Gosh, wish I had bought a house I couldn't afford.
I have learned a valuable lesson these past few years: When everybody else is driving off a cliff, follow them.
Still plenty of overpriced homes out there Nemo. I could hook you up, for a fee-
To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property.
So in other words, 0.0 people will be eligible unless the 1st wants to eat the 2nd mort or the 2nd mort willingly dies.
Fannie Mae (FNM/NYSE) is implementing the Deed for Lease™ Program under which qualifying homeowners facing foreclosure will be able to remain in their homes by signing a lease in connection with the voluntary transfer of the property deed back to the lender.
"accounting question: Is delinquent rent or lease payments any different than a delinquent mortgage? "
Yeah, but, one thing you need to realize before you go down that road, the announcement is a bit misleading. It says that borrowers turn the deed over to the lenders. But really they would just turn the title over to the servicers, who would give it to Fannie.
It's not the banks who are going to hold all these houses on their balance sheets as REO, in fact, they aren't allowed under banking regs.
So this won't affect bank balance sheets at all.
It will be Fannie (and probably soon Freddie), or in other words the govt. I gotta say, I called this one - BHO WANTS to own these houses.
As for accounting, once it is REO, it will be marked on the books at some carrying value (who knows what), which may or may not represent a loss (i.e. a mortgage assets goes away at its value, replaced by an REO at its value).
once there, the leases get accounted for much differently than loans. How the govt will account for it, who knows.
Positive this was part of the plan.....only I gathered they wouldn't be this desperate until the middle of next year. I said it earlier this year that when it came to this (renting them out as opposed to foreclosure) you knew it would be much worse than the perception.
Wow, with investors cash-flowing at the bottom, is Fannie Mae just making a last ditch attempt to cash flow some of the crap on the books?
edit: ahh, see the ghost post above.
Looks like we need another talking head to give us the all clear sign and put us up over 10K....I'm sure Timmy is gagged and in the broom closet since his statements usually have the opposite effect, but surely someone else is available?
This is a very important physiological element: Digestion of massive quantities means no vertebrae, a small and dark heart, and a brain that doesn't have a frontal lobe.
Fried Lemmings: 100,000 lemmings, 2 part lemons provided through C4C, 50,000 ZIRP NINJAs and a leaky oil barrel to fry in. Fry for 30 minutes until crispy crunchy and enjoy!
I am guessing that accounting rules for delinquent rents is different than for delinquent mortgages. In other words, having a renter not paying you probably allows you to not mark down the value of the mortgage you started with. Does anyone here know how it works?
And just who is going to perform all the upkeep and maintenance on this new batch of public housing? Are property taxes going to be based on a new sales value?
It is steps like this which make me wonder if we will even have another Presidential election in 2012, or for that matter, at any time again.
alert, or maybe not! My Mom keeps talkin' like that, and I keep think' she's bein' silly, but what if she's on the right track, and the rest of us are just too trusting
Make it mandatory for any property underwater and you've got .... something.
This would be a good way to force (I said FORCE!) the lenders to mark to market, which is why the lenders will never agree to participate (although they may pretend and extend the 'negotiations' indefinitely).
Why go through foreclosure, long period of being vacant, fix-up expenses for sale, and then, much later, a sale at near market - while making a family/person be homeless or family-basementing?
as far as O owning them....As you mentioned it really all depends on how it's accounted for. I'm sure there will be quite the transparency in allowing all of us to see exactly what they own and to whom....
Yancey-
I gather you are pretty close in that assumption. Afterall isn't the the whole game now not having any actual price discovery?
Better BHO than JPM. Besides, I thought we were just talking about loans made in 2000-2009? There is no election anyway if the choice amounts to all pro-TARP candidates.
Serious question - do the unemployed qualify for the program? Do they have to pay market rent, or is rent capped at 31% of their gross income? Can't tell from the summary.
Terry - seriously - the press release mentions a guide, and provides a link but the page doesn't seem to have any guidance about this specific program.
Terry
They expanded HAMP to count unemployment benefits as qualifying income. There is almost an entire internalized government economy, shifting money from the right pocket to the left and back. Food, shelter, job/welfare, ...
They'll need some creative accounting to keep the deficit below their psycho-political ceiling of 10% GDP
Personally, I think this is great for the FBs that would have been foreclosed on otherwise. This just now buys them an indefinite period of time to continue living in the same house, at a "market rent" (Read: substantial discount to their mortgage payment). Best case scenario for newly-minted renters: they can use the monthly differential between rent and mortgage payment to save money to buy a different house at a more affordable price. Worst-case scenario: They continue to rent, as they would have likely had to do as foreclosees anyway, without the trouble or expenses of having to move.
Best-case scenario for government sponsored entities (and by extension, the U.S Taxpayer)? None. Eats the difference between the monthly mortgage payment and rent for as long as tenant stays, and inevitably eats the loss for when the tenant leaves, and the home has to be sold at market price (or below).
I like the Brit phrase 'council housing' much better than 'Section 8". It works for the UK (and I think elsewhere, but haven't searched). The soviets also burnished the concept.
Frankly, I'd rather have Uncle Sugar owning the building I lease an apartment in (or a house) than have JPM/ GS/ WFB/ BOA as my landlord.
"Just wait until FedGov starts getting it's new property tax bill. "
That's going to be pretty damn interesting as I originally thought the banks would just turn the homes over to the municipalities as the "bill" came due. Sort of saw that as inevitable given the amounts of back taxes were dealing with here. But then I'm sure the Feds will bend them over a barrel with the next stimpack so that they cooperate fully...
Council Housing Galore!!!
Geez, all we need is a good dole (unemployment extension- check)
universal healthcare for those on the dole (coming along nicely- check)
feckless politicians (Double Check)
raising taxes to meet enless increases in public spending (Next up- check it off soon!!)
Blimey, ye blighters, welcome to post war Great Britain!!!
State/local property taxes on Fed-owned property are not constitutional. I guess the Feds could agree to pay 'in-lieu of' payments to cities/states to 'replace' the prop. tax. It could be included in the lease price, like mortgage insurance sometimes is.
Seeing and knowing are two different experiences...but I digress. Family movie night tonight....double feature Those Daring Young Men In Their Jaunty Jalopies and Those Magnificent Men and Their Flying Machines...need some laughs.
If things were getting better or even stabilizing, they wouldn't be expanding the tax credits to almost everybody, and floating these new home debtor programs.
On the bright side, SEIU will be the housing management company and ACORN will process the paperwork and control who gets to 'rent'. So we got that going for us.
:kcoop smiley for more inane debate about how the US is becoming more socialist/fascist/communist and less capitalist/free market/democratic by people with little familiarity with the principles involved:
debate about how the US is becoming more socialist/fascist/communist and less capitalist/free market/democratic by people with little familiarity with the principles involved:
:kcoop smiley for more inane debate about how the US is becoming more socialist/fascist/communist and less capitalist/free market/democratic by people with little familiarity with the principles involved:
Well, I believe we have found a subject for this thread.
Each and every major challenge facing the country has a large, entrenched, military or industrial bloc controlling it.
food: food industrials
energy: military / large oil co's. domestically, lots of small NG players. no move to utilize NG thus far.
health: great system if you are rich. passable if you are military. abysmal if you are poor.
housing: banks / government
water: government
Just on that basis, you can't really afford to change the government except incrementally.
I guess I left out the media, but making sure the proles get an appropriate diet of jingoism and calming entertainment is pretty important too.
Folks here are missing the obvious.
The empire has fallen, and the bill is now due.
Crushing debt burdens, low return on capital, collapse of the pound/dollar.
Yup we have recreated our very own collapse of Great Britain.
Well, at least we didn't get blitzed.
Shut the doors, and relax, this won't hurt much beyond a long slow grind downwards.
But hey, a lot of folks lived and died in their 'umble abodes rented for peppercorn rents from the local Councils, and most folks didn't toally starve, beyond the realtors, of course.
I think it is time we form a National Trust for the best National Treasure houses that folks will be unable to keep up due to taxes and inflation.
I think Larry Ellison's house would be a good place to start;-}
Well, in honor of the guide to Deed to Lease not existing, I provide you with a link to the Country Music Lyrics generator.
I believe this system could be extended to produce Fannie Mae guides, and other semi-official documents.
Enjoy: country I met her in the Stone Age sort of pregnant
I can still recall that plastic nose she wore
She was drownin' in the quicksand but I loved her,
and I knew that she was rotten to the core;
A Klingon said I'd salivate forever;
She said to me man wasn't meant to fly;
But who'd have thought she'd yodel in my Edsel;
She fell beneath the wheels and cried goodbye.
The federal government does not pay property taxes. They do have a program where they pay a meager amount in lieu of such taxes. The real question is are the GSEs now the federal government in a technical sense? Expect a legal mess with localities losing even more revenue.
If the "policy" is to support house prices, this is folly. I would piss on the walls, let the yard go to crap, and let large dogs run free in every room. Then tell the landlord it is inhabitable and sue. Nothing like an angry renter who just lost his house.
that sounds more like a reasonable transfer mechanism that the federal government can employ to prop up local governments without having to resort to a "stimulus" measure...
The big problem describing these as fascist, capitalist or in any way economic is that these are not economic activities being described. Finance is not economic activity. This confusion is what led to our present problem. Just like in the previous thread, hedging does not prevent price increases, it transfers the risk to another party.
who takes care of repairs?
