Will Mortgage Insurers Limit the Housing Market?
Submitted by
CalculatedRisk on Tue, 08/25/2009 - 2:52pm (178 comments)
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Expect dozens more government programs.
"Uh oh.
I just got a message from Ameritrade asking me to consider changing my cash-sweep vehicle"
Yalt, is this legitimate concern or a bit of snark?
I love words, and 'mortgage' is a beauty.
Translated from French, it's meaning is: "dead pledge"
I thought "cash-sweep vehicle" referred to vacuuming up nickels in front of a steamroller.
uhaul, AFAIK, has their own in-house "insurance company". looks like FHA needs something along the same lines.
Actually the MI requirement seems like just a way of having another set of eyeballs look at the loan. What's the point of requiring mortgage insurance when FHA is really just a government insurance outfit?
I admit its possible that the whole private MI + FHA thing is just another conduit to pumping up the income of the private sector financiers.
You can only apply so many patches until you have a system that may still exist but can't move, can't breathe, can't even defecate without magic zombie dust. Like zombies, they tend to fall over and flail weakly on the ground in any crisis situation.
JD: are you saying that 'in the long run we are all dead' means we have to get a mortgage to leave this veil of tears?
It seems to be a national priority to keep households highly leveraged. This is obviously kicking the can....
Expect dozens more government programs.
I am hopeful!
"The ability of the MIs to meet that level of demand is “remote"
... and with good reason, as modern history now demonstrates.
My flying United Airlines to Mars overnight is also remote.
You guys are confusing FHA with FHFA. FHA requires just 3.5% down, FHFA oversees Fannie and Freddie.
Oh. We'll get to help some folks out a second time.
Just shoot me.
Bob: FHA doesn't actually provide the money on a loan, I believe. They just guarantee the loan to private insurers. They are an insurance entity.
We need Cash 4 Mortgage Insurance.
private lenders, that is, not private insurers as above.
I never really understood why you need mortgage insurance if you're buying w/less than 20% down, but you don't need mortgage insurance if you do a cash-out refi and reduce the equity lower than 20%.
This should be no problem. Ben Bernanke just signed a new four year lease on a technology called a printing press.
With all of those congressional affairs coming to light we should try Cash 4 Congress. That's sure to generate some revenue.
Seriously, if PMI represents a log jam in issuing new mortgages, Washington either addresses it or manifestly has no confidence in a recovery. It's amusing in an unpleasant way.
MI has always been required for higher than 80% LTV. Why do you think people got 80 / 20 loans? That was one of the ways people got talked into them, you "saved money" as the payments are lower.
What I don't understand is why they think they can't provide MI insureance. Do they think too many will default? It is only paid on default, like credit default swaps.
Couple across from me (in Starbucks) is pricing condos in Alki beach.
they're using some kind of priority scheme where some houses are on the "A" list, "B" list, etc.
Man, they're not that old.
I thought they were both thirty but perhaps a mom and daughter.
I'm not so sure we'd have much luck with Cash 4 Congress, but if we could get $4500 a head for them, i'd say do it.
When I was growing up, there was a kid who would light fires in nearby woods then help the firefighters when they came. Obama would have made him fire chief.
If we could get only thier heads ...... I'm in.
I know a Gila teen that's out of work, a bit rusty.
The Fed is already the insurer of last resort for Citi and BAC, why not for the residential mortgage market?
Insurance is what swashed much of the private student lending 18 months ago, we could get these great rates from this company called AIG. Senior management was planning for 2.5x growth in private student lending guaranteed with our partner AIG.
And then....
One of the major follies is the continuation of bad underwriting practices. What is the percentage of loans written with little down? Is everyone so shell shocked that this critical factor is conveniently ignored?
Bad underwriting Like 3/5% down that you can borrow from the gov? And you can get more than the property's value if you want to fix it up?
those kind of loans?
If a first-time buyer purchases a condo for $125,000 with an FHA loan, they have a $4,375 downpayment, plus some fees, so say $6,000. Then thay get an $8,000.
He cleared $2,000 buying a house. Sounds like 2006 to me.
Snark. But that doesn't mean it isn't a concern.
I don't have any cause for alarm besides the unsolicited suggestion. Their track record with those isn't very good.
You know which discount stock brokerage always gets a chuckle out of me, when I see their tv commercials?
The one that has the fake district-attorney as their spokesperson...
Another goverment program?
Call your Congressperson--an M. I. Liquidity Facility is one program we can all get behind!
FHA also has a huge problem with re-defaults after modification. Then we have a whole new category called "quick-default", these are the ones which default without ever making a payment.
The condo buyers are too analytical, taking too many notes, asking too many questions.
Got to be "investors", there's not a hint of sentiment in their choice.
"Fed Audit Would Be Problematic For The Country"
Timbabwe
Broward,
I'll paypal you five bucks if you accidently spill scalding coffee on them
No love for the
?
Since we are still printing money, can someone write a bill whereby all households whose AGI is under $250K send ALL debt statements to the Treasury, where Uncle Timmah will pay them off in the following manner: Unsecured Debt is paid at 100%, and Mortgages/Car Loan are paid 50%. The only exclusion is for automobiles purchased with C4C, where the Federal Government will pay 50% minus the C4C credit. To make it somewhat fair, all households who submit their debt to the Treasury that is less than 15% of their AGI (lowest AGI of the last 5 years for this calculation), the government will provide you a check for 25% of the households AGI (highest AGI of the past 5 years of tax returns will be used ).
