yagij wrote:

What more needs to be said?

How about "It's about time!"?

The road to the bottom will be filled with acronyms.

CR wrote

$1,500 to the seller for moving expenses

Can they use that as a down payment for a FHA backed mortgage?

yagij wrote:

what the banks will do with their new-found property.

The beauty of a short sale is that someone has already found a sucker --I mean-- buyer for the property. The bank takes its lumps and washes its hands of the property.

A ht from CR. I'm both honored and humbled.

Don't know how much this affects short sales in Las Vegas, but Nevada is a recourse state with an anti-deficiency statute. This means the only way to get a deficiency judgment against the borrower for the loss is to go to court for the foreclosure. If the lender just uses the trustee's sale process, they can't get a money judgment. That situation probably encourages lenders to agree to short sales.

"I am curious about the incentives to the borrower and the 2nd... I find it hard to imagine such a radical change without motivation."

If the second lienholder signs up for the HAMP 2nds program, they will get a few pennies on the dollar.

BofA signed up, and they (through Cwide) were a huge 2nds issuer.

however, most of those were securitized, not sure what those agreements allow.

But in general short sales are by far the best solution for all involved.

Well, its a first step to clearing the market.

Blackhalo wrote:

I am curious about the incentives to the borrower and the 2nd

The 2nd has to agree to non recourse as well, at least that is the way I understand it.

yagij wrote:

won't it just turn up as a toxic asset again?

It depends on how good a job the apprasier does this time. FHA, Fannie Mae and Freddie Mac all require an independent valuation of the property. Good valuation = sound mortgage. Bad valuation = toxic asset.

I had to read this more than once, because it sounds like a good thing. Not used to that.

Is it true that, as an example, if there is a debt 'worth' $400k, and it short sells for $225k, then the $175k difference is actually written off? It's no longer a $175k 'asset' on someone's books?

If so, this is a good thing IMO.

josap wrote:

The 2nd has to agree to non recourse as well, at least that is the way I understand it.

That's a good point. When I said "the lender" above, I was referring to the first trust deed holder

There has to be some incentive for the second TD holder. That's why lawyerliz and I, along with others, didn't get upset when CR mentioned the fraud involved in second holders talking money on the side, probably a couple thousand or so to sign off. That didn't mean lawyerliz and I don't get upset by fraud in general, but just that we recognized there was some value in getting the second to agree to the deal. The frauds should still be prosecuted as such.

Also, when there is an actual foreclosure sale, any "sold out junior" can sue on the note and get a money judgment. So the junior TD holders have to have a say in the matter if the seller wants to walk away relatively unscathed.

I think I am missing something. I still don't see how short sales are preferable to foreclosures for distressed homeowners. Free rent for a year while the lender goes through the process of foreclosure vs paying on a mortgage the distressed homeowner can no longer afford, while, at the same time--fixing up and marketing the house for the lender. The homeowners' credit scores are still going to take a hit, either way--right?

It's no longer a $175k 'asset' on someone's books?

Well, I certainly wouldn't bet on that.

In theory it is supposed to work the way you describe, but I would expect Timmay to be buying the nonexistent loan deficits in some form.

Pearl wrote:

short sales are preferable to foreclosures for distressed homeowners.

If the mortgage is recourse (as in Nevada), the home owner could be subject to a deficiency judgment if the property goes through foreclosure. The lender "forgives" the remainder of the loan in a short sale.

dryfly wrote:

Only the future knows if there is an advantage or not.

Great. Now can ghostfaced not tell me how having a put on a house is a great deal and allows me to live rent-free to boot, I can learn how letting it go via a short sale is just icing on the cake. Free rent. Reduced liabilities. All in the name of killing my credit score which probably won't matter in 2-5 years.
.
Oh the stories I will be able to tell my children. "When I was your age, I was expected to take out 115% LTV loans, run up debt on credit cards, and walk away from my mortgage when I had no job, and we liked it that way!"

For Fannie and Freddie, the Future Looks Cloudy - NY Times

" To counter such salvos, Democratic lawmakers are now searching for opportunities to publicly distance themselves from Fannie and Freddie.