Have you ever seen a public housing project that looked like it ever got repaired? They just get blown up and the rubble recycled into newer slums every few years. It's what community organizers do.
I think they're losing control
They have a competent staff for sure. The healthcare spending bills can fill the daily agendas alone. HAMP was a big enough bureaucratic/logistical challenge. Trying to rally support or pressure/threaten allies for a surge in Afghanistan ties up international relations before Pakistan, GM, and others.
This deed for lease / lease for deed program is more than they can manage.
I've worked on some big projects. What I have learned is that you must limit the number of things you are paying attention to at any one time if you want to do them well. They have so much work on the go, that the only way they can keep juggling it all is if they delegate. But delegation has its limits in terms of time, money, and coherence.
They can't keep adding programs here and there. They need a simple, comprehensive strategy that they can just put the pedal to the metal with. Like force banks to get current on their writedowns, recapitalize in exchange for ownership, and then offer ownership stake as incentive for a re-IPO in a few years' time. The problem is they are too afraid of the amounts involved
Fannie Mae is desperate for cash flow. The numbers of homeowners who are using ruthless default must be far greater than we've considered; they know their books, we don't. This takes away the impetus to just walk and go to something cheaper by keeping some in their houses.
It slows the decay rate of housing stock. The houses won't be sitting vacant and open to bandos/vandals but it will still deteriorate since capital improvements and repairs will no longer be done by the owner/renter. Now that will have to fall to Fannie and we know how that's gonna turn out.
This is going to significantly drive rental prices down further since an untold number of housing stock is suddenly going to start hitting the rental market.
On the upside, in several years, financial desperation will probably force Fannie Mae to start selling housing stock to make some money back. Yes, now you too can have a Detroit auction in your nearby city...
This has everything to do with triage medicine and nothing to do with BHO.
This is going to significantly drive rental prices down further since an untold number of housing stock is suddenly going to start hitting the rental market.
Congratulations, you are smarter than the collective wisdom of a national government
/should write an epilogue to that wisdom of crowds book I never read
edit: changed presidential administration to national government because I really don't know who is the champion for this, nor do I care enough to look
Just like in the previous thread, hedging does not prevent price increases, it transfers the risk to another party.
Sure, you take the risk from one party that has limited appetite for it, and transfer it to another that has a greater appetite. In aggregate it's a zero-sum affair, but if hedging permits individual companies to reduce their risk exposure, it also reduces the prices they require to mitigate that exposure, thereby lowering prices.
This pretty much fits in with my thesis that a tremendous amount of capital is quietly being destroyed by changing circumstances.
Who is going to invest when the returns are so low, and any bad exogenous event smashes your equity?
Not me, I think a lot of folks are going to remain planted in their upside down council housing, killing all of those folks looking for a quick buck flipping/renting foreclosures.
This is the end of the line for the housing market, houses are dead for at least two decades. Might as well get some cheap interest rates and wait for inflation in housing, which is going to take forever. Commercial property will be worse, much worse- empty useless strip malls will be converted back into cheap homeless housing and low dollar small renter booth use.
Britain/Argentina writ large.
There is no master plan, except that capitalism has failed the people, something that will become more and more obvious with time.
As for the libertarian fringe, they will be going deeper into a shrill, self absorbed fantasy of Galtistan.
Ugh. I guess I will just hang around for me pension, and live quietly, as this doom looks inescapable by America.
Demographics, economics, and politics have all aligned into the end of our empire.
Well, the good news is the next phase only lasts about 10 years.
Sure, you take the risk from one party that has limited appetite for it, and transfer it to another that has a greater appetite. In aggregate it's a zero-sum affair, but if hedging permits individual companies to reduce their risk exposure, it also reduces the prices they require to mitigate that exposure, thereby lowering prices.
I've been thinking about this sort of thing, and I'm not sure you can have a zero sum game with debt involved. Creating debt creates money and defaulting must destroy it. Thus, the economy can shrink and the sum therefore not be zero in the end, and vice versa.
Extend and pretend. The borrowers can pretend they're homeowners. Policy makers and lenders can pretend that home prices and mortgages aren't tied to incomes.
I am beginning to think that there are perverse consequences such as that when many parties hedge - the optimal strategy for the individual natural gas producer, for example, was to hedge the living daylights out of their production stream a year or so back when prices peaked - they have transferred price risk, and acquired counter party risk, BUT from a supply perpsective they have eliminated the price signal, and in fact must produce to deliver their contracted volumes to experience the benefit of the hedge. Now, when enough industry participants have gone down this road, then we might see increasing supply into the teeth of a historic price declines...
Yup we have reached the point of Lunacy.......one socialistic mess coming up.
It's just different flavours of 'mess'. It's like we just left our teenage boy's boys room, littered with clothes and magazines on the floor, and entered our teenage girls room, littered with different clothes and magazines on the floor.
I'm guessing that this won't be very popular, just like their "save the idiots from foreclosure" program. These folks want out not just from the debt, but from the reminder that they f*cked up and are idiots when they pull into the driveway every day.
It's just different flavours of 'mess'. It's like we just left our teenage boy's boys room, littered with clothes and magazines on the floor, and entered our teenage girls room, littered with different clothes and magazines on the floor.
Huh? Soory noob I don't get it....although I am slow today I was up all night making money
Does anyone have a handle on how many this Fannie program will entail? Is this only for those with F/F loans or FHAs or does this include other mortgages that will be taken on by Fannie in qualifications are met?
One more step on the road to serfdom.
You almost have to believe this was the plan the whole time.
Back in 2006/2007 I remember commenting here that the eventual end of this will be the govt. owning housing and the citizens renting from the govt. Of course, I'm just a doomer, who listens to me?
I think this rental plan actually makes some sense. It pointless to try and sell into a glut when renting might be a better option. Plus, uprooting millions of families is counterproductive and wrong.
That said, the losses should be CONtained to the buyers of FNM paper. Let the hair cuts begin! No way should the gubbmint protect mortgage holders at the expense of everyone else.
These income levels are used to determine eligibility for Fannie Mae's MyCommunityMortgage product for low-and moderate-income home buyers under Fannie Mae's Community Lending products. To ensure these loans are used to assist low- and moderate-income home buyers, MCM eligibility is generally limited to borrowers with an income no greater than 100% of the area median income in the area where the home is located. There are several exceptions, however, as described in the Fannie Mae Selling Guide.
To assist borrowers in localities in which an income greater than 100 percent of the area's median family income is needed to qualify for a median-sales-priced home, we allow higher income limits for certain high-cost areas.
Translation: As long as you bought in a bubble area, we can help you!
Angry Saver
read the press release
the plan is to sign existing tenants to a 12 month lease, and then sell the rented house on the market to cash flow investors
Nanoo-Nanoo (profile) wrote (in reply to...) on Thu, 11/5/2009 - 1:20 pm
My Head Just Exploded
You're not blond by any chance are you
BTW, have you ever heard the urban legend about a blond that had left here groceries in the car for a hair appointment, and when she returned, a tube of biscuits exploded and hit her in the back of the head. A passerby stopped and asked her why she was sitting there completely still and holding the back of her head, and she explained that she'd been shot and was holding her brains to keep them from falling out-
It's just different flavours of 'mess'. It's like we just left our teenage boy's boys room, littered with clothes and magazines on the floor, and entered our teenage girls room, littered with different clothes and magazines on the floor.
I'll bet the girls room smells better than the boys room-
Soory noob I don't get it....although I am slow today I was up all night making money
Hehe, in retrospect that was overly obtuse. I was simply stating that we were leaving a really messy implementation of 'capitalism', and entering an equally messy implementation of 'socialism'.
Cosmetically they look different, but fundamentally it's still the same old mess.
But think who owns much of that paper and how they're going to respond. This is now cashflow, nothing but, and our government is behaving like a bunch of crack addicts offering their household belongings in hopes of not having to sell the baby.
Cinco-X
Your brain has no nerves. You wouldn't feel them spilling out. I'd probably have been momentarily freaked out as well. Until I saw that it was cookie dough
I read the press release. Selling a rented house might mitigate losses. I don't have a problem with this as long as the losses accrue to Fannie investors (which is un-freakin likely).
Angry Saver
read the press release
the plan is to sign existing tenants to a 12 month lease, and then sell the rented house on the market to cash flow investors
Sure. That's the plan alright. These guys plan about as well at the Dilbert crew [referring to the series he had a few years ago on strategic planning sessions... hint: a great place to eat free donuts all day].
LOL! No, just a wannbe blond that could never bring herself to fry her scalp. I've got some wicked good Alabama jokes but I'll refrain. gabyjan could probably outdo me there anyway.
Citizen AllenM (profile) wrote on Thu, 11/5/2009 - 1:19 pm
As for the libertarian fringe, they will be going deeper into a shrill, self absorbed fantasy of Galtistan.
Well, the good news is the next phase only lasts about 10 years.
Of course they're becoming more shrill; nobody's listening
I guess the bad news is what comes after the end of the next 10 years......
BUT from a supply perpsective they have eliminated the price signal, and in fact must produce to deliver their contracted volumes to experience the benefit of the hedge. Now, when enough industry participants have gone down this road, then we might see increasing supply into the teeth of a historic price declines...