For households with an AGI of over $250K, the Treasury will pay up to 50% of your current unsecured debt, 25% of outstanding FIRST mortgages and car loans.
Leases are excluded from the program.
Banks get capitalized, consumers get relief, and all the government has to do is print money!!!!
There, that is my Stimulus 2 package.
Make it go.
It is only money, right?
Insurance for me but not for thee. Oh, and here's the bill.
If they would stop giving huge amounts of money to people who don't qualify for it, we wouldn't be in this situation.
Speaking of insurance companies, AIG wants to buy back their debt from Hey Zeus C. Bernanke. Where the hell did they get the money? I smell a rat here, and I think I know what's happening, more later on it. This is the same company that "insured" the loans last time with their Ponzi scheme and reaped huge rewards and bonuses for their CEO's including smokin Hank Greenberg.
"Another goverment program?"
Why is there a question mark at the end of that sentence?
It does appear to be a clear-cut case of vermin infestation @ AIG.
Yahoo says: "WASHINGTON (AP) -- In a chilling forecast, the White House is predicting a 10-year federal deficit of $9 trillion -- more than the sum of all previous deficits since America's founding. And it says by the next decade's end the national debt will equal three-quarters of the entire U.S. economy."
I guess that is the cost of absorbing all of the bank/investment bank/securitized bad debt....
Of course, the FHA continues to offer massively subsidized government insurance on loanw with low down payments, and the current FHA loan limits are so high that they cover the vast bulk of the housing market
Let's say the U.S. Government was a gambling casino, and let's say that the Wall*Street cardsharps that frequented the establishment never lost, in fact they always won big... how much longer would the casino stay open under such an arrangement?
AIG wants to buy back their debt from Hey Zeus C. Bernanke. Where the hell did they get the money?
AIG paid off the initial FRBNY loan (LIBOR + 800bps, which evidently is usurious to everyone but credit card customers) with proceeds from preferred shares that it sold to the Treasury. Something like robbing Peter to pay Paul...
Or, you know, PRICES COULD FALL TO WHERE 20% DP WAS AFFORDABLE.
"Or, you know, PRICES COULD FALL TO WHERE 20% DP WAS AFFORDABLE. "
Do you like, hate America?
Put your CAP-guns away people, no shooting indoors.
Prof. Krugman wants to know:
Where are the bond vigilantes? - Paul Krugman Blog - NYTimes.com
I guess he hasn't been introduced to Ben Bernanke's little friend...
In a chilling forecast, the White House is predicting a 10-year federal deficit of $9 trillion
Because in America, there's always a bubble.
"Or, you know, PRICES COULD FALL TO WHERE 20% DP WAS AFFORDABLE. "
If 20% DP was mandated, prices would naturally fall to affordable levels to accommodate buyers.
Will this problem impact the way my Klunker is insured? (insert un-insured car icon here and parked in the driveway of a foreclosed house, which is in the process of being flipped by a retired meth dealer).
"We got a thousand points of light
For the homeless man
We got a kinder, gentler,
Machine gun hand
We got department stores
and toilet paper
Got styrofoam boxes
for the ozone layer
Got a man of the people,
says keep hope alive
Got fuel to burn,
got roads to drive."
NY <<>>
"If 20% DP was mandated, prices would naturally fall to affordable levels to accommodate buyers"
Can't. Let. That. Happen.
Why don't we just outlaw all mortgages and require people to pay cash for houses. That would give us true price discovery.
There could be an exception for seller financing, since that existed for hundreds of years, but the problem there is that someone would find a way to buy up the loans and securitize them.
i think i will start a mortgage insurance...insurer.
i even have my 5 bucks in start up capital.
I'm with you sportsfan! In addition all corporations must also now pay cash and report true asset values!
"Why don't we just outlaw all mortgages and require people to pay cash for houses."
Some of us don't want to live in a world controlled by Big Brother, with a law disallowing one of us to lend money to another. I'd be happy to lend 50% against the price of many homes, and sometimes even more. Just because 3.5%, or 5%, or 10%, is usually ridiculously small as a down payment doesn't mean that 100% is the smallest reasonable down payment. Without explicit and implicit taxpayer-paid guarantees, most loans today would require downpayments of 20% in areas where prices have already fully deflated, and 20-50% in the areas that were bubbly and haven't yet come down all the way. Those kinds of downpayments make sense, and would lead to affordable home prices, and a healthy housing market, and a more balanced economy.
Speaking of bogus assets, it's probably time to check up on all the lease-back bullshit that helped pump earnings for so many corporations (in addition to the other goodwill impairments that are no longer issues) Dow to 14,000 by XMAS!
Kinda OT but this is really unbelievable.
Amy Goodman: Who Is Obama Playing Ball With?
I hate this post, but here is the link:
The Bonddad Blog: From Invictus: CFNAI Update II
The Chicago Fed describes it this way: “The CFNAI is a weighted average of 85 existing monthly indicators of national economic activity. It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.” (See here for a .pdf of the 85 components and their weightings.)
