not the same as promoting general health and well being. Everyone gets sick and dies. Insurance is for unforeseen events, not inevitable events.

But hey, once your inevitable condition is pre-existing nobody has to insure your dying body. This is a reprehensible indefensible industry that thrives on harvesting your life savings in your hour of need.

Everything is a scam.

here is another example: Cap and trade institutionalizes current levels of pollution and let's polluters sell lost production. Monetization of pollution is not the same as elimination of pollution.

"...a second 787 line..."

Good luck with that.

TJ and The Bear

"This idea that any program that works somewhere else will automatically work here is idiotic and naive."

~~~~~

The problem is our health care system is broken beyond repair .... It is now hurting our competitiveness

in all aspects of commerce, both at home and abroad ... The other G7countries have models that we can learn from ...

Fixing the health care system is not an option, it is a necessity ... Ask any CEO running a business except health care CEOs ...

Yes, because (obviously) socialist programs work well in socialist countries.

You call me naive? We already have plenty of socialism here for the banksters and their buddies. Didn't you notice?

sportsfan,

Yeah, and who's providing that "socialism"? I suppose you're so happy with the government's work with banking that you're ready to turn over your healthcare now, too? Perhaps then only the bankers will get treatment and you'll get to pay for it.

mmckinl

Exactly why we need cramdowns ... BK Judges will figure it out real fast ...

What are the comps ... here is your new mortgage ... done

I doubt the process would be that simple. Nonetheless, I think you have the right idea. Values were so inflated, and there is so much downward price pressure that the debt will have to be deflated. It will be done quick and dirty-like, at maximum cost to all of us.

On the upside, there's so much inventory that will be had so cheap. I think we have a massive housing inventory that may very well spark-off 20 to 30 years of phenomenal growth once the write-offs are complete. Somehwere around 2017, IMHO.

I've managed to pay for my own insurance (self-employed) for most of my working life, too.

So have I but I don't recommend that anyone try paying for health-care for a lifelong chronic condition on 40k a year. I'm blessed to have a well paying job so I'm not in any trouble. There's no way I could do it on an average wage though and that is immoral in this country that prides itself on calling itself a superpower and a 1st world nation.

ON TOPIC, I have no problem with cramdowns as long as the borrower is suffering from real financial hardship and is not simply someone that bought way more house then they could reasonably afford. Otherwise, yet more moral hazard.

She is too optimistic..

//She's saying debt reductions of at least 50% in the hard hit areas//

great... I just located the hour of Hi-Def footage I shot of Morris in April 2008
which was shot at the Apple Store in the back theater in Soho... although I had
press credentials the taking of photos, let alone video taping was prohibited
since Apple was taping it and would make it available later on on Itunes...
... they don't know the duke who has had his fill of people who know what's
good for you (dictators, tyrants and nazi store clerks at Apple)... what to do?
go American Cong style and shoot from the hip (really, from the crotch)....
I'll post it later on my site...
... screw you Steve Jobs (ps: many of the 'live tapings' are edited and the embarrassing bits removed)

"There's a good chance the whole operation could be moved out of state, lock stock and barrel."

Please, oh please, come to right to work, Austin.

Baby Boomers To Kids: Kiss Your Inheritance Goodbye: Facing shrunken portfolios, some seniors are revising retirement plans and leaving nothing to their kids.
Sorry About The Inheritance, Kids - Retirement Finance - Annuities - WSJ.com

JULY 9, 2009, 9:29 P.M. ET

Thanks to the financial crisis many people will have to reconsider the legacy they'll leave behind. Ross Schmidt, a financial advisor in Denver, sat down with a well-to-do client last fall, just after the stock market had collapsed. The client was in her sixties, divorced, with two adult sons. "We were scrambling to stem losses in her portfolio" and re-evaluate retirement plans, Mr Schmidt recalls. He asked his client how much she wanted to leave her sons. "Well, now, nothing," she replied. She will not be the last to reach this decision -- especially if the stock market stays down.