“We’re going to provide a lot of chances for Democrats to vote against Fannie and Freddie and to openly criticize them,” said a Congressional staff member working for a high-ranking Democrat. “Everyone is going to get a chance to say something bad about the companies if they want to, and we’re going to make sure the volume is up on the microphone.”

The White House, already under attack for mounting debts, has so far disregarded advice from the Congressional Budget Office to fold the costs associated with Fannie and Freddie into the budget. In Monday’s statement, the administration emphasized that because Fannie and Freddie may one day come out from under government control, they should stay off the books.

.....“And the longer the government relies on entities like Fannie and Freddie to implement the recovery, the harder it is to get rid of them. This is a really, really hard problem, and it’s going to take a long time to figure out the right solution.” "

Defeat reform of the housing finance market by pretending to support popular opinion, and run out the clock. (I don't count anything as reform if the govt is supporting more than 10% of the market.) Oh, and the Republicans want to keep home prices inflated just as much as Dems. They just want to do it in a way that allows private bankers and RE agents and mtg brokers etc to get a bigger slice of the pie. All these corrupt politicians treat us as morons.

ghostfaceinvestah wrote:

I guess the notices will just be going out today.

Oh, yes, I am sure all those notices went out on time. No one is trying to delay accountability for mistakes, I am sure.

dryfly wrote:

Only the future knows if there is an advantage or not.

I think most distressed homeowners are inclined to feel that money saved via not having a mortgage for a few months will make up for a few extra (supposed) points on a FICO score. Honestly--I think this would have been a dandy idea about a year ago, but, ironically, distressed homeowners are beginning to regain a sense of power through the process of foreclosure. I think the genie is already out of the bottle....

Don't you think the bankers have already received all the bailouts they will get from Treasury?

No. All this budget balancing talk is for everybody else. MP is right - when the bankers come calling again, our elected officials will not be able to overcome their inbred servility of spirit toward the masters of the universe.

I don't know whether MP is correct that this will be the big one, though. I would say this round will visibly debase the currency and then maybe the next one will be the big one.

But I don't expect much change in the willingness of our elected officials to throw us all to the wolves in the service of bankers, no matter how bad things get.

Rajesh wrote:

It depends on how good a job the apprasier does this time. FHA, Fannie Mae and Freddie Mac all require an independent valuation of the property. Good valuation = sound mortgage. Bad valuation = toxic asset.

Are you serious? Appraisers just measure relative value, not absolute value. If all homes in an area are being sold at bubble prices, the appraiser will value more homes in that area at bubble prices too. Appraisers sustain bubbles, they don't deflate them.

A real appraisal would involve looking at a 15-20 year history (over at least one full RE cycle, maybe two), and averaging the prices over that period, and then dialing up for regular CPI inflation. Buyers could pay more than that, but lenders with implicit or explicit backing from the govt should not be lending more than 80% of that number in total.

Albrt,you are level headed and a bit less skeptical than mp.Oh shit.

"For sure. In fact the homeowners' credit is already shot for not paying for the year going into the short sale. I think BK is the best option for the borrower; no threat of deficiency and wipe out CC debt and any other judgements/liens."

Under HAMP short sales the servicer has to release the deficiency.

The other advantage of short sales for the borrower is closure - no deficiency, no worrying that the bank actually won't go through with the foreclosure, sticking you with the liability, etc. Plus under HAMP I think you even get money to move, thanks to the taxpayer.

patientrenter wrote:

patientrenter (profile) wrote (in reply to...) on Mon, 2/1/2010 - 8:40 pm

ghostfaceinvestah wrote:

I guess the notices will just be going out today.

Oh, yes, I am sure all those notices went out on time

Looks like "on time" could be any time over the next 30 days:

During the review period, services also must send written notification to borrowers to inform them that they are at risk of losing eligibility for a permanent modification because the borrower has failed to make all required trial period payments; or failed to submit all required documentation; or both.