Go look at charts...
Dow to 14K by XMAS night!
(Ho ho hoooo)
does anybody know the interest rate assumption that they made?
Good evening, all
Slightly tweaking our series - now it is "Their taxes at work"
French Bankers Agree to Restrictions on Bonuses
PARIS — President Nicolas Sarkozy of France on Tuesday announced steps, agreed to by bankers, to curb excessive compensation in the industry as he pledged to push for tighter international rules at a meeting of global leaders next month.
“It’s too easy to say we’ll do nothing because others aren’t,” Mr. Sarkozy said. “France must lead and try to persuade the others.”
After a meeting with government officials, representatives of leading French banks agreed that bankers would repay part of their bonuses if the performance of the bank, or of a trader’s team, deteriorated. Up to two-thirds of bonus payments should be deferred, while a third should be paid in shares of the bank.
“From now on, the trader must wait three years to cash in all of their bonus and if in the two years following, their activity loses money, he will not have his bonus,” Mr. Sarkozy said.
The accord allows the French president to place himself in the vanguard of the fight against excessive rewards before a Group of 20 summit meeting in Pittsburgh in late September, where Mr. Sarkozy would like to see a global limit set on bonus payments, and sanctions for transgressors.
Taking on excessive pay for bankers offers political dividends for Mr. Sarkozy. Unemployment is close to 10 percent in France, unions are uneasy and public anger is simmering at payouts after taxpayers’ money supported banks during the global financial crisis.
“Public opinion will not accept that after the crisis that we’ve seen, things return to the way they were before,” Mr. Sarkozy said.
Also Tuesday, BNP Paribas, the biggest French bank, agreed to pay its investment bankers only 500 million euros, or $716 million in bonuses this year, Mr. Sarkozy said. At the start of the month, the lender said that it had set aside double that amount.
...
The stronger American banks — like Goldman Sachs, JPMorgan Chase and Morgan Stanley — have repaid government bailout money and are not subject to the government pay restrictions that can be imposed on banks that have not yet repaid the Treasury.
Goldman said in July that it was setting aside $11.4 billion for annual bonuses after it posted strong second-quarter profits. Other United States banks like Citigroup have offered bonus guarantees to poach talent, as have groups elsewhere like Nomura of Japan, Credit Suisse of Switzerland and Barclays Capital of Britain.
And the French also have universal healthcare.
What is wrong with them?
Who gives a shit if Obama signed pair of UBS balls? The real question surrounding the follow-up shaft grip lesson is the free put at the 19th hole.
Oh the Humanity...
The recession was over in January ..... did anyone know that besides daytraders?
Chicago Fed national activity index rose from -1.82 to -0.74 in July, the highest since January 2008. The CFNAI is essentially a coincident index of economic activity, compiled from 85 previously released indicators. It bottomed out at –4.03 in January and has risen sharply since, but at current levels is still consistent with activity running below its historical trend
Doc - CFNAI still points to a severe recession. You need to look at the three month average (CFNAI-3) not at the monthly date.
Go to the source
Chicago Fed National Activity Index (CFNAI) - Economic Research and Data, Federal Reserve Bank of Chicago
PS. CFNAI-3 bottom indicates the point of the fastest deterioration, so long as CFNAI-3 is below -0.7, the economy is still contracting
This is right up there with PennyMac buying up foreclosures in bulk deals with money that was put up by BlackRock. BlackRock receives TARP funds. I swear this is such a huge story but no one seems to want to run with it.
It'd be my guess that France is the most stereotyped country, in our country.
Legions of Americans that have never been there have strong opinions about the place, for some reason...
Hahaha, Citi's still calling it "talent".
You'll love this from the Time article:
"The fact of the matter is, we already had the collateral," Blankfein says. "If AIG had defaulted, guess what — we would have kept the collateral from AIG and from the banks we'd bought protection from. The government's decision to bail out AIG was about the risks to the system. It wasn't about Goldman Sachs."
OMB projects that the deficit will decline from 11.9% tp 4% assuming that happens over 4 years that amounts to about a 2% drag on GDP. That means the other 75-80% of the economy must expand by bwtween 2-5-3% just to keep GDP flat. TO get 3% growth it has to grow 6.25%-7.5%. Does that seem possible?
what am I missing?
/rant on
The last true conservative was Goldwater. I walked precincts for Goldwater in '64.
Having said that, every self-described "conservative" since has been a con artist.
Self-described conservatives like Reagan, Bush I and Bush II destroyed the US economy, thank you very much. Bill Clinton played along as well.
And, some of these days, I hope to run into Nixon in one of the hottest corners of the fires of Hell. Now, that is something to which I genuinely look forward.
Have a nice day.
/rant off
Get real. Future GDP is irrelevant to the kleptocracy in charge.
FT.com / Comment / Opinion - The case against Bernanke
Nice article in the FT by Stephen Roach, laying out the problems with making Bernanke our primo Central Banker. Stephen Roach has earned some credibility.
In his later years, Goldwater was deemed to have 'turned liberal'.
Blankfein is a lying shithead.
May 2008: Paulson: "The worst is behind us"
Paulson: The Worst Is Behind Us
fail.
Future GDP is irrelevant to the kleptocracy in charge.