The $45,000 per person comitted thus far to save the financial system was more than enough to take care of everyones health needs and buy every man woman, child, and infant a new car and a laptop with money left over for a barbecue and an above ground swimming pool.

Given the dozen trillion flushed down the toilet to settle the bad bets of suicide bankers there is no longer any excuse for not providing for a healthy citizenry. Are we really so stupid to not see how a healthy populace equals happy, productive, non disruptive people?

TJ, if you can't understand that this is about both you and me being ripped off by people who don't give a damn whether we live or die, there is nothing I can say to wake you up.

Do you even read what you write? You're describing Washington, DC.

sportsfan (profile) wrote on Thu, 7/9/2009 - 11:07 pm replyIgnore userI doubt the process would be that simple. Nonetheless, I think you have the right idea.

Actually the process is exactly that simple. You present your evidence, I present mine. The person wearing the black robes makes the decision, down comes the gavel and it's all over. There's a lot of cases on the docket. "Next case."

No argument here. I just don't trust the courts. Personal experience and all.

It never occurred to you that it was the LACK of government involvement during the Bush Administration that CAUSED the very problems we face today, such as a crashing economy?

So now you're argument is that government failed yet again? You really should think your arguments through.

Can anyone name a major us system that is working well and not thoroughly corrupt? The military?,education?, healthcare?,Finance?Agriculture?elections?...there is Porn,but somehow that does not make me feel better.C'mon,my back is giving me fits,cheer me up! Tell me what IS working...

Actually the process is exactly that simple. You present your evidence, I present mine.
I think you're being terribly unfair to the judge. The judge will have to review every other creditor and asset and make an informed ruling, that's going to eat up a lot of time. And there will be a tsunami of cases.

"What it comes down to is that there just aren't enough smart people in the industry to do this kind of work. There never were. In addition, the big servicers are too giant as organizations to have any sense of how best to deploy productive individuals."

CameronH, you are exactly right. It isn't that the people who work in default management are stupid per se, it is just that the each borrower's situation is unique, and is often very, very complicated. As you mentioned, sometimes there is a second, sometimes there was fraud, good luck getting documentation on a loan that was originally a no-doc loan, etc. To modify one loan is probably 10 - 20 hours of effort each (not continuous of course, which actually makes it worse). And there are tens of thousands of these.

Imagine a worker making maybe $45K with maybe a college education needing to pour through the original loan docs to figure out where it all started, hunting down the borrower, figuring out the current situation, figuring out a solution that will work within the parameters of the current programs.

It ain't as simple as "here is your new interest rate, sign this and send it in."

And then you have the issue you mentioned of the monoliths that make up the servicing industry today.

The $45,000 per person comitted thus far to save the financial system was more than enough to take care of everyones health needs and buy every man woman, child, and infant a new car and a laptop with money left over for a barbecue and an above ground swimming pool.

Yes. No doubt even better if we considered what's been wasted fighting in the Middle East. I was struck by the administration's "cost" placed at $1T and thought "hey, if it's so damned cheap why didn't they already do it". They passed a $700M TARP fast enough, didn't they. Well, it's not that simple.

I've no problem with the right approach to UHC. I believe a universal disaster insurance program should be there, too, I just don't buy the idea that the government should be involved other than mandating basic coverage and in regulating the players.

I forgot the "Criminal" Justice system.Oh well ,I am not the only one.

The problem with cramdowns on the scale and speed necessary is that it would undercapitalize the banks again.

They are spending their children's inheritance, there's a surprise.
Children. Adult children. Oxymoron? Let's see, life expectancy 70 or 80, that makes the children about fifty or sixty,...
WTF

I just don't trust the courts. Personal experience and all.

CameronH, it's our next to last line of defense. TJ and I both expect the courts will preserve our Constitutional rights.

Should that next to last line fail, well, we'll be down to the last line of our defense.