The signal still exists; I think the difference is that the vast majority of producers hedge, whereas only a fraction of buyers hedge. Quite frankly, all consumers should be hedging at low levels, which should bring balance back into the price signal, but since it's less economic for households, for example, to hedge their use, the relationship becomes skewed.
But I appreciated your thesis; food for thought, certainly. I'll have to chew on it for a while.
Nobel laurate Edmond Phelps wrote an op ed in the Financial Times yesterday: FT.com print article
He argues that there may not be any short term fix to the credit binge that the US experienced. Neither Keynesian nor neoclassical approach may work this time.
EvilHenryPaulson (profile) wrote (in reply to...) on Thu, 11/5/2009 - 12:17 pm
/should write an epilogue to that wisdom of crowds book I never read
EHP - Don't bother reading it, aside from a few neat anecdotes you are better off with swarm theory. I'm sure every age has had its "Wisdom of Crowds"... The best of which is probably "Extraordinary Popular Delusions".
I think this rental plan actually makes some sense. It pointless to try and sell into a glut when renting might be a better option.
Supply right now isn't a glut at all. Prices are up in most markets. Why continue to prop prices rather than sell these houses for cheap to deserving buyers? It's market manipulation.
OT, but I think significant from more than one point of view:
" November 5, 2009
Finland's government Nov. 5 approved the Russian-German consortium's Nord Stream project to run natural gas pipelines under the Baltic Sea through Finnish waters, Reuters reported. In a statement, the government added, "The project must be implemented so as not to prevent any potential subsequent energy, data communications or other infrastructure projects." Finland said the approval was valid for the next 50 years, after which it could be renewed."
We're all landlords now. I can't wait to see how we enforce up-keep standards.
True that. If the house needs a new roof, who's taking care of that? Or "tenants" who let the front yard fill with garbage until the city comes by and cites the "landlord." Or, or, or.... anything you need management for? I'm sure they haven't thought that far ahead. I'm sure at least some of these homes will end up in fairly bad shape unless there's a management structure in place.
I owned a couple of section 8 units (a duplex) many years ago, and the solution was easy; it was my responsibility, and the local housing authority made regular inspections goosed me when I didn't meet their standards. They were moderately diligent but not overboard, and I couldn't disagree with what they wanted.
SFR is about the most inefficient form of public housing there is, too. I don't see this as a real solution, just another flimsy barrier thrown in the path of the avalanche to slow it down slightly and give the villagers a little more time to flee.
Your brain has no nerves. You wouldn't feel them spilling out. I'd probably have been momentarily freaked out as well. Until I saw that it was cookie dough
I think urban legends are fabrications that take on a life of their own, but have no basis in fact. While you might not feel your brains spilling out the back of your head, I suspect that a substantial portion of your motor control would be damaged.
Thanks for the comment re selling back to market at end of the year.
So they're thinking that perhaps if it's successful, then they can have a backdoor mechanism to reallocate housing prices? Or do I give them too much credit...
There is no master plan, except that capitalism has failed the people, something that will become more and more obvious with time.
As for the libertarian fringe, they will be going deeper into a shrill, self absorbed fantasy of Galtistan.
I also expect a reheating of socialism to emerge... and not the lame fantasy the right wing talking heads point to now and call 'socialism' but something a whole lot more in your face. That will complete the bookend extremes.
Ya when that plays out then you'll know you are closer to the end of the war.
If we are going to be uncivil to the point of going to war, red is a crummy color, as easy-targeted Zouavely dressed soldiers found out in the first Civil War.
Three anecdotes from people I've talked to this week. This is from the 'real' world so feel free to disregard like Wall Street.
1) Had a long talk with one of my tenants. Very in tune with what is going on in the economy and Wall Street. Said if things don't turn around in 6 months he's throwing in the towel.
2) Talked with someone who works at Home Depot. Said they were operating on a skeleton crew. He's a kitchen designer - the only one left of five.
3) A friend who is a senior commercial loan officer for a regional. First thing he said when he called - 'We are going back down'. He explained that he was looking at reworked leases showing 20% rent reduction.
He argues that there may not be any short term fix to the credit binge that the US experienced
I would think that a gigantic across the board cramdown might work. OK, snark off.
There are several keys to getting out of the current problems: 1. Concentrate on the productive parts of the economy. 2. Allow and encourage immigration of people who have money and/or valuable skills. 3. Pull back hard on new construction. 4. Encourage research into technologies which result in sending less money overseas, whether that is for oil or goods.
Angry Saver
sorry, didn't mean to be rude, typing during short breaks. could have alternatively said, in the press release...
the one boost to the housing market this does have is that it slows the rise in the average household size, for as long as they stay current on their rent (are evictions the same timeline/process whether mortgagee or renter?)
still you have to wonder how attached the new renters will be to the property unless it is a good price (below market rate, contrary to the press release) or it is a fair price, they have a steady but reduced income, and have kids/friends/family that offsets the squeeze and makes them choose to stay at least for a while
this would take a chunk of the cash investors demand if it led to more supply on the market, perhaps a breaking of the shadow REO cartel. much easier to value known knowns, lower risk premia
still, I think there are too many small plans that ultimately do not respect the big problem
I also expect a reheating of socialism to emerge... and not the lame fantasy the right wing talking heads point to now and call 'socialism' but something a whole lot more in your face. That will complete the bookend extremes.
That was the way it was in the '30s. That's what scared the hell out of everybody and made reform possible. And that's why the labor movement that emerged from that period (that had been fairly socialist in some parts) had to turn ardently anti-socialist to get their seat at the table with the corporate bigwigs. Socialists were purged from the labor movement.
If we are going to be uncivil to the point of going to war, red is a crummy color, as easy-targeted Zouavely dressed soldiers found out in the first Civil War.
Nov. 5 (Bloomberg) -- JPMorgan Chase & Co.’s Charles LeCroy explained to a colleague in 2003 how he planned to keep his job as the chief bond banker to Jefferson County, Alabama.
“I got to get the politics lined up,” he said, according to a complaint filed by the Securities and Exchange Commission yesterday. “And, of course, we have to pick the partners who are going to get free money from us this time.”
Jefferson County was a money mill to JPMorgan as politicians refinanced $3 billion of debt with a combination of floating-rate bonds and interest-rate swaps that last year pushed it toward bankruptcy. According to the SEC, LeCroy and Douglas MacFaddin, head of JPMorgan’s municipal derivatives unit from 2001 to 2008, paid more than $8 million to politically connected firms to secure its role in the deals.
"Honey, can you take the kids to school this morning? The Fanny Mae service guy is coming to fix the garbage disposal between 9 and noon."
Between 9 today and noon a year from now... 'course how's that different from the 'market solution'... if you buy a warranty from a private firm they just out-source it and good luck getting them to perform better than gubbmint. In short if you want it done you'll still have to pay - either bribe the Faanny Mae service guy OR the guy under contract to the warranty firm.
Had a long talk with one of my tenants. Very in tune with what is going on in the economy and Wall Street. Said if things don't turn around in 6 months he's throwing in the towel.
Odd. I'm not expecting socialists. I'm expecting anarchists.
Some. But they won't be popular unless they offer health care .
Fascist/populists, now, that's another matter. Very dangerous to the fascist junta currently in power. Imagine a Glen Beck who didn't work for Fox News and wasn't running cover for an established political movement.
BUT from a supply perpsective they have eliminated the price signal, and in fact must produce to deliver their contracted volumes to experience the benefit of the hedge.
What's your point on the price signal when I am explicitly viewing if from the producers' POV and the impact that near industry wide hedging has on the supply response (or lack thereof) to falling prices?
That was the way it was in the '30s. That's what scared the hell out of everybody and made reform possible. And that's why the labor movement that emerged from that period (that had been fairly socialist in some parts) had to turn ardently anti-socialist to get their seat at the table with the corporate bigwigs. Socialists were purged from the labor movement.
I know - northern Minnesota was crawling with wobblies. I had friends with family among them. To this day they are hard core in your face socialists - the Limbaugh faction has no idea what a real socialist looks like. They might get to learn something.
All good points. How about this scenario: The heater breaks and the renter calls FNM to fix it. They don't show up for weeks on end so the renter stops paying rent - with justification. Or the faucets leak or the toilets run and the renter sends the landlord a bill for excess water charges.
I've been there. Being a landlord is actual work and the market is usualy based on sweat equity.
Fannie better sell these properties as soon as they are rented - whether they like the price or not. The or not part will be interesting as to Hu takes the loss.
While I don't think it would work now, I previously proposed a stupidity tax on lenders who did stated income loans or went over 95% LTV.
In the absence of market transparency, how could you set the level of such a tax?
What about instead, forcing loans like this to be held on books, or properly risk-rated and sold off? I guess ratings fraud is the elephant in the room here.
Any particular reason the boards of Moody's et al aren't in jail yet?
Odd. I'm not expecting socialists. I'm expecting anarchists.