It is the current projections of the future GDP that matter.
None of us here in Washington knows all or even half the answers. You people out there in the fifty states had better understand this. If you love your country, dont depend on handouts form the Washington for your information. If you cherish freedom, dont leave it all up to BIG GOVERNMENT.
Barry goldwater, Why Not Victory, 1962.
*this message brought to you by an energyecon supporter of more blog PRON...
"This is right up there with PennyMac buying up foreclosures in bulk deals with money that was put up by BlackRock. BlackRock receives TARP funds. "
So $1 bill of visible TARP money from the taxpayer turns into $50 bill of demand for housing, pushing prices up, after being sent quietly through multiple leveraged institutions guaranteed and backstopped by.... the taxpayer. Taxpayers' money thrown at housing, in hundreds and hundreds of ways, and trillions of dollars, is all that is preventing house prices from resetting.
No one born after 1970 knows anything about Goldwater.
"In his later years, Goldwater was deemed to have 'turned liberal'."
Everyone, including Goldwater, is entitled to change their views. One thing didn't change: he was a man.
I respect him.
William Allen White, for example, was a conservative, but that didn't prevent him from campaigning vigorously for civil rights in 1920s Kansas.
William Allen White was also a man. I respect him, too.
agreed. The article in Time would make you sick. It should have been subtitled "we're nice guys, please don't kill us".
Thanks, patientrenter
Here is a nice quote:
both Mr Bernanke and Mr Greenspan drew the wrong conclusions from post-bubble strategies earlier in this decade put in place after the bursting of the equity bubble in 2000. In retrospect, the Fed’s injection of excess liquidity in 2001-2003, which Mr Bernanke endorsed with fervour, played a key role in setting the stage for the lethal mix of property and credit bubbles.
If we call the US economy in 2003-2007 "a bubble", then the equity run-up of 1998-2000 should be properly called "a micro-bubble". Now, get ready to the mop-up operation in 3-4 years.
No one born after 1970 knows anything about Goldwater.
Please. If I can't stereotype Boomers as the most selfish, wasteful, fat-bags generation of my life, then please don't assume people who grew up playing on a Colecovision wouldn't know who Goldwater was. The infamous "Daisy" ad is enough to lock Goldwater into the annuals of American history.
50 million Frenchmen cant be wrong.
Whats not to like? They gave us Democracy, Existentialism, crepe's, and zee 69....no?
The vast majority of people born after 1970 have no interest in or comprehension of history.
"The infamous "Daisy" ad is enough to lock Goldwater into the annuals of American history."
Yeah, a total hatchet job. I remember it well.
And right after the election, LBJ ratcheted-up the war in Viet Nam.
Thank you, LBJ.
Thinking of getting a creperie truck, after meeting a woman who started a successful operation in SF this year. Merci.
Whose "value" is the input to that loan to value calculation?
WSJ weeps for Larry
Mr. Summers, chairman of the president's National Economic Council, was widely seen as a rival for the top spot at the Fed. When he was named to his current job, many observers surmised it was a temporary parking spot for the renowned economist and former Treasury secretary.
Seven months into the Obama administration, Mr. Summers doesn't appear to be going anywhere.
...
Administration officials say the decision to reappoint Mr. Bernanke stemmed from a strong desire for continuity. Mr. Obama has also come to rely on Mr. Summers as his top economic advisor and didn't want to lose him.
"No one is indispensable. But at this moment, Larry comes very close," said David Axelrod, Mr. Obama's top political advisor. "Larry recognizes the unparalleled problems and opportunities that he is being called on to help solve. For a superb economist, and a committed public servant, it would be hard to walk away."
...
Friends of Mr. Summers believe he had come to accept a Bernanke reappointment. What might have caused him to bristle, they say, would have been if Mr. Obama replaced the chairman with someone else altogether.
The vast majority of people born after 1970 have no interest in or comprehension of history.
sighs Moving on.
Yes, that LBJ job was rotten, and we got a Great Society and Guns & Butter because of all of his goodness. There is no telling what Goldwater would have done differently, but that Daisy ad was just tasteless. I'm not sure what it says (good) about the American public that they thought Barry was the Horseman of Death.
Please, I'm just telling you what is taught in history classes all around the country. Ask anyone under 35 about Barry Goldwater and I'm sure the answers would be most telling. I'm not being derogatory, I would probably vote for him if he was running for President.
However... no one carries his flag anymore. Name one person in Congress or in national political spotlight who would be a modern-day Goldwater?
The infamous "Daisy" ad is enough to lock Goldwater into the annuals of American history.
That statement raises the question whether a person's place in history is based on what he did and said . . . or what others said about him.
"The vast majority of people born after 1970 have no interest in or comprehension of history."
So true; of course this also describes the vast majority born before 1970.
1960's Economy: Guns & Butter
2000's Economy: Buns in Gutter
Allright, sorry... but I just hear a lot about Goldwater conservative, etc... but it's lost on this generation. So was Barry Goldwater something like Ron Paul? I'm actually speaking from my own ignorance when I say no one born after 1970 knows a lick about Goldwater.
"However... no one carries his flag anymore. Name one person in Congress or in national political spotlight who would be a modern-day Goldwater? "
There aren't any, which was my point.