“The notice must provide the borrower with the opportunity to correct any error in the servicer’s records or submit any missing documents or payments within 30 days of the notice or through January 31, 2010, whichever is later,” administrators said.

sportsfan wrote:

Don't you think the bankers have already received all the bailouts they will get from Treasury?

You asked us not to laugh, but that's not fair after you crack a joke like this. Of course the Feds or Treasury will come up with more ways to prop up the prices of the bad assets feeding into the balance sheets of their banker best friends.

albrt wrote:

All this budget balancing talk is for everybody else. MP is right - when the bankers come calling again, our elected officials will not be able to overcome their inbred servility of spirit toward the masters of the universe.

I can't imagine a less politically popular idea right now than giving more bailouts to the banks. I just can't see how a large number of politicians could get behind that deal.

The bankers are still doing okay, of course, what with interest on their Fed reserves and the spread for any loans they might be making, not to mention all the government programs in effect today. I just don't see any more coming down the road.

BTW, I also believe currency devaluation is the next stage, but that will affect us all.

not_going_to_post wrote:

Josap, are you sure short sale offers go direct to the lender?

Yes, the lender has the final say of yes or no to the price and terms. That has been a problem in the past. The lender would refuse the price and the property would then forclose. I think that as of April 5th, the lender must agree to the listing price in advance of placing the property for sale. So if there is an offer at list price it is a done deal, rather than waiting months for the lender to say yes or no.

I'm grumpy because it is late. I just think this is too little, too late. But maybe I'll like the idea better tomorrow! Good night smart people!

dryfly wrote:

You think they'll bring them 'in house'?

Never. Let's be honest, the goal is to keep supporting the channeling of lots of extra money into the housing market, to keep prices high. You don't help that by bringing F&F on balance sheet. So you just cook up a different, less obvious, mechanism to have taxpayers continue to fund the promotion of investment in housing bubbles instead of other less productive things, like manufacturing, or energy efficiency, or research and development.

Pearl wrote:

I just think this is too little, too late. But maybe I'll like the idea better tomorrow!

LOL - we aren't saying its smart or that we like the idea so much as it looks like this is the way its going to go - for at least awhile.

What was it Churchill said about Americans - they always do the right thing but only after having tried everything else first.

Yeah. I took that to mean what the lender would clear from the sale, ie, the minimum they'll accept for the short sale.

"
The White House is floating, ever so gently, the notion that they are open to nominations for the position of “Tim Geithner’s Successor.”

It’s not clear if they mean this job is likely to be advertised formally sometime in 2012 or 20 minutes after the November midterms. Nor is it obvious if this is a real request for proposals – it could be just an effort to make critics “put up or shut up.”

Fortunately, there is an entirely plausible successor already in waiting, ready now or whenever the president finally realizes the need to fundamentally change banking policy.

Tom Hoenig, president of the Kansas City Fed, is best known for three things.
"

Tom Hoenig For Treasury « The Baseline Scenario

The origins of credit bubbles...
The 'erosion' of the nation state.
After the 'breakdown of Bretton Woods fixed exchange rates, states lost command over the setting of domestic interest rates to the international financial markets and had to yield to their tyranny. (Eichengreen, 1997)
'States were faced with the choice between either runnung permanent public deficits or facing a decline in international competitiveness due to excessive labor costs.'
'Deregulation and transnationalization further reduced the capacity for active state policy...'
~ 'Banking Deregulation and Globalization' - Andreas Busch, 2009
Banking Regulation and Globalization - Google Books

The simplest solution would be for the banks to rewrite the existing loans to current market value and let the owners stay in there.
Oh, but that would set off a chain reaction: Everyone would want this, whether they were underwater or able to make payments. As regards to the seconds (and thirds) that exist, there is a huge market that buys and sells these. Say the lender gets the $3k, then they sell the note for 2-7 cents on the dollar to the investors. The investors want a return, so will pursue the deficiency. The short sales I have seen require the seller to sign a statement that the lender reserves the right to pursue or not pursue remedies in the future.. In California, creditors have 4 years to file for a judgement, then can record that good for 10 years with another 10 year renewal option. With the current situation of depleted manpower to handle the processing, some, but not all, of this is on the back burner. When things slow down, watch out. Wait until these people go to buy a car, maybe a house, or some other big ticket item in the future. With a car they will either want the lien removed or will charge a much higher interest rate. Who gets this yield? BANKS. Money, like energy, is neither created nor destroyed, it just changes form.