Some of that too - but we'll get socialist also. Not necessarily 'stateist' socialism but definitely 'communitarian' and very anti-corporate. I know these people - they are still out there in numbers that would surprise the many 'Galtists' on this forum.
the thought of 1975 USA is haunting me
Latin American debt crisis
Did not recognize losses, but that squeezed credit, which killed the economy that was already losing market share to a Europe/Japan that had caught up to pre-war levels... which is why there was the easy money to Latin America that produced investment returns and export demand for and from the USA respectively
this is a close analogue, but proportionally much larger even after adjusting for changes in workforce / income distribution
just like then, inflationary monetary policies are being pursued
however the debt bubble is humongous now... and that was the bubble that pulled the US out of the stagflation period when Reagan increased spending/borrowing by the public sector, and deregulated private sector credit (from usury laws, to allowing securitzation, the first success of which was the junk bond market)
so will we find out what comes after stagflation this time?
Of course just like so many other plans, this depends on the willingness of the servicers of seconds to mark them down to nothing. But the maintenance/landlording/property taxes parts of this seem to be so poorly thought out, I really do have to believe that there's little chance the lenders holding on to the propertys for long. Now rents are capped at a percent of income. Does that mean that the FBs will be paying sub-market rents, or that this program won't be available to somebody who can't afford to pay market rates. If it's the first, it should further lower the price that one can get for the property. If it's the latter, this program will probably be too small to have much effect. (yey?)
The heater breaks and the renter calls FNM to fix it.
Don't be absurd. Those functions won't be Fannie's responsibility any more than collecting mortgage payments is. They'll require their servicers to provide for management services, which the servicers will do by hiring a local management company.
Don't be absurd. Those functions won't be Fannie's responsibility any more than collecting mortgage payments is. They'll require their servicers to provide for management services, which the servicers will do by hiring a local management company.
And so you bribe the repairman working for the management company to get him to show up - just like the good ol'soviet union.
What's your point on the price signal when I am explicitly viewing if from the producers' POV and the impact that near industry wide hedging has on the supply response (or lack thereof) to falling prices?
I should have made it explicit: I don't have an issue with your points on the suppliers response. Indeed, it's logical, and it's what I've witnessed elsewhere. As long as the suppliers have the cash flow originating from their hedges, they do not change output. This distorts the market price downward and leads to over-supply conditions. I don't think anyone can argue with that, and I should have made that more clear.
My thought was that--since suppliers hedged out everything they could as far into the future as they could--the price signal skewed to over-supply for an extended period. Normally this should have been checked by buyers coming in as the price fell, especially to lower levels, and hedging all of their consumption out as far into the future as possible. However, since large industrial users--those predispositioned to hedge--are only a portion of the buyers market, most users of natural gas are very price sensitive and reduce their consumption as soon as prices rise. If they all hedged, they would also be unaffected by upswings and price and would keep consumption unchanged.
My point, is that pervasive hedging should really just result in longer cycle times for high and low prices; however, since natural gas hedging is predominantly on the production side, the upswings would be brief and the troughs would be extended.
black dog
we know but tptb dont know that we know, or they do they are prepending that they dont know so we wont know that they know that we think they dont want us to know.
now i dont know
The remake of Charles Bronson's Death Wish movies are in the planning and will be coming to the theaters near you. The decay of our society continues with this latest short-term rescue scheme.
Nematode.
Thread music:
(Deed) fur Elise
Comment by EvilHenryPaulson from thread 'Weekly Initial Unemployment Claims: 512,000'
why you hates America?
"Continuing claims continues to fairly represent continuing claims"
DUH! You're Canadian
One more step on the road to serfdom.
You almost have to believe this was the plan the whole time.
accounting question: Is delinquent rent or lease payments any different than a delinquent mortgage?
Section 8 million.
Zombie banks, zombie car companies, zombie airlines, now zombie renters.
How does this impact accounting treatment of writedowns?
Rob Dawg wrote:
Part of the Healthcare Bill or the Stimulus Bill?
Gosh, wish I had bought a house I couldn't afford.
I have learned a valuable lesson these past few years: When everybody else is driving off a cliff, follow them.
,rads & apparatchicks,
The fraudenfreude is thick and treacly, and the diaspora of debt undeniable, and I wouldn't want it any other way...
The United States of Lemmings and Parasitic worms. And a new version of sale and lease back, just minus the sale. How quaint!
Lemmings are good when fried and eaten in quantity.
energyecon wrote:
Interesting question. Who get's the "benefit" of the capital loss. Wanna bet it's not the foreclosed homeowner?
is it "Lease for Deed" (CR-post title) or "Deed for Lease" (press release title) or both or does it even matter?
particularly if you are a late adopter the impact might be cushioned
Nemo wrote:
But go last, so there's a nice cushion of carcasses below you.
EDIT: Wow, simul-comment with Elmer in every sense of the word. Nice!
This plan has the advantage of stopping any losses being assessed on the property showing up in an arm's-length sale to a third party.
Make it mandatory for any property underwater and you've got .... something.
Nemo wrote:
Still plenty of overpriced homes out there Nemo. I could hook you up, for a fee-
To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property.
So in other words, 0.0 people will be eligible unless the 1st wants to eat the 2nd mort or the 2nd mort willingly dies.
So does this mean that UE benefits go directly to Fannie or do the newly minted renters have a choice?
Nanoo-Nanoo wrote:
But you have to have a vampire squid's digestive system.
Today's Blue Plate Acronym Special:
DFL™ Soup
Nanoo-Nanoo wrote:
Are you just going to lay that out there without providing recipes?
any good
recipe will do
"accounting question: Is delinquent rent or lease payments any different than a delinquent mortgage? "
Yeah, but, one thing you need to realize before you go down that road, the announcement is a bit misleading. It says that borrowers turn the deed over to the lenders. But really they would just turn the title over to the servicers, who would give it to Fannie.
It's not the banks who are going to hold all these houses on their balance sheets as REO, in fact, they aren't allowed under banking regs.
So this won't affect bank balance sheets at all.
It will be Fannie (and probably soon Freddie), or in other words the govt. I gotta say, I called this one - BHO WANTS to own these houses.
As for accounting, once it is REO, it will be marked on the books at some carrying value (who knows what), which may or may not represent a loss (i.e. a mortgage assets goes away at its value, replaced by an REO at its value).
once there, the leases get accounted for much differently than loans. How the govt will account for it, who knows.
energyecon wrote:
Some servicers who went the keys-for-rent route did it in order to forestall reporting losses by treating the renter as a delinquent borrower.
ghost-
Positive this was part of the plan.....only I gathered they wouldn't be this desperate until the middle of next year. I said it earlier this year that when it came to this (renting them out as opposed to foreclosure) you knew it would be much worse than the perception.
Ciao
MS
Wow, with investors cash-flowing at the bottom, is Fannie Mae just making a last ditch attempt to cash flow some of the crap on the books?
edit: ahh, see the ghost post above.
i wonder what the response would be if they opened the DFL program to all Fannie homedebtors. everyone and their mother would trade in the mortgage...
Looks like we need another talking head to give us the all clear sign and put us up over 10K....I'm sure Timmy is gagged and in the broom closet since his statements usually have the opposite effect, but surely someone else is available?
Lemmings Leap recipe
This is a very important physiological element: Digestion of massive quantities means no vertebrae, a small and dark heart, and a brain that doesn't have a frontal lobe.
Fried Lemmings: 100,000 lemmings, 2 part lemons provided through C4C, 50,000 ZIRP NINJAs and a leaky oil barrel to fry in. Fry for 30 minutes until crispy crunchy and enjoy!
Basel Too wrote:
Why not!? I think between the Fed, Fannie, Freddie, Ginny, and the FHA, the USG "owns" most of the housing market anyway-
" ghost-
Positive this was part of the plan...."
It is steps like this which make me wonder if we will even have another Presidential election in 2012, or for that matter, at any time again.
The sheer speed at which BHO is consolidating power is impressive. Now he is trying to own the property people live in? Incredible.
And the sheeple lap it up.
This is part of the "single family public housing" program.
I'd go with Single Housing Assurance For Tenants.
gotta have a catchy acronym these days
I am guessing that accounting rules for delinquent rents is different than for delinquent mortgages. In other words, having a renter not paying you probably allows you to not mark down the value of the mortgage you started with. Does anyone here know how it works?
We're going to be living in the United States of Europe before long, aren't we?
And just who is going to perform all the upkeep and maintenance on this new batch of public housing? Are property taxes going to be based on a new sales value?
Crap, I'm worried about Comrade Kristina.
ghostfaceinvestah wrote:
FDR: A chicken in every pot.
BHO: An unemployed family in every home.
I've been chain-drinking White Russians, worried sick.
NervousRex wrote:
This would be a good way to force (I said FORCE!) the lenders to mark to market, which is why the lenders will never agree to participate (although they may pretend and extend the 'negotiations' indefinitely).
Why go through foreclosure, long period of being vacant, fix-up expenses for sale, and then, much later, a sale at near market - while making a family/person be homeless or family-basementing?
Jonathan (profile) wrote on Thu, 11/5/2009 - 11:41 am
FDR: A chicken in every pot.
BHO: An unemployed family in every home.
An unemployed family in every government-owned home and a leased government-owned car in every garage.
So, if you have a married family who are both unemployed, 31% of zero is zero - rent free???
as far as O owning them....As you mentioned it really all depends on how it's accounted for. I'm sure there will be quite the transparency in allowing all of us to see exactly what they own and to whom....
Yancey-
I gather you are pretty close in that assumption. Afterall isn't the the whole game now not having any actual price discovery?
Ciao
MS
Think of the military and banksters as the real power, and the Office of the Presidency as ceremonial...
ghostfaceinvestah wrote:
This is absurd. There is no plan, just a bunch of foolish worms rooting around in the dark.