Even my democratic senator (well one of them) has signed the senate version of the audit the fed bill.
Some I know are going to a farmers market this weekend to hand out more audit the fed flyers.
Name one person in Congress or in national political spotlight who would be a modern-day Goldwater?
I'm stumped. Ron Paul?
As for the previous comment, I am just the counter-point to your blanket statement, and I had friends who are/were political junkies like Young Republicans/Democrats and active in local, county, and state politics, while avoiding Poli Sci degrees like the plague (General swipe intended).
Anyway, your point about politics and positions is valid.
First you laugh then you think, wait a minute...
Joe Bageant: The Entertainment Value of Snuffing Grandma
The one large group of Americans that has any comprehension of history, only cares about events that may or may not have happened, about 2,000 years ago.
More delicious news
Aug. 25 (Bloomberg) -- Hassan Nemazee, chairman of Nemazee Capital Corp. and a fundraiser for President Barack Obama and Hillary Clinton, was arrested on a bank fraud charge and ordered held overnight pending his release tomorrow on $25 million bail.
Nemazee was charged with using phony documents to trick Citigroup Inc. into lending him as much as $74 million. The financier got the loan by telling Citibank he held accounts with hundreds of millions of dollars that could serve as collateral, U.S. Attorney Preet Bharara said today in a statement.
Nemazee, 59, brought to court in Manhattan this afternoon, is to be released tomorrow with his bond guaranteed by a $20 million Manhattan residence and his $8 million home in Katonah, New York. He will then be held under house arrest at his Manhattan apartment, subject to electronic monitoring. U.S. Magistrate Judge Ronald Ellis called the $25 million bond the “most onerous” he had ever seen.
The financier used fake addresses and phone numbers controlled by him to mislead the bank, prosecutors said. The accounts “either never existed or had been closed years before Nemazee submitted the documents referencing those accounts,” Bharara said in the statement.
Nemazee repaid the loan to Citibank yesterday, a day after he was interviewed by Federal Bureau of Investigation agents, prosecutors said. The interview took place at Newark Liberty International Airport as Nemazee was checking in for a flight to Rome.
...
Nemazee is one of the leading fundraisers for the Democratic Party. He served as national finance chairman for the Senate committee that works to elect Democrats when it was run by New York Senator Charles Schumer.
In the 2008 presidential campaign, Nemazee raised at least $100,000 for Clinton, and then went on to bring in at least $500,000 for Obama after he defeated her in the primary campaign, according to the Washington watchdog group Public Citizen. Clinton is now secretary of state.
Nemazee also served as New York finance chairman for Massachusetts Senator John Kerry during his 2004 run for the presidency.
Nemazee Capital’s Web site carries excerpts of stories that highlight his connections. The first, a Washington Times piece about former President Bill Clinton’s recent mission to North Korea, describes Nemazee as a “friend and longtime Clinton supporter.”
Tommy Vietor, an Obama administration spokesman, and Ian Kelly, a State Department spokesman, declined to comment on the arrest. Brian Fallon, a Schumer spokesman, said $4,800 donated by Nemazee to Schumer in April would be donated to the foreclosure prevention program of the Neighborhood Housing Service. He declined to comment further.
As Jon Steward would lament, that makes the life of comedians too easy
Goldwater = Department stores.
...a person's place in history is based on what he did and said . . . or what others said about him.
A man either makes history or history makes the man. Just like the Red Sox 1st baseman who went wicket sticks against the Yankees back in the 80s, it is what it is. The answer is All of the Above.
I've read some posts here where people wonder what place to run to when the USA collapses. Everybody says New Zealand. I have always been thinking of France. My guess is that it would be the last place on earth where a person could get some fantastic bread, coffee, cheese, etc. And the last place on earth where you could complain about politics in public.
Billy 'effin Buckner.
Steelhead,thanks for that link. Following the money at UBS is truly unbelievable...
A true conservative wouldn't be pandering to the likes of the Limbaugh assclown.
A true conservative would have been publicly asking him if, he was such a patriot, why he'd never been seen in uniform.
And, if he really was 4F, why wasn't he working in a USO doing something useful for the effort?
He's a smart mouthed punk and that's it.
Billy 'effin Buckner.
I probably wouldn't even need to mention the Yankees part and many baseball fans--and all Red Sox fans--would've gotten it. Like the place kicker for the Buffalo Bills that missed the FG in the SB against the Giants is another one who fits that pattern... (Hint: Wide Right)
History is a b**ch like that some times.
MP is channeling Clint Eastwood in Gran Torino
"The GSEs can purchase single-family mortgages with loan-to-value ratios higher than 80% only if the homebuyer gets mortgage insurance."
CR, I realize these are not your words, but this is an absolutely false assertion.
Read the GSE charters yourself, here is a link to Freddie's
http://www.freddiemac.com/governance/pdf/charter.pdf
Note the language pertaining to 80LTV loans:
"No conventional mortgage secured by a property comprising one- to four-family dwelling units shall be purchased under this section if the outstanding principal balance of the mortgage at the time of purchase exceeds 80 per centum of the value of the property securing the mortgage, unless
(A) the seller retains a participation of not less than 10 per centum in the mortgage;
(B) for such period and under such circumstances as the Corporation may require, the seller agrees to repurchase or replace the mortgage upon demand of the Corporation in the event that the mortgage is in default; or
(C) that portion of the unpaid principal balance of the mortgage which is in excess of such 80 per centum is guaranteed or insured by a qualified insurer as determined by the Corporation."
