But he said it fell in value in part because of "regulatory mismanagement."

Those bastards! They shouldn't have given me a loan!

so he made a promise to pay the bank back, it didn't work out for him, so he is not responsible...hmmm. he is a college professor? What is he teaching? economics? better yet, ethics?

The question is precisely how the US government is going to "strategically default".

Anybody else enjoying the irony of buyer's remorse from a marketing professor?

He should really dust off those sections of his lecture notes about "cognitive dissonance."

I'm angry

Me too, but I am angry about the people that are angry.

We are a culture of instant gratification and being in the whole $440 large, when it's now worth 1/2 of that, makes it easy to walk...

To get to even might take a decade or 2, and the hoi ploy can't hardly think past a fortnight from now~

Before You Walk Away From Your Mortgage, Read This - WSJ.com

Mike_ wrote:

I wonder what the record is.

I wonder that too. Is there a chart somewhere showing the median delinquency to foreclosure duration?

Rob Dawg wrote:

$410k condo in Moorpark. "Bummer of a birthmark Hal."

What mindset, maybe not dealing in reality. The job this person has is very close to top of the food chain and he is teaching our future generations if it feels good do it.

More owners opt to walk and leave mortgages behind

Good old American "It's not my Fault!". Sixty eight with a mortgage that is impossible to repay. This person was teaching your kids! Wonder where America learned to displace their failures on others.

How many of those bank mark-to-model algorithms factored in 'strategic defaults' in their cure rates for delinquincies?

I'll take zero against the rest of the field.

I know of 19 months in the house before eviction

some investor guy wrote:

I've seen a lot of articles where this appears to mean staying in the home without paying.

Much better strategy. You can easily get 18 months out of it, minimum, as long as you have no equity. Banks not interested in underwater mortgages, they would rather kick that can.

Maury the Credit Responsibility Panda wrote:

As a plan B, I'd suggest conquering Venezuela, purely from a risk-reward standpoint.

Hang tight, it will be a 'humanitarian rescue mission' soon enough...though our closer neighbor to the south with a pesky resource underdevelopment problem appears to be neck and neck...

black dog wrote:

How many of those bank mark-to-model algorithms factored in 'strategic defaults' in their cure rates for delinquincies?

Exactly zero. In fact, most of these models have no idea how to evaluate a mortgage that has an effective LTV of 110, let alone 200, which you see in some sand states.

nades wrote:

30 yr rates are still at 5%... (edit: granted thats for 80% loans)

Nah. The 4.875% I got quoted on the last thread was for 10% down. One point.

If you put 20% down, they'll give you the same rate with no points. Why anyone would tie up an extra $40K of their cash in order to save $4K at closing is beyond me, but there you go.

J6P has a lot of cash to burn without a mortgage (or rent) to pay. I wonder if the eventual return to "everyone paying for housing" has been integrated into models that predict future retail sales.

How many months can you live in your home for free?

Should be the name for a reality show this year. Watch the scammer and grifter sort come up with new ways to evade eviction.

Mike_ wrote:

J6P has a lot of cash to burn without a mortgage (or rent) to pay. I wonder if the eventual return to "everyone paying for housing" has been integrated into models that predict future retail sales.

Just a rough estimate: the latest LPS data estimated 7.5M mortgages are delinquent but still active (property not taken by the