Where do you think the rich got those estates the Caesar robbed?
[:recycling 3-arrows icon:]
jonathan-
It's been that way for a long time....not "tin-foily" at all.
Better BHO than JPM. Besides, I thought we were just talking about loans made in 2000-2009? There is no election anyway if the choice amounts to all pro-TARP candidates.
Think of the military and banksters as the real power, and the Office of the Presidency as ceremonial...
Excuse me - but that's my tinfoil hat.
"We're going to be living in the United States of Europe before long, aren't we? "
If you mean 1930s Germany, or 1960s Soviet Union, then yes.
I don't think the government owns 80% of the ground under the bed where you sleep in Europe today.
The Europeans today lean more towards socialism, but we are talking about tyrannical Fascism here.
Juvenal Delinquent wrote:
The only benefit to holding a staff meeting in a bar is that--in the event of a mass layoff--the whiskey is already right there.
Serious question - do the unemployed qualify for the program? Do they have to pay market rent, or is rent capped at 31% of their gross income? Can't tell from the summary.
Terry - seriously - the press release mentions a guide, and provides a link but the page doesn't seem to have any guidance about this specific program.
Terry
They expanded HAMP to count unemployment benefits as qualifying income. There is almost an entire internalized government economy, shifting money from the right pocket to the left and back. Food, shelter, job/welfare, ...
They'll need some creative accounting to keep the deficit below their psycho-political ceiling of 10% GDP
Whiskey wrote:
Hey! BHO and wife on the cover or Royalty Magazine an issue or two ago, and his wife is on the cover of the current issue!
White Russians = Yum!
Personally, I think this is great for the FBs that would have been foreclosed on otherwise. This just now buys them an indefinite period of time to continue living in the same house, at a "market rent" (Read: substantial discount to their mortgage payment). Best case scenario for newly-minted renters: they can use the monthly differential between rent and mortgage payment to save money to buy a different house at a more affordable price. Worst-case scenario: They continue to rent, as they would have likely had to do as foreclosees anyway, without the trouble or expenses of having to move.
Best-case scenario for government sponsored entities (and by extension, the U.S Taxpayer)? None. Eats the difference between the monthly mortgage payment and rent for as long as tenant stays, and inevitably eats the loss for when the tenant leaves, and the home has to be sold at market price (or below).
Just wait until FedGov starts getting it's new property tax bill.
What is everybody freaking out for?
This is how a country goes full on fascist.
It's not like we haven't seen it coming for YEARS now.
De-nihilists
oh, nice. my current gross income is $0. can i haz $0 rent? last time i checked, .31 * 0 = 0.
/snark
disclosure: my income isn't actually $0
Cinco-X wrote:
I suppose I should have expected it, but I really can't believe there's strong enough demand to warrant a 'Royalty Magazine'.
I like the Brit phrase 'council housing' much better than 'Section 8". It works for the UK (and I think elsewhere, but haven't searched). The soviets also burnished the concept.
Frankly, I'd rather have Uncle Sugar owning the building I lease an apartment in (or a house) than have JPM/ GS/ WFB/ BOA as my landlord.
These men are harmless, Donnie!
HomeGnome wrote:
Democracy dies to the sound of thunderous applause?
I may need to go all old skool and read some Steinbeck again.
kermie had a mi.
Just wait until FedGov starts getting it's new property tax bill.
Report shows states' revenue sources
Democracy died a while ago, IMO.
Now it is Elephant and Ass Fascism.
noob goldberg wrote:
Follow the link; it's there, and I've seen hard copies for sale at B&N's.
"Just wait until FedGov starts getting it's new property tax bill. "
That's going to be pretty damn interesting as I originally thought the banks would just turn the homes over to the municipalities as the "bill" came due. Sort of saw that as inevitable given the amounts of back taxes were dealing with here. But then I'm sure the Feds will bend them over a barrel with the next stimpack so that they cooperate fully...
Ciao
MS
"Just wait until FedGov starts getting it's new property tax bill. "
Ha! that's a good point.
You have to wonder, though, at what point they refuse to pay property tax. What is a local government going to do about it?
And for that matter, does the govt need to buy hazard insurance? I wouldn't think so.
Is there more discontent towards politicians and/or their parties, or is there more discontent directed to the political system itself
Cinco-X wrote:
I did follow the link. I just find it surreal.
Isn't Royalty Magazine published by Glodman Sucks, and distributed by Bloomberg?
Council Housing Galore!!!
Geez, all we need is a good dole (unemployment extension- check)
universal healthcare for those on the dole (coming along nicely- check)
feckless politicians (Double Check)
raising taxes to meet enless increases in public spending (Next up- check it off soon!!)
Blimey, ye blighters, welcome to post war Great Britain!!!
Oi! Oi! Oi!
Someday this war's gonna end...
noob goldberg wrote:
It's a UK magazine. They still love the Queen, or so I've led to believe-
Democratic Republics end, not with a bang, but with a whimper. Or, in this case, to the muted sound of HGTV playing in the background.
hey maybe the govt will use the rent to pay down debt!
The whole Central Planning organization is coming together: Health Care, Finance, Housing, Transportation, Jobs Banks.
You get the picture.
WTF!
Dow 9,954.49 +152.35 +1.55%
Nasdaq 2,094.50 +38.98 +1.90%
S&P 500 1,059.66 +13.16 +1.26%
10 Yr Bond(%) 3.5290% -0.0170
Oil 80.10 -0.30 -0.37%
Gold 1,091.80 +5.10 +0.47%
(turns 10k rally-cap inside out, and it says "Made (off like a bandit) in the USA")
oh grasshoppah...much to learn.
RockyR,
I was just thinking the same thing.
State/local property taxes on Fed-owned property are not constitutional. I guess the Feds could agree to pay 'in-lieu of' payments to cities/states to 'replace' the prop. tax. It could be included in the lease price, like mortgage insurance sometimes is.
Seeing and knowing are two different experiences...but I digress. Family movie night tonight....double feature Those Daring Young Men In Their Jaunty Jalopies and Those Magnificent Men and Their Flying Machines...need some laughs.
Did you see the label that said "Made in China" when you turned it inside out?
"State/local property taxes on Fed-owned property are not constitutional. "
Excellent point.
There goes that source of funding. Guess the locals will need to lean on BHO even more for their funding.
Exactly as planned.
State/local property taxes on Fed-owned property are not constitutional.
fannie mae isn't the federal government.
Really, the plan isn't on the website, just the announcement.
If things were getting better or even stabilizing, they wouldn't be expanding the tax credits to almost everybody, and floating these new home debtor programs.
On the bright side, SEIU will be the housing management company and ACORN will process the paperwork and control who gets to 'rent'. So we got that going for us.
:kcoop smiley for more inane debate about how the US is becoming more socialist/fascist/communist and less capitalist/free market/democratic by people with little familiarity with the principles involved:
Juvenal Delinquent wrote:
For a second there I read "Madoff like a bandit" . The dark side of Gestalt
Blue and Red Fascism.
Please enlighten us badger.
Remember, remember, the 5th of November.
YouTube - V for Vendetta Televised Speech
badger wrote:
Perhaps you can explain it for us then?
Basel Too wrote:
looks like a duck.... and (at least) offering more than implied full faith and credit of the Treasury.
ghostfaceinvestah wrote:
The Yankees winning is good for the S&P, just as Obama wanted. Nefarious!
badger wrote:
Well, I believe we have found a subject for this thread.
ghostfaceinvestah wrote:
Citizen AllenM (profile) wrote on Thu, 11/5/2009 - 11:53 am
Blimey, ye blighters, welcome to post war Great Britain!!!
Yes, it's the United States of Europe, coming all too soon... We'll all learn to enjoy our government-issued life.
Whiskey wrote:
don't forget the tides flowing, the moon waxing/wanning, and beans causing farts, just as Obama wanted.
,rad 5-10,
Words are just playthings for me to torture, the holy grail being perhaps a quadruple entendre?
We're all landlords now. I can't wait to see how we enforce up-keep standards.
Juvenal Delinquent wrote:
and a double reverse twist too?
Each and every major challenge facing the country has a large, entrenched, military or industrial bloc controlling it.
food: food industrials
energy: military / large oil co's. domestically, lots of small NG players. no move to utilize NG thus far.
health: great system if you are rich. passable if you are military. abysmal if you are poor.
housing: banks / government
water: government
Just on that basis, you can't really afford to change the government except incrementally.
I guess I left out the media, but making sure the proles get an appropriate diet of jingoism and calming entertainment is pretty important too.
Juvenal Delinquent wrote:
I'm pretty sure that would cause such a feedback loop in my brain as to result in
.
"fannie mae isn't the federal government. "
The will be in March.
Folks here are missing the obvious.
The empire has fallen, and the bill is now due.
Crushing debt burdens, low return on capital, collapse of the pound/dollar.
Yup we have recreated our very own collapse of Great Britain.
Well, at least we didn't get blitzed.
Shut the doors, and relax, this won't hurt much beyond a long slow grind downwards.
But hey, a lot of folks lived and died in their 'umble abodes rented for peppercorn rents from the local Councils, and most folks didn't toally starve, beyond the realtors, of course.
I think it is time we form a National Trust for the best National Treasure houses that folks will be unable to keep up due to taxes and inflation.