I can't imagine a less politically popular idea right now than giving more bailouts to the banks.

OK. How about spending an entire year talking about health care, locking the entire congressional leadership into a really bad bill that everybody hates, and then failing to pass anything at all? Literally nobody is in favor of that, not even bankers. It makes the Democrats look completely ridiculous, and the only thing saving them is that the Republicans refuse to even pretend they are sane or competent.

The politicians are in shock and completely unable to function. Even the crazy wingnuts who never do anything but jabber aren't functioning. The only ones functioning are the Wall Street flunkies at Treasury who don't know how to do anything but create absurdly complicated schemes for hiding debt and risk.

I don't know that the next bailout will be as obvious as TARP, but I don't think it will be as easily hidden as the off-budget guarantees Timmy and Ben were handing out last year. That's one of the reasons I think it won't cause an immediate collapse, but it will cause significant devaluation. Then after that there will be some type of desperate bailout attempt that will really fail.

I'm going to try to sell my house in March, because I don't think there is any chance of it getting any better after that.

I have a hard time understanding appraisals. I've seen a property bought at short sale for 135, minimal improvements made, sold for 270k less than 6 months later, to most likely an FHA buyer. Not sure how any appraiser can justify such a huge markup.

I guess if I'm sitting in my property not paying the mortgage I can save 10k or so to give my friend to add to the FHA down payment to make it work. Lots of ways to come up with a solution if you've got nothing but time to consider it. It is the reverse of the straw buyer scenario on the way up.

albrt wrote:

OK. How about spending an entire year talking about health care...

Nicely stated.

chipperman wrote:

Money, like energy, is neither created nor destroyed, it just changes form.

Someone need to watch the goldsmith's tale...

YouTube - The Goldsmiths Tale

not_going_to_post wrote:

I have a hard time understanding appraisals. I've seen a property bought at short sale for 135, minimal improvements made, sold for 270k less than 6 months later, to most likely an FHA buyer. Not sure how any appraiser can justify such a huge markup.

Distressed sales are not used in comps. Don't know why, just that they aren't.

Short sales are messy. The listing agents low ball prices the lenders will never accept to corral buyers. the borrower will accept just about any offer which is then forwarded to the lender where it sits for weeks or months without a response. And if there is a second from a different lender, forget it. I'll believe the new rules requiring bank approved pricing before they go on the market when I see them.

albrt wrote:

did you ever get my email response?

Yes, thank you.

Markar wrote:

I'll believe the new rules requiring bank approved pricing before they go on the market when I see them.

https://www.hmpadmin.com//portal/docs/hamp_servicer/sd0909.pdf

pg 5 p4

pages 6 & 7 are a very detailed list of what happens. including dealing with 2nds.

albrt wrote:

I don't know whether MP is correct that this will be the big one, though. I would say this round will visibly debase the currency and then maybe the next one will be the big one.

You may be right about that. I would only say that, with a CRE bailout, the needle on the gauge is moving well into the red, close to irrecoverable.

Appraisals are not the snafu. The banks use BPO's on short sales (Broker Price Opinion). They might use two or three. Realtors usually have a better handle on value than appraisers because appraisers have to use different data and do not weight heavily on the "gut level feeling" items that agents know sell a property. I've talked with short sale processors that get 200 deals a month across their desk, most with incomplete packages (is this a surprise?). How would you deal with it? You've got the A pile and the ? pile. Lack of manpower, and skilled personnel doesn't help. Then, if you are like BofA, there are three levels of negotiators to work through, and each one has a TEN business day delay between levels (after the work at each section is complete). This makes the DMV look as efficient as Disneyland.