Note that under the charters, the GSEs may purchase loans over 80 LTV if the seller retains a 10% participation.
Isn't this what the government wants to happen anyway? Wasn't Barney Frank pushing this in proposed legislation? And note, this is the first option listed. Maybe the drafters of these charters intended this to be the preferred method of credit enhancement?
I think the government should just eliminate option (c), and require sellers to either take the repurchase risk (which most would not) or retain 10% of the loan. It is already written into law.
A man either makes history or history makes the man. Just like the Red Sox 1st baseman who went wicket sticks against the Yankees back in the 80s, it is what it is.
History never makes the man. The man always makes his own history. True for Buckner, true for you, true for me, true for every other person here.
Quality Props-O-Ganda
*public domain
I thought Mr. Jefferson from Virgina was the last real American politician worth a damn.
"The turnover means Obama will be able to appoint a majority of governors in his first year. Bernanke will have to convince the Fed’s new members to concentrate on maintaining the economic recovery and put aside concerns about a revival of inflation, said former Fed Governor Lyle Gramley"
Oh, I thought they were committed to price stability, and no more bubbles. Was I wrong?
Bernanke Team May Have New Look as Second Term Begins (Update1) - Bloomberg.com
Re: Krugman's Post -- add your own fun quips...(mine await moderation, which shall never come...)
The Foreign Central Banks are already busy being merchantilists….where would they find the time to be vigilantes?
Did you like my last one?
How about “they are grazing out behind the quantitative easing barn?”
Three is a charm….
How about “busy converting into other currencies and raw materials?”
MP is channeling Clint Eastwood in Gran Torino
Okay, but remember the sin that Eastwood's character confessed. He knew his great failure in life and it had nothing to do with killing people.
Meanwhile, there really are no principled conservatives like Goldwater on the stage now, that much is true.
History never makes the man.
When Kublai Khan's navy was smashed against the shores of Japan and brought the word "kamikaze" into existence, you are to say that History/Nature/Random Luck has nothing to do with it? Khan was just wrong place/wrong time.
To have one without the other seems to be an absurd position to take, but I'm a Yin/Yang kind of person.
"I thought Mr. Jefferson from Virgina was the last real American politician worth a damn. "
I respect him too, except for the Sally Hemming part.
He should have married her.
Scott Norwood?
Okay, JD, here's something interesting for you, maybe take your mind off Toquesville for a while.
From Nova Science Now, just watched on TV:
NOVA | scienceNOW | Profile: Alfredo Quinones-Hinojosa | PBS
Ever head of Dr. Alfredo Quinones-Hinojosa? Associate Professor of Neurosurgery, Neuroscience, Oncology and Cellular and Molecular Medicine, and the Director of the Brain Tumor Stem Cell Laboratory at Johns Hopkins University (from wiki).
The thing is, Dr. Q. grew up in Mexico, became an illegal immigrant by jumping the fence at 19 yrs. old, worked as a migrant worker living in a tiny trailer, studied english, yadda, yadda, yadda, today he's a top brain surgeon.
A lesson to all of us re: disparaging the illegals.
Now my day's lesson is done.
Well, except that I just saw 4 of the moons of Jupiter thru the spotting scope. On one of the moons of Jupiter, the gravity is so strong that the land actually has tides, higher than our water tides.
Okay, that last lesson was a freebie.
We hold these truths to be self-evident: that all men are created equal; that they are endowed by their Creator with certain unalienable rights; that among these are life, liberty, and the pursuit of happiness.
On deficit spending
We may consider each generation as a distinct nation, with a right, by the will of its majority, to bind themselves, but none to bind the succeeding generation, more than the inhabitants of another country.
Where the preamble declares, that coercion is a departure from the plan of the holy author of our religion, an amendment was proposed by inserting "Jesus Christ," so that it would read "A departure from the plan of Jesus Christ, the holy author of our religion;" the insertion was rejected by the great majority, in proof that they meant to comprehend, within the mantle of its protection, the Jew and the Gentile, the Christian and Mohammedan, the Hindoo and Infidel of every denomination.
Yep.
"I think the government should just eliminate option (c), and require sellers to either take the repurchase risk (which most would not) or retain 10% of the loan. "
"(B) for such period and under such circumstances as the Corporation may require, the seller agrees to repurchase or replace the mortgage upon demand of the Corporation in the event that the mortgage is in default"
Ghostface, wouldn't mortgage lenders who sell to the GSEs simply incorporate an originating subsidiary that has the obligation. Hell, set up a few dozen. Take profits into the holding company, and let any subs that have to buy back too much go belly-up. Where there's a will, there's a way.
mp,
He was already married to her half-sister. That would have been somewhat like Obama dumping his wife for a fat blond named Sheri.
The Red Sox probably wouldn't have made it to the 86 World Series without Buckner and at the time the guy had such bad knees that the Red Sox were taking him out of games in the 7th or 8th inning. The Red Sox had a lead in the bottom of the 10th inning and the Mets got 3 straight singles, then there was a wild pitch, and then Buckner let the ball go through his legs.