I think Larry Ellison's house would be a good place to start;-}
Rule Britannia, Britannia rules the waves!!!
Someday this war's gonna end...
....every bomb that is dropped, every warship launched...
JimPortlandOR wrote:
That's just what Obama wants you to think. Beans only cause gas because they're soaked in fluoridated water.
Angry Saver wrote:
Just as we do today?
or CCC grass cutters and painters on schedule.
Well, in honor of the guide to Deed to Lease not existing, I provide you with a link to the Country Music Lyrics generator.
I believe this system could be extended to produce Fannie Mae guides, and other semi-official documents.
Enjoy:
country
I met her in the Stone Age sort of pregnant
I can still recall that plastic nose she wore
She was drownin' in the quicksand but I loved her,
and I knew that she was rotten to the core;
A Klingon said I'd salivate forever;
She said to me man wasn't meant to fly;
But who'd have thought she'd yodel in my Edsel;
She fell beneath the wheels and cried goodbye.
Rob Dawg,
The federal government does not pay property taxes. They do have a program where they pay a meager amount in lieu of such taxes. The real question is are the GSEs now the federal government in a technical sense? Expect a legal mess with localities losing even more revenue.
Too bad the free rent genie is out of the bottle.
I can't help it, I can't get the image of the Chernobyl housing complexes out of my head.
Why even bother with state and local income/sales/property taxes. Pay it all to the IRS and let Congress sort out the priorities (hahahahah).
No more local corruption of officials with that dirty ol money.
If the "policy" is to support house prices, this is folly. I would piss on the walls, let the yard go to crap, and let large dogs run free in every room. Then tell the landlord it is inhabitable and sue. Nothing like an angry renter who just lost his house.
that sounds more like a reasonable transfer mechanism that the federal government can employ to prop up local governments without having to resort to a "stimulus" measure...
who takes care of repairs?
It keeps getting worse and worse.
Even in the 60's when the UK had already waned, we were still building UTTERLY BAD-ASS aircraft like these:
Historic day for aviation as Vulcan bomber returns to the skies after 14 years | Mail Online
Warbird Alley: Blackburn Buccaneer
And the UK was also the only country to abandon a successful space program / orbital launch capability:
Black Arrow
So let me get this straight. Underwater buyers can squat and live for free for about two years or pay rent for two years. Hmmmm.
cinco-x
both
Rob Dawg wrote:
Federally owned property is exempt from property tax.
"the ability of western states to fund public education is further
impacted by the fact that state and local property taxes, which
public education relies heavily upon to fund education, cannot
be assessed on federal lands" http://www.cde.state.co.us/cdeboard/download/RESOLUTION/res_appleinitiative.pdf
Where the hell is Christina, damnit.
And the bonds backing those mortgages? Do they take a hit? Does 100% of rent payment got to service the bonds/MBS tied to those mortgages?
The big problem describing these as fascist, capitalist or in any way economic is that these are not economic activities being described. Finance is not economic activity. This confusion is what led to our present problem. Just like in the previous thread, hedging does not prevent price increases, it transfers the risk to another party.
gabyjan wrote:
JimPortlandOR wrote:
Hmmmm....bigger pools of money but with less corruption. Hoocouldanode-
Nanoo-Nanoo wrote:
Agreed. She said an hour, tops.
I think they're losing control
They have a competent staff for sure. The healthcare spending bills can fill the daily agendas alone. HAMP was a big enough bureaucratic/logistical challenge. Trying to rally support or pressure/threaten allies for a surge in Afghanistan ties up international relations before Pakistan, GM, and others.
This deed for lease / lease for deed program is more than they can manage.
I've worked on some big projects. What I have learned is that you must limit the number of things you are paying attention to at any one time if you want to do them well. They have so much work on the go, that the only way they can keep juggling it all is if they delegate. But delegation has its limits in terms of time, money, and coherence.
They can't keep adding programs here and there. They need a simple, comprehensive strategy that they can just put the pedal to the metal with. Like force banks to get current on their writedowns, recapitalize in exchange for ownership, and then offer ownership stake as incentive for a re-IPO in a few years' time. The problem is they are too afraid of the amounts involved
Angry Saver wrote:
Welcome to my nightmare.
Live long and prosper
Some thoughts on this nonsense.
This has everything to do with triage medicine and nothing to do with BHO.
Jonathan,
Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed.
Dwight D. Eisenhower
Eisenhower on the Opportunity Cost of Defense Spending (Harper's Magazine)
1 currency
didnt think about that. well if i did it was just the normal stuff the rich do......
homedad43 wrote:
Congratulations, you are smarter than the collective wisdom of a national government
/should write an epilogue to that wisdom of crowds book I never read
edit: changed presidential administration to national government because I really don't know who is the champion for this, nor do I care enough to look
badger wrote:
Sure, you take the risk from one party that has limited appetite for it, and transfer it to another that has a greater appetite. In aggregate it's a zero-sum affair, but if hedging permits individual companies to reduce their risk exposure, it also reduces the prices they require to mitigate that exposure, thereby lowering prices.
,rad sm_,
Accidental tenants players usually have a crummy first serve.
Hey, if Eisenhower could manage the Normandy Invasion, just bring him back as the Federal Housing Czar managing the 'public housing option'.
Just another bad move from a corrupted system and government.
Yup we have reached the point of Lunacy.......one socialistic mess coming up.
Democracies don't have Czars.
cinco-x
just part of the rbcbo regime, nothing to worry about.
this could be very dangerous for current landlords.
if the program is "successful", then lots of lower priced rentals hit the market and start to drive down rents over time.
the wife got me into rental housing 7 yrs ago.
Nanoo-Nanoo wrote:
Why Chernobyl? You can get so much closer to home in Detroit and experience the same thing
sweet juniper!
This pretty much fits in with my thesis that a tremendous amount of capital is quietly being destroyed by changing circumstances.
Who is going to invest when the returns are so low, and any bad exogenous event smashes your equity?
Not me, I think a lot of folks are going to remain planted in their upside down council housing, killing all of those folks looking for a quick buck flipping/renting foreclosures.
This is the end of the line for the housing market, houses are dead for at least two decades. Might as well get some cheap interest rates and wait for inflation in housing, which is going to take forever. Commercial property will be worse, much worse- empty useless strip malls will be converted back into cheap homeless housing and low dollar small renter booth use.
Britain/Argentina writ large.
There is no master plan, except that capitalism has failed the people, something that will become more and more obvious with time.
As for the libertarian fringe, they will be going deeper into a shrill, self absorbed fantasy of Galtistan.
Ugh. I guess I will just hang around for me pension, and live quietly, as this doom looks inescapable by America.
Demographics, economics, and politics have all aligned into the end of our empire.
Well, the good news is the next phase only lasts about 10 years.
Someday this war's gonna end...
Whew..... DOW heading back up now.
noob goldberg wrote:
I've been thinking about this sort of thing, and I'm not sure you can have a zero sum game with debt involved. Creating debt creates money and defaulting must destroy it. Thus, the economy can shrink and the sum therefore not be zero in the end, and vice versa.
I'm thinking big condo tower projects might be better off signing up quickly as a property management for the rental money grab.
whiskey
please dont call worms foolish i heard that they have powerful lobby that will come and take us away aha
Don't forget.
I am beginning to think that there are perverse consequences such as that when many parties hedge - the optimal strategy for the individual natural gas producer, for example, was to hedge the living daylights out of their production stream a year or so back when prices peaked - they have transferred price risk, and acquired counter party risk, BUT from a supply perpsective they have eliminated the price signal, and in fact must produce to deliver their contracted volumes to experience the benefit of the hedge. Now, when enough industry participants have gone down this road, then we might see increasing supply into the teeth of a historic price declines...
shill wrote:
It's just different flavours of 'mess'. It's like we just left our teenage boy's boys room, littered with clothes and magazines on the floor, and entered our teenage girls room, littered with different clothes and magazines on the floor.
I'm guessing that this won't be very popular, just like their "save the idiots from foreclosure" program. These folks want out not just from the debt, but from the reminder that they f*cked up and are idiots when they pull into the driveway every day.
Interesting comment re the MBS packages.
I wonder what's being said behind closed embassy doors. I suspect that "Hu's Your Daddy" wasn't only being heard in Yankee Stadium.
Keep that cash flow comin' boys and girls.
At this rate, in three years we'll have kids selling Chinese reimbursement bonds door to door.
This is no doubt a green shoot of our jobless recovery economy, eh comrades?
"capitalism has failed the people"
No...We let the crooks corrupt the system once again. It is amazing that we allow economic intermediaries to screw us over and over again.
HomeGnome wrote:
fixup: recoveryless recovery, I'm sure you mean...
"...then lease back the house at a market rate. "
Just like ARMs but this time you don't claim to own the house.
Citizen Allen M:
You make my day full of all that sunshiny crap.
Now I'm gonna go watch some Hello Kitty.
Huh?
Soory noob I don't get it....although I am slow today I was up all night making money 
Does anyone have a handle on how many this Fannie program will entail? Is this only for those with F/F loans or FHAs or does this include other mortgages that will be taken on by Fannie in qualifications are met?
ghostfaceinvestah wrote:
Back in 2006/2007 I remember commenting here that the eventual end of this will be the govt. owning housing and the citizens renting from the govt. Of course, I'm just a doomer, who listens to me?