"But in the true spirit of nonpartisanship, let me say the Obama pulling his support from the cramdown legislation and allowing it to fail in the Senate with only 45 affirmative votes showed me his true color (in a non-racial sense)."

And his support of Geithner's actions regarding the banks? Goldman Sachs by all rights should have collapsed. Instead they are going to pay record bonuses this year, for scalping NYSE trades.

We have political capture at the highest levels in this country. And it just keeps getting worse and worse every year.

The Quiet Coup indeed.

I think you're being terribly unfair to the judge.

No, I'm not. I think lawyerliz would agree with me that BK judges have heard every sob story imaginable and they've seen every clever trick a fraudulent creditor could come up with.

They are generally no-nonsense, shut up and answer my question kind of people.

I would trust their judgment more than any broker opinion, or political operative or sobbing homeowner.

We have to have faith in somebody, even if it's just the Postman (Kevin Costner).

Tom Stone asked earlier to tell him what is working.

I AM! Yay for being employed.

Ok, sorry for the silly.

On a local level the Public safety system is working well. Then again, we have 3 policemen and the fire department is volunteer....

I sure hope Obama doubles back and fixes the cramdown doublecross. I sure would like to believe he is honest and competent. Can't on the current record.

We're all "undercapitalized" now.

@ rsj Did you see the link from the smoking gun about the prank call to the hotel clerk in Arkansas?

Now...Go Break The Windows - June 9, 2009

"You know, Tom Stone, you should be apologizing for getting your accusation COMPLETELY wrong. Frank paid $80 to man for sex who was running a male prostitution ring in 1989. Republican Mark Foley was accused of having or trying to have sex with underage male pages."

Thank-you for clarifying. Something did not sound quite right about Frank being quite as off as Foley.

"@ rsj Did you see the link from the smoking gun about the prank call to the hotel clerk in Arkansas?"

I read that. Seriously funny stuff. Makes me wonder a bit about our competitiveness in the global labor marketplace.

"Crank caller wreaks havoc on Arkansas hotel, duping employees, guests. Now...Go Break The Windows"

Thanks sportsfan,I am offkilter tonight.Generally upset,and part of that is due to seeing a lot of sensible suggestions here that have little or no possibility of being implemented.You saw the response to my question about what IS working in this country.The implications are not happy ones but I can no more predict the next few years than someone in the spring of 1914 could.

china bill auction fails again!! how can this happen. aren't hey supposed to have all the money!
imagine if this happened in the u.s.

Goodnight, sportsfan.

Tom, the question of "what's working" is a good one. I still believe our basic (and I mean basic) system is sound, it's just that too much money & power has been centralized into DC and it has definitely been captured by special interests, corporate and otherwise. We can't hope to fix individual problems within our society (such as healthcare) without fixing our government first.

Wow, It only took nine days to go from GM saying their delisted but still trading stock has no value to due to the recent bankruptcy to GM emerging from bankruptcy.

What of the chairman saying the stock would have no value right before it was due to have higher value by virtue of exiting bankruptcy in 36 days instead of the 36 months predicted?

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G.M. Stock Advice: Expect Zero Value

"“G.M. management continues to remind investors of its strong belief that there will be no value for the common stockholders in the bankruptcy liquidation process, even under the most optimistic of scenarios,” G.M. said."

G.M. Stock Advice: Expect Zero Value - NY Times

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GM Gets a Second Chance

"the company re-emerged from Chapter 11 on Monday just 36 days after it went in."

gm-gets-a-second-chance: Personal Finance News from Yahoo! Finance

"What of the chairman saying the stock would have no value right before it was due to have higher value."

Well, the old worthless stock now trades as GMGMQ and the new, something else. So no due higher value.

50 billion bailout dollars apparently will speed a company through BK courts in amerika.

remember the good ol days when 300 billion was a big budget deficit for the whole entire US government?

when was that, 2006?

More pushback.