Placing all the blame on that guy was about as classless as all the Cubs fans that still blame Steve Bartman for the 2003 disaster.
someone mentioned bond craziness?
Up To Old Tricks, Wall Street Repackages Bad Mortgages
didn't we learn this lesson the first time?
When Kublai Khan's navy was smashed against the shores of Japan and brought the word "kamikaze" into existence, you are to say that History/Nature/Random Luck has nothing to do with it? Khan was just wrong place/wrong time.
To have one without the other seems to be an absurd position to take, but I'm a Yin/Yang kind of person.
I would never discount Nature or Random Luck. They play essential roles. Kublai Khan made his own history. The simple fact that he may have been denied to make more because of Nature or Random Luck doesn't change that fact.
History, though, is just the retelling of the story. It was the living of the story that made it worth retelling.
Hence, Khan made his own history.
As for yin and yang, it's always been hard to find one without the other.
dont try to bring the Bond Vigalantes into this. We dont need no stinking Dollars, dont matter the Obama-de-nomination...
"A lesson to all of us re: disparaging the illegals"
I don't disparage the hungry, or homeless, or handicapped, or stupid, or.... But that doesn't mean I am OK with illegal activity. We can like people while still insisting on preventing them from certain activity. Anyway, for every rule there is an exception. Does that man we should enforce no rule?
I respect him too, except for the Sally Hemming part.
He should have married her.
LOL. Now that would have been Progressive with a capital P.
Not to mention a hundred and fifty years ahead of his time.
Regarding PMI, why not just be the seller of protection on a mini-CDS to overcome having to hold the reserve. The Gov't would just have to change the rules to count it as insurance and then ask for collateral at a giant haircut. Problem solved, everyone wins. Right?
I agree about the rules. But there is disparaging that goes on, and that's different.
Monticello.
The man was the Leonardo de Vinci of America.
Buckner was more an ankle problem. Great ballplayer his whole career.
Donnie Moore, another goat, same year. His shoulder was toast, woulda been on the DL collecting his million nowadays.
nova, are you reading The Federalist Papers again?
Hey Nova,
Here's a good theme for a doom story........"She wondered aloud how come they tried to do everything right all their lives, and yet those they perceive did not are reaping things so far beyond her reach"......saw it on a post on KD's site.
P.S. Could we get MP to channel Clint Eastwood in High Plains Drifter instead?
Yeah, the METS, not the damn Yankees.
They would have won that game in extra innings even if he had made the play. The karma was overwhelming.
That's a good line that every generation of the working class could say and it would be true for them.
"Not to mention a hundred and fifty years ahead of his time."
Yeah, well, if he had done that, he really would have been 150 years ahead of his time.
And maybe we would have been 150 years ahead of our time.
Who knows?
But, he should have done what's right. He should have given his children a heritage.
Insurance is for suckers or people planning to commit fraud.
"Ghostface, wouldn't mortgage lenders who sell to the GSEs simply incorporate an originating subsidiary that has the obligation."
The official seller to the GSEs is usually the bank operating company itself. The FDIC-insured bank sub is the one that originates and services the mortgages. This is especially true today for many reasons, notably gaining access to the FHLB for funding. Note that CFC moved all their originations out of their mortgage bank and into their FDIC-insured bank near the end, in order to access the FHLB.
For example, WFC's seller to Fannie and Freddie is most likely their FDIC-insured banking sub. To set up a sub to do all the mortgage origination, servicing, etc, just to be able to walk away from repurchase obligations, and give up FHLB funding access? Highly, highly unlikely. And for one of the larger mortgage originators and servicers to jeopardize the ability to originate and service to avoid this obligation? Again, extremely unlikely to happen.
Besides, almost all the large lenders entered into back door reinsurance agreements with the mortgage insurers anyway, where they took up to 50% of the MI risk. If they are taking that much of that risk anyway, why not cut out the middle man and deal directly with the GSEs on risk-sharing?
Sure, some smaller lenders would not have this ability, and/or would not be credible counterparties, but the MI industry could still exist (and probably have enough capacity) to support the 30% of the market that is not served by the top 20 lenders.
This solution makes total sense. Which is probably why it will never happen, sadly.
Outsider,
Folks that constantly disparage others- just because of their origin, tend to be weak-minded bully-types...
Not so far removed from the bully you remembered in the 3rd grade, if you follow my drift.
We are building an observatory, here on just the other side of nowhere, and it should be finished in a month or so...
We have almost no light pollution to deal with, and a remarkable night sky.
I can't wait to voyeur~
"Regarding PMI, why not just be the seller of protection on a mini-CDS to overcome having to hold the reserve. The Gov't would just have to change the rules to count it as insurance and then ask for collateral at a giant haircut. Problem solved, everyone wins. Right?"
Funny you say that, in Europe, some of the MI companies were writing exactly those types of policies/swaps to get around licensing issues in some countries.
Jefferson talked a good game on improving the lot of slaves.
In his actions, he continued to fuck them over, literally.
"I can't wait to voyeur~ "
Well, if you should happen to run into ET, tell him I need a ride off this rock, will you?
Cool. I want an observatory, too, but the light pollution defeats the purpose. If I want to see stars, I watch Entertainment Tonight.