I think this rental plan actually makes some sense. It pointless to try and sell into a glut when renting might be a better option. Plus, uprooting millions of families is counterproductive and wrong.
That said, the losses should be CONtained to the buyers of FNM paper. Let the hair cuts begin! No way should the gubbmint protect mortgage holders at the expense of everyone else.
Shill:
I've reached the point that if it ain't on periodic table, it ain't money.
New slogan "We ARE the housing market"
REBear wrote:
Don't you mean to say, "Just like ARMs but this time you don't own a call on house price appreciation."
The rules associated with these programs are full of pleasant sounding phrases.
https://www.efanniemae.com/sf/refmaterials/hudmedinc/index.jsp?from=hp
These income levels are used to determine eligibility for Fannie Mae's MyCommunityMortgage product for low-and moderate-income home buyers under Fannie Mae's Community Lending products. To ensure these loans are used to assist low- and moderate-income home buyers, MCM eligibility is generally limited to borrowers with an income no greater than 100% of the area median income in the area where the home is located. There are several exceptions, however, as described in the Fannie Mae Selling Guide.
To assist borrowers in localities in which an income greater than 100 percent of the area's median family income is needed to qualify for a median-sales-priced home, we allow higher income limits for certain high-cost areas.
Translation: As long as you bought in a bubble area, we can help you!
Angry Saver wrote:
LOL!!!
That was EXACTLY what I took away from the article.
Angry Saver
read the press release
the plan is to sign existing tenants to a 12 month lease, and then sell the rented house on the market to cash flow investors
Nanoo-Nanoo (profile) wrote (in reply to...) on Thu, 11/5/2009 - 1:20 pm
My Head Just Exploded
You're not blond by any chance are you
BTW, have you ever heard the urban legend about a blond that had left here groceries in the car for a hair appointment, and when she returned, a tube of biscuits exploded and hit her in the back of the head. A passerby stopped and asked her why she was sitting there completely still and holding the back of her head, and she explained that she'd been shot and was holding her brains to keep them from falling out-
noob goldberg wrote:
I'll bet the girls room smells better than the boys room-
Except that FRB/Treasury owns a big chunk of Agency MBS.
not badger
but red and blue make purple so purple fascism!!!! yeah i got it had it long time ago.our representives arnt
shill wrote:
You got one of those cool new photocopiers?
shill wrote:
Hehe, in retrospect that was overly obtuse. I was simply stating that we were leaving a really messy implementation of 'capitalism', and entering an equally messy implementation of 'socialism'.
Cosmetically they look different, but fundamentally it's still the same old mess.
Mike in Long Island wrote:
More appropriate
Angry Saver, I intellectually agree with you.
But think who owns much of that paper and how they're going to respond. This is now cashflow, nothing but, and our government is behaving like a bunch of crack addicts offering their household belongings in hopes of not having to sell the baby.
Remember, Hu's Your Daddy.
The Purple Fascist Party Lives!!!
Cinco-X
Your brain has no nerves. You wouldn't feel them spilling out. I'd probably have been momentarily freaked out as well. Until I saw that it was cookie dough
EHP,
I read the press release. Selling a rented house might mitigate losses. I don't have a problem with this as long as the losses accrue to Fannie investors (which is un-freakin likely).
EvilHenryPaulson wrote:
Sure. That's the plan alright. These guys plan about as well at the Dilbert crew [referring to the series he had a few years ago on strategic planning sessions... hint: a great place to eat free donuts all day].
LOL! No, just a wannbe blond that could never bring herself to fry her scalp. I've got some wicked good Alabama jokes but I'll refrain. gabyjan could probably outdo me there anyway.
Citizen AllenM (profile) wrote on Thu, 11/5/2009 - 1:19 pm
Of course they're becoming more shrill; nobody's listening
I guess the bad news is what comes after the end of the next 10 years......
Fannie Mae will be in the "Rent to Own" business, and HU will administer the paper work.
resistanceis
i was born government issue,raised gi so whats new?
I like this line:
Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income.
What's 31% of zero?
edit: oops. Terry already commented on that. I'm reading the thread from the bottom up.
energyecon wrote:
The signal still exists; I think the difference is that the vast majority of producers hedge, whereas only a fraction of buyers hedge. Quite frankly, all consumers should be hedging at low levels, which should bring balance back into the price signal, but since it's less economic for households, for example, to hedge their use, the relationship becomes skewed.
But I appreciated your thesis; food for thought, certainly. I'll have to chew on it for a while.
Angry Saver wrote:
How about an MBS tax? Instead of defaulting on the mortgages, reduce their value in a more socially acceptible manner.
While I don't think it would work now, I previously proposed a stupidity tax on lenders who did stated income loans or went over 95% LTV.
Nobel laurate Edmond Phelps wrote an op ed in the Financial Times yesterday:
FT.com print article
He argues that there may not be any short term fix to the credit binge that the US experienced. Neither Keynesian nor neoclassical approach may work this time.
EvilHenryPaulson (profile) wrote (in reply to...) on Thu, 11/5/2009 - 12:17 pm
/should write an epilogue to that wisdom of crowds book I never read
EHP - Don't bother reading it, aside from a few neat anecdotes you are better off with swarm theory. I'm sure every age has had its "Wisdom of Crowds"... The best of which is probably "Extraordinary Popular Delusions".
Angry Saver wrote:
Supply right now isn't a glut at all. Prices are up in most markets. Why continue to prop prices rather than sell these houses for cheap to deserving buyers? It's market manipulation.
and the kicker will be: rental application will require a credit check!
Sorry you don't qualify because of the DQ loan...so sorry...NEXT!
OT, but I think significant from more than one point of view:
" November 5, 2009
Finland's government Nov. 5 approved the Russian-German consortium's Nord Stream project to run natural gas pipelines under the Baltic Sea through Finnish waters, Reuters reported. In a statement, the government added, "The project must be implemented so as not to prevent any potential subsequent energy, data communications or other infrastructure projects." Finland said the approval was valid for the next 50 years, after which it could be renewed."
Angry Saver wrote:
True that. If the house needs a new roof, who's taking care of that? Or "tenants" who let the front yard fill with garbage until the city comes by and cites the "landlord." Or, or, or.... anything you need management for? I'm sure they haven't thought that far ahead. I'm sure at least some of these homes will end up in fairly bad shape unless there's a management structure in place.
I owned a couple of section 8 units (a duplex) many years ago, and the solution was easy; it was my responsibility, and the local housing authority made regular inspections goosed me when I didn't meet their standards. They were moderately diligent but not overboard, and I couldn't disagree with what they wanted.
SFR is about the most inefficient form of public housing there is, too. I don't see this as a real solution, just another flimsy barrier thrown in the path of the avalanche to slow it down slightly and give the villagers a little more time to flee.
EvilHenryPaulson wrote:
I think urban legends are fabrications that take on a life of their own, but have no basis in fact. While you might not feel your brains spilling out the back of your head, I suspect that a substantial portion of your motor control would be damaged.
EHP:
Thanks for the comment re selling back to market at end of the year.
So they're thinking that perhaps if it's successful, then they can have a backdoor mechanism to reallocate housing prices? Or do I give them too much credit...
Lease Substitute for Deed program
LSD
whiskey
nope beans gave gas way before fluoridated water.
Citizen AllenM wrote:
I also expect a reheating of socialism to emerge... and not the lame fantasy the right wing talking heads point to now and call 'socialism' but something a whole lot more in your face. That will complete the bookend extremes.
Ya when that plays out then you'll know you are closer to the end of the war.
Nanoo-Nanoo wrote:
I'm from AL. Let 'er rip!
now thats a good idea now.
Take a name asswipe wrote:
That is totally awesome.
If we are going to be uncivil to the point of going to war, red is a crummy color, as easy-targeted Zouavely dressed soldiers found out in the first Civil War.
oh i know what to do
lets ask some 4th graders
Three anecdotes from people I've talked to this week. This is from the 'real' world so feel free to disregard like Wall Street.
1) Had a long talk with one of my tenants. Very in tune with what is going on in the economy and Wall Street. Said if things don't turn around in 6 months he's throwing in the towel.
2) Talked with someone who works at Home Depot. Said they were operating on a skeleton crew. He's a kitchen designer - the only one left of five.
3) A friend who is a senior commercial loan officer for a regional. First thing he said when he called - 'We are going back down'. He explained that he was looking at reworked leases showing 20% rent reduction.
traderwalt wrote:
I would think that a gigantic across the board cramdown might work. OK, snark off.
There are several keys to getting out of the current problems: 1. Concentrate on the productive parts of the economy. 2. Allow and encourage immigration of people who have money and/or valuable skills. 3. Pull back hard on new construction. 4. Encourage research into technologies which result in sending less money overseas, whether that is for oil or goods.
Supply right now isn't a glut at all.
Klarek,
We have 19 million vacant housing units (15% of our total housing stock)! It is by far the biggest housing glut in history.
The best one is HERE:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aMVX5q9SgWJ8
Soon in a fashionable North Scottsdale home...
"Honey, can you take the kids to school this morning? The Fanny Mae service guy is coming to fix the garbage disposal between 9 and noon."
nanoo
she said that she had to go to the meeting.