The House rebuked President Obama for trying to ignore restrictions to international aid payments, voting overwhelmingly for an amendment forcing the administration to abide by its constraints.

House members approved an amendment by a 429-2 vote to have the Obama administration pressure the World Bank to strengthen labor and environmental standards and require a Treasury Department report on World Bank and International Monetary Fund (IMF) activities. The amendment to a 2010 funding bill for the State Department and foreign operations was proposed by Rep. Kay Granger (R-Texas), but it received broad bipartisan support.

http://thehill.com/leading-the-news/house-overwhelming-rebukes-obama-signing-statement-2009-07-09.html

What to do with the $328 billion left in Hanks bailout fund?

The Treasury Department wants to keep the money at its disposal in case the economy gets worse. But fiscal conservatives like Sen. Judd Gregg of New Hampshire and Rep. Spencer Bachus of Alabama, both Republican, want the money kept to pay down the national debt.

Meanwhile, a group of liberal Democrats led by Massachusetts Rep. Barney Frank, chairman of the House Financial Services Committee, say at least a portion of it should be spent to help cash-strapped homeowners.
The article requested is no longer available.

What to do with the $328 billion left in Hanks bailout fund?

The Treasury Department wants to keep the money at its disposal in case the economy gets worse. But fiscal conservatives like Sen. Judd Gregg of New Hampshire and Rep. Spencer Bachus of Alabama, both Republican, want the money kept to pay down the national debt.
Pay down the national debt? We should ask for more and wipe out the national debt entirely.

Accusations on this forum are the worst. Especially when they seem so plausible. Not only are we dealing with a relatively anonymous commenter (although using a real name [and damn it, I know you believe it]) but we're also dealing with hearsay from someone we don't have any history with and trusting someone else's judgment about that third person. Now I have to keep reminding myself that I don't know this for a fact.

"I wonder what larger fraud this story will obscure?"

Exactly my response when I saw the amount being asked for in bonuses was $2.4 million. Here's what I think is being masked:

"The government could lose out on more than $2 billion if federal officials continue to undervalue part of the financial bailout package, a government watchdog panel will say on Friday. "
...
"The bulk of those warrants -- some 70 percent -- were issued by J.P.Morgan, Bank of America, Morgan Stanley, Goldman Sachs, Citigroup and Wells Fargo. Treasury has not sold any of those warrants so far, according to the report."
News Archive - TheHill.com

Yawwwwnn. Gmng in the great-ish state of Mary-nam. Java please.

Asia tankd, Yerp futures down, Stoxx50 crud. Could be a Difficult day leading up to pizza time.

C

We have a single-payer program here -- it's called Medicare.

Medicare is not a single-payer system. There is Medicare Plus Choice, Part C.

Wisdom Speaker (homepage, profile) wrote on Fri, 7/10/2009 - 1:06 am

* reply
* Ignore user

All you need for that is for the insurers to be forced to offer all plans for a single price. It doesn't require a government program. The problem right now is that unless you're in a group plan it costs you an arm and a leg just to have the doctor check out your arms and legs!

If insurance companies are no longer required to do underwriting what role do they perform? The whole point of insurance is exclusion- so a health plan that makes no exclusion for pre existing conditions preserves insurance companies and mandates coverage by everybody is yet again another big hand out to the corporate interests under the guise of doing something for J6P.

otishertz (profile) wrote on Fri, 7/10/2009 - 2:24 am

* reply
* Ignore user

I don’t advocate defaulting on debts. I’m saying it is already happening. We all know a real estate attorney who rationally advises people to walk away from their debts.

Why not? Every loan is ultimately a put option written by the lender. The borrower gets the upside and the bank accepts the downside in exchange for a fee. The amount of equity is just a reflection of how "out of the money" the option is. If lenders were too stupid to realize that a zero down was an at the money put option priced at an out of the money price they deserve to get screwed. I think any financial adviser who doesn't carefully evaluate the cost/benefit of walking away is guilty of malpractice.