Bretton Woods II...
The G-20 in Pittsburg...''the Pittsburgh Agreement of 2009, where deficit nations may devalue their currencies and surplus nations may revalue theirs...'
Bretton Woods system - Wikipedia, the free encyclopedia 
International regulations and reforms will affect national economies and their 'recoveries' just as international capital requirements has affected banks in a recession trying to raise capital...just food for thought as folks continue to discuss national financial & economic reforms coming down the pike...

A "BPO" costs a bank $50 or so,an appraisal quite a bit more.And a good broker can look at a place and tell you what it will sell for very accurately.It is not a "reasonably supported" opinion however,and does not meet USPAP standards,so it is not an "APPRAISAL" under the existing rules.

Think it's time to check out the new episode of Pawn Stars. Amazing what kind of stuff comes into that shop.

Volcker's Testimony - Big Banks' Risky Trading Should be Curbed: Volcker - CNBC

merchants of fear wrote:

Volcker's Testimony - Big Banks' Risky Trading Should be Curbed: Volcker - CNBC

Tomorrow's story "Big banks remind Obama and congress how much they give in campaign contributions and spend on lobbying".
~splat

Maybe Roubini's party invitations are drying up?

C

Or irritates a russe oligarch.

C

do not forget this

Powered by Google Docs
its the 1099c and very interesting.
oh good morning and happy groundhog's day
this goes along with the google doc
The Mortgage Forgiveness Debt Relief Act and Debt Cancellation 

Odds are that one of the GSE's, or the Fed, or Treasury already hold the primary mortgage. So the 'asset' being written down comes off of your balance sheet! Seconds are likely held by hedge funds at this point, purchased for pennies on the dollar.

New homebuilder comes to Atlanta  | ajc.com

Blackhalo wrote:

That's some powerful they serve up there on Pennsylvania Ave...

more like

Humana 4Q profit climbs partly on lower expenses - Yahoo! News

Humana's Medicare Advantage membership exceeded 1.5 million at year-end, up 5 percent from 2008. Medicare Advantage plans are government-sponsored, privately run programs for seniors that offer comprehensive health coverage.

Medicare Advantage premiums rose 12 percentto $4.07 billion in the fourth quarter.

Humana said membership in its stand-alone Medicare prescription drug plans totaled nearly 1.93 million as of Dec. 31, 2009, down more than 1 million members.

The company said the membership decline in the stand-alone drug plans was due mainly to some low-income seniors joining rival plans. Humana realigned its premium and benefit structures for those plans for 2009 to correspond with its prescription drug claims experience.

"At the end of the day, I think we just got our price a little high and we're suffering some market-share loss as a result of that," McCallister said during the conference call.

Blackhalo wrote:

"Ben has been through the fire,” Volcker said in a telephone interview. “He’s much better qualified now than he was four years ago, before he went through that experience.”

translation: while Bombs Away Ben put several cleat marks in his crank while learning the fundamentals of a real world vs academic methodology for Central Banking, we don't think he'll be near as big a screw up in his second term

what were we talking about?

I think how much a leader learns and how quickly he or she learns "on the job" may be as important to doing a good job as how smart or capable that person was when getting the job in the first place.So assessing performance when first taking a job may not be the best measure of how capable an official is going foward. Apparently Volcker thinks that BB is now much more capable.

Too bad Obama hasn't learned anything..

traderwalt wrote:

Apparently Volcker thinks that BB is now much more capable.

you shoulda seen my little Benny, he beat out an infield grounder for a single

dats a my boy, you just wait til next year and see what he does, he's a good boy

from mof's link

"I am not so naive as to think that all potential conflicts can or should be expunged from banking or other businesses," Volcker said in his prepared remarks.

"But neither am I so naive as to think that, even with the best efforts of boards and management, so-called Chinese walls can remain impermeable against the pressures to seek maximum profit and personal remuneration," he said.

traderwalt wrote:

A permeable one can be very profitable.

In the short term. Arthur Anderson shredding anything Enron leads me to think that long term... Never mind. With Bailout Ben at your back, you can just borrow and bet your way out.

Blackhalo wrote:

With Bailout Ben at your back, you can just borrow and bet your way out.