We are strangers in the Egypt that is America. The one you feed today may be an angel of the Lord.
1 currency now -yogi
You really are an amazingly self righteous shit.
By the way, there was a book published a few years ago called "The Bad Guys Won" about the 1986 Mets. It's an outstanding read. That team was a bunch of degenerates. They'd make the Cowboys look like class acts.
I've seen UFOs twice. Both times sober and have pictures of one. I never thought it was possible until I saw them. And, if you haven't seen them, I'm sure you don't think they are possible.
Stop disparaging me for disparaging illegals! h crickey, now I'm disparaging you for disparaging me for disparaging illegals!
People should obey the rules, and we should demand that the rules are obeyed. Hence the term "rule of law", not "rule of personality" or "rule of special people", or "rule of exception". Rule of mother'eff''n law. You know, I heard a President once use the phrase Rule'o'law.... damn shame that no one called him out on that BS. In America I think what we have is the rule of money, or the rule of elite, or the rule of influence... clearly not the rule of law... yet who the 'f is gonna stand up and say it in a forum that matters?
And people wonder why this country has gone to doo-doo.
We were once a nation of laws, perhaps it was when Goldwater was around.
"Of course, the FHA continues to offer massively subsidized government insurance on loanw with low down payments, and the current FHA loan limits are so high that they cover the vast bulk of the housing market"
Thomas, you are correct, and is undoubtedly one of the reasons Treasury has not supported the MI industry - they want to push much of that business over to the FHA.
And in both cases they ignored you? Boy, that's upsetting
"We were once a nation of laws"
Definitely not when Bush/Cheney were around.
And maybe we would have been 150 years ahead of our time.
Who knows?
But, he should have done what's right. He should have given his children a heritage.
mp, it would have been a history shattering event, no doubt. yagij, he could have made even more history had he chosen to do so.
Where we would have been as a society . . . boy, is that a tough one to consider.
Forget all the racial stuff. It wasn't until 1950 that South Carolina became the last state to adopt the concept of one man, one vote. Back then (in Jefferson's time) the three-fifths rule was still in effect.
A bridge too far for TJ. What he did accomplish, though, is most remarkable.
Funny thing how DNA came around 150 years later and, though there may be some dispute concerning the historical evidence, his descendants, if not his children, have a heritage.
People around here know that I love reading the Library of Congress Congressional record. You should also know that I'm kind've pissed the online edition doesn't go back to 1989. I wondered why they don't take the online archive further back. I figured it out; I think Lexis Nexus charges like $1000+ for access to the old Congressional Record archives online. I don't know why LoC doesn't want to eat their lunch...
But why can't Google Books archive the Congressional Record? Is there any way to suggest this? It's public domain, correct?
People should obey the rules, and we should demand that the rules are obeyed.
Except in exigent circumstances and when you cross your fingers, then breaking the rules doesn't count
If obeying the law means I have to starve another man or his family then I refuse unless refusing would cause me personal discomfort.
Rugged Ruined Rules on Rum and Money
Money is a like an arm or a leg, use it or lose it
Henry Fjord, in an interview about Icelands prospects for phish.
No. I've just read books on Jefferson, and I am skeptical of politicians' words without action.
Jefferson was a politician. What exactly did he accomplish to help his or his cronies' slaves?
Did you know the man, Nova?
Good politicians make you want to like them. The best politicians get blow jobs from interns in the White House. Why would you want to be a politician (unless you like sex from fat people)?
yogi, Jefferson did a helluva lot more than just talk a good game on improving the lot of slaves. He was, however, heavily indebted through most of his life and thus did not free most of his slaves although I have no doubt whatsoever that he would have done so had he been penniless, but debt free.
Ironic how we rant against debt slaves here today, when in fact the evil has been with us a very long time.
"Expect dozens more government programs." That is optimistic.
From the Krugman link Basel Too posted above...
"For now, at least, interest rate movements seem to reflect views about the economic situation and the prospects for eventual Fed tightening. Rates rose as the end-of-the-world scenario receded, then stabilized. There’s no hint in the data of fears about (a) crowding out (b) inflation (c) default. It’s good to be an advanced country."
So then who is the piss boy? Or don't I want to ask.
Yu looks like the piss boy.
and Hu looks like a bucket of shit?
*mel brookes, FTW
the Congressional Record is public domain, so there are no copyright issues with scanning the books/microfiche into digital form, except as you pointed out, West and Lexis make a killing off of providing legal information.
Jefferson freed his slaves in his will. Or maybe it was in his will that when his wife died after him they would be freed.
Dozens more indeed Nemo, it's all part of what I deemed "creeping stimulus" quite some time ago. It's a slam dunk!
Basel I don't know if you'd be interested in this but you were interested in the malpractice lawsuit re: NH; Mass. tried to charge sales tax to tire sales in NH that involved Mass. citizens but it got shot down by the Mass. courts. I thought that was a fairly interesting tactic by Mass.
Clarification of a comment I made above:
South Carolina was the 48th State to adopt the Australian ballot in 1950, decades after the 47th.
Alaska and Hawaii were not, of course, states at the time.
OMG!
mp is actually Hillary Rodham...
hm, quick someone anti-correlate mp posts with Hillary's trips outside the US...