I think the reason more people are not walking away has nothing to do with morality but rather because they don't want to be "stopped out" of their trade. Hope springs eternal that real estate prices will come roaring back. Put another way- given that people have been living of their home ATMs for quite a long time for them to accept the idea that home prices are not going to come roaring back is also to accept that they will have to live the rest of their lives at a much lower standard of living. It is the reason speculation is so attractive - it gives people the opportunity to dream.

Wholesale prices fall by a record 6% in Japan.

Yahoo! 404 - Page Not Found

For thousands of years cost of living slowly fell. This was roundly viewed as a positive for society until we started this debt as money foolishness.

Cui bono?

One man gored during running of the bulls. That's sad.

Yahoo! 404 - Page Not Found

It's also ironic as 100s of millions have been financially gored by bulls running for the exits of the financial casino/ponzi scheme.

Do you vote? (@TJ)

"A national poll of unemployed workers conducted in November by Peter D. Hart Research Associates in Washington for the National Employment Law Project found that more than two-thirds had cut back on food expenditures."

I call BS. This, like most studies recently undertaken about "hunger", clumps "food prepared in the home" with "food prepared outside the home". If a person doesn't know how to boil water and eats out every meal, I can understand the problem of "having to cut back on food expenditures".

Teach people to cook for themselves and you'll notice people won't go hungry, they'll lose weight, AND be healthier in the bargain. What a novel concept - Fast food is junk!

......

Saw Ritholtz quoted this morning on Yahoo Finance...

"It's pretty clear that the green shoots thesis, which a lot of optimists were hoping would have some sway, is a nonstarter," said Barry Ritholtz, director of equity research at Fusion IQ in New York.

"Now people are adapting to a more realistic view of the economy, which is ongoing weakness for the foreseeable future and everything that means for corporate earnings."

I think Barry is peeing in the Green Shoots Garden again.

LOL.........You wonder why we're a nation of fat pigs - and I'm a contender @ 250#! Though I DO eat healthy and work my ass off - outside of the Mrs' peach pies.

This recent White House pleading for mods and PPIP is puzzling me. Are these all they have to deploy ahead of option-ARM and CRE waves, both of which are imminent?

Very weak planning, if so. We have a competence problem.

Ah. Porcine intervention!

my head is killing me BSR.... LOL!

Does the Secretary of the US Treasury know that you do not tell the banks to do anything?

Banks in the US answer to no one. Banks in the US operate with absolute impunity. Banks in the US have no fear of the mortgage borrower because the borrower has no rights. The Congress will NEVER NEVER pass any legislation that limits or controls the banks ability to financially harm their borrowers since it would limit the financial fruits that Congress receives from the US Banks.

All these government mortgage programs are merely a financial vehicle to pass money from the Congress to the Banks in the guise of helping the home owner. This is another example of helping the home owner by making the Banks wealthier.
Apparently, the Billions and Billions of dollars given to the banks without restriction were not enough.

Michael LittleBig

We Americans should be so very proud of what we have become: self-entitled whiners. Typical borrower: "I told the bank I would pay something [say, $650 per month, when the actual mortgage payment is $2,150], but the bank won't work with me! Wahhhh!!!!!!"

Things go awry, and we immediately affix the blame on someone else. After all, the situation could not possibly be our own fault. (No way!) And, knowing that no private party will bail us out, we whine to the government to do so. Besides, the government is supposed to be "protecting" us.

So, why don't we use taxpayer funds to pay off the first, say, $250,000 of each person's contractual obligations. If a given person doesn't owe that much, the government (taxpayers) would simply cut a check to that person for the difference. Any person who owes more than $250,000 could bankrupt him or herself out of any remaining obligations. (Can't afford this, you say? Of course we can - - we just shift the printers into triple overdrive.)

P.S. I am no longer going to frequent the bakery I went to this morning, as the customer who got served before I did got a bigger scone than I did. It's not fair, I tell you!!!