With Bailout Ben at your back, you can just take money and not change your spots.

there IFIFY

gabyjan wrote:

you think they going to do like the big boys and sit on the money?

they will obey the regulators

prolly try to talk a good consumer game, but truly just set on the money to see what hatches

gabyjan: I think they have no other choice than to shore up their balance sheets as the losses in CRE begin to be realized starting this year and going into at least the next 2. I strongly suspect this amount of money to smaller banks won't be nearly adequate. However, it may provide Sheila Bair with a little relief for awhile and slow down the process of seizing small and regional banks. The RTC like LLC created for commercial real estate will also be helpful but a story a week or two ago of structuring the losses made me wonder if she turned over to the 'dark' side.

An on the ground report here. The very last remaining independent VERY small bank in my state had a notice in plain view saying deposits are insured by the FDIC through June 2010 on all NON-interest bearing accounts. My jaw hit the floor as I wasn't aware that was a provision so now I need to get onto the FDIC site to find out what that actually means.

China Regulator Said to Seek to Curb Third Mortgages (Update2) - Bloomberg.com

China Regulator Said to Seek to Curb Third Mortgages

"Feb. 2 (Bloomberg) -- China’s government, seeking to stem property speculation, told banks to raise interest rates on third mortgages and demand bigger down payments for such loans, a person with knowledge of the matter said."

...Now where is all this fancy talk about a housing bubble in China. Article doesn't say a word about the magical fourth mortgage. Those will be left alone...heh, heh.....

13-careers-for-the-next-decade: Personal Finance News from Yahoo! Finance

"middle class jobs".

Juvenal Delinquent wrote:

Good morning from the regional headquarters.

hope you have indoor plumbing

comment from earlier in thread caught my attention since I'm pretty much in that camp but didn't think anybody else was.

Specifically, the credit scores are going to be irrelevant in 2 - 5 years.

So why bother terribly about whether a specific bill gets paid on X date? Mortgage and credit cards are up to date monthly, but getting bent out of shape about my credit score is pretty much meaningless.

gabyjan wrote:

what is e harmony?

it's your inner you matched with mister/miss perfect

Children who are cranky in the AM before school are very, very tiresome.

Harrumph.

homedad43 wrote:

the credit scores are going to be irrelevant in 2 - 5 years.

Credit scores will be different but they will continue to play a part. Most likely they will still be a course filter but banks will look at the detail of your credit history if you pass the credit score hurdle.

Jim A. wrote:

a sign of getting out LESS

conundrum

Jim A. wrote:

So why commit fraud by insisting that the payment be kept secret?

They avoid having to negotiate with the first. A little lying lubricates the financial transaction.

Good morning doomers What excitement lays in store for us today?

The usual...

denies that the Cap'n will be in line for a 3 figure bonus, it will only be like 2 figures, they claim.

volker the viking wrote:

and that's okay with you?

Of course not. We're just explaining the "why".

volker the viking wrote:

okay?

OK!

but i get out,i go to town once a week do my shopping come home. so i do get out.

FHA to Pay Out Claims on 25% of 2007 and 2008 Loans

,rade kristina i noticed that too, no way can we watch and listen to both at the same time
suppose they will have them on cspan for a couple days.but who to watch first.?

Switzerland was one of the poorest countries in Europe a few hundred years ago and a combination of natural beauty in a mountain redoubt, tourism & neutrality allowed the country to prosper, but WW2 was where they made hay, and their whole reason for financial being was secrecy. They were only too happy to facilitate business between them and the 3rd reich, and sorry reich, but we don't take reichsmarks, we prefer gold.

Once the tone was set after the war, everybody knew the Swiss bankers could be trusted with a financial secret, and a 'numbered Swiss account' was fact, not fiction. A way of evading paying taxes.

In many ways Switzerland was our alter-ego after the war. Largely untouched by the damage, incredibly enriched and the only man left standing when the guns fired no more.

The gnomes of Zurich showed the way for us how to have the banks run your country for you~

My friend told me that in a short sale situation the seller (not the bank) in order to accept an offer demanded that a buyer will give the seller money under the table by signing a promissory note. I advised my friend not to.