On the heels of Ford’s better-than-expected third quarter profits and its promise of solid profitability by 2011, 68% of Americans adults hold a favorable opinion of the one company that passed on a government bailout. Ford continues to far outdistance public perceptions of General Motors and Chrysler.
Angry Saver
sorry, didn't mean to be rude, typing during short breaks. could have alternatively said, in the press release...
the one boost to the housing market this does have is that it slows the rise in the average household size, for as long as they stay current on their rent (are evictions the same timeline/process whether mortgagee or renter?)
still you have to wonder how attached the new renters will be to the property unless it is a good price (below market rate, contrary to the press release) or it is a fair price, they have a steady but reduced income, and have kids/friends/family that offsets the squeeze and makes them choose to stay at least for a while
this would take a chunk of the cash investors demand if it led to more supply on the market, perhaps a breaking of the shadow REO cartel. much easier to value known knowns, lower risk premia
still, I think there are too many small plans that ultimately do not respect the big problem
dont forget y'all the time thingie is set an hour ahead of eastern standard.
dryfly wrote:
That was the way it was in the '30s. That's what scared the hell out of everybody and made reform possible. And that's why the labor movement that emerged from that period (that had been fairly socialist in some parts) had to turn ardently anti-socialist to get their seat at the table with the corporate bigwigs. Socialists were purged from the labor movement.
Juvenal Delinquent wrote:
The South was Gray, the Union blue. Who was red?
Nanoo-Nanoo wrote:
Good one:
Rob Dawg
just got done reading the previous comments thread regarding UE
i thank you for your observations about EMRATIO and in a later comment about
going past the SA numbers and 4 week averages and instead (or additionally)
recognizing the significance of comparing un adjusted numbers this current period against the same period last year
those numbers and the graph tell the real story...the country is in dire straights
thanks for cutting to the heart of the matter
gabyjan wrote:
It was 3 hours ago, and she said she was going to find out what's up within 30 minutes.
homedad43 wrote:
It sounds like they are planning to sell the house ASAP with the lease being assigned to the new owner.
Odd. I'm not expecting socialists. I'm expecting anarchists.
Anyone want to guess the impact this will have on the Owners Equivalent Rent portion of CPI?
Welcome to the Disownership Society.
french mistake wrote:
Between 9 today and noon a year from now... 'course how's that different from the 'market solution'... if you buy a warranty from a private firm they just out-source it and good luck getting them to perform better than gubbmint. In short if you want it done you'll still have to pay - either bribe the Faanny Mae service guy OR the guy under contract to the warranty firm.
Bureaucracy is bureaucracy is bureaucracy.
Wouldn't you just loveeeee to know who's bright idea this was.
kcoop
we really need a set of screws to show how much we're getting screwed
Mike in Long Island wrote:
That's easy. They will change the method by which it is calculated.
someone's boyfriend perhaps? ewwww...sorry.
black dog wrote:
He's going to kill himself?
some investor guy wrote:
Some. But they won't be popular unless they offer health care
.
Fascist/populists, now, that's another matter. Very dangerous to the fascist junta currently in power. Imagine a Glen Beck who didn't work for Fox News and wasn't running cover for an established political movement.
MaryAnn wrote:
I've seen this idea floated around the web for at least 2 years.
Read the text, noob:
What's your point on the price signal when I am explicitly viewing if from the producers' POV and the impact that near industry wide hedging has on the supply response (or lack thereof) to falling prices?
Angry Saver wrote:
Put these on the market at a reasonable price and they won't be vacant.
Bob Dobbs wrote:
I know - northern Minnesota was crawling with wobblies. I had friends with family among them. To this day they are hard core in your face socialists - the Limbaugh faction has no idea what a real socialist looks like. They might get to learn something.
Bob Dobbs,
All good points. How about this scenario: The heater breaks and the renter calls FNM to fix it. They don't show up for weeks on end so the renter stops paying rent - with justification. Or the faucets leak or the toilets run and the renter sends the landlord a bill for excess water charges.
I've been there. Being a landlord is actual work and the market is usualy based on sweat equity.
Fannie better sell these properties as soon as they are rented - whether they like the price or not. The or not part will be interesting as to Hu takes the loss.
Bob Dobbs wrote:
Wow, anarchists offering healthcare. I have no idea how they would do it. The only thing that comes to mind is people will get more exercise.
kcoop
we really need a set of screws to show how much we're getting screwed
I'm still waiting for a BOHICA icon.
Silly British got it backward: Rent to Own? Own to Rent!
so they get kicked out ? after the years up? well mayb cash flow investors will make good landlords.....
OT I know but I really dislike this dick.
Ex-NYC Top Cop Kerik Takes Plea Deal - CBS News
some investor guy wrote:
In the absence of market transparency, how could you set the level of such a tax?
What about instead, forcing loans like this to be held on books, or properly risk-rated and sold off? I guess ratings fraud is the elephant in the room here.
Any particular reason the boards of Moody's et al aren't in jail yet?
some investor guy wrote:
Some of that too - but we'll get socialist also. Not necessarily 'stateist' socialism but definitely 'communitarian' and very anti-corporate. I know these people - they are still out there in numbers that would surprise the many 'Galtists' on this forum.
Silly of me not to have noticed it for two years.
yeah one of the new color photocopiers that the secret service wants people to stop using only the fed can click out money
oh yeah
the thought of 1975 USA is haunting me
Latin American debt crisis
Did not recognize losses, but that squeezed credit, which killed the economy that was already losing market share to a Europe/Japan that had caught up to pre-war levels... which is why there was the easy money to Latin America that produced investment returns and export demand for and from the USA respectively
this is a close analogue, but proportionally much larger even after adjusting for changes in workforce / income distribution
just like then, inflationary monetary policies are being pursued
however the debt bubble is humongous now... and that was the bubble that pulled the US out of the stagflation period when Reagan increased spending/borrowing by the public sector, and deregulated private sector credit (from usury laws, to allowing securitzation, the first success of which was the junk bond market)
so will we find out what comes after stagflation this time?
This will lead to lower rents. Lower rents lead to lower RE prices.
The price/rent ratio is still significantly glued to the price side.
i cant tell jokes im really bad at it.
Of course just like so many other plans, this depends on the willingness of the servicers of seconds to mark them down to nothing. But the maintenance/landlording/property taxes parts of this seem to be so poorly thought out, I really do have to believe that there's little chance the lenders holding on to the propertys for long. Now rents are capped at a percent of income. Does that mean that the FBs will be paying sub-market rents, or that this program won't be available to somebody who can't afford to pay market rates. If it's the first, it should further lower the price that one can get for the property. If it's the latter, this program will probably be too small to have much effect. (yey?)
,rad 5-10,
Zouave was in, once upon a time....
http://er3eb.tripod.com/zouaves.jpg
cinco-x
if i say that"the green goes on top"would tell the joke, usually used with the teller being ung about an alburn
Don't be absurd. Those functions won't be Fannie's responsibility any more than collecting mortgage payments is. They'll require their servicers to provide for management services, which the servicers will do by hiring a local management company.
They're in here too....
Yalt wrote:
And so you bribe the repairman working for the management company to get him to show up - just like the good ol'soviet union.
energyecon wrote:
I should have made it explicit: I don't have an issue with your points on the suppliers response. Indeed, it's logical, and it's what I've witnessed elsewhere. As long as the suppliers have the cash flow originating from their hedges, they do not change output. This distorts the market price downward and leads to over-supply conditions. I don't think anyone can argue with that, and I should have made that more clear.
My thought was that--since suppliers hedged out everything they could as far into the future as they could--the price signal skewed to over-supply for an extended period. Normally this should have been checked by buyers coming in as the price fell, especially to lower levels, and hedging all of their consumption out as far into the future as possible. However, since large industrial users--those predispositioned to hedge--are only a portion of the buyers market, most users of natural gas are very price sensitive and reduce their consumption as soon as prices rise. If they all hedged, they would also be unaffected by upswings and price and would keep consumption unchanged.
My point, is that pervasive hedging should really just result in longer cycle times for high and low prices; however, since natural gas hedging is predominantly on the production side, the upswings would be brief and the troughs would be extended.
jd
so is blue i think the french found that out in ww1 but still wore it because it was what they were about. cameo is the answer the only answer
dryfly wrote:
Just like good ol' Chicago. The bribe is usually a drink, there as well as here.
I take it it's been a while since you rented.
black dog
we know but tptb dont know that we know, or they do they are prepending that they dont know so we wont know that they know that we think they dont want us to know.
now i dont know
Yalt wrote:
Yup. But I have service contracts for warranties - same difference.
cinco-x
la (not los angeles) some raised troops own uniforms etc. dont really know about the north
EHP,
It sounds like they are planning to sell the house ASAP with the lease being assigned to the new owner.
Suhweet! So Fannie Mae is now a specuvestor in housing. This will end well.
that this program won't be available to somebody who can't afford to pay market rates.
and prove that their rent won't exceed 31% of their income.
this program will probably be too small to have much effect.
correct ~
dryfly wrote:
Unless you can get Harry Tuttle to do the repairs....
Rob Dawg wrote:
Hmmm, are Freddie and Fannie federal entities, under the tax code, or not ?
If not, the tax rolls just got a bunch smaller.
Government in the rental business....should work out great
The remake of Charles Bronson's Death Wish movies are in the planning and will be coming to the theaters near you. The decay of our society continues with this latest short-term rescue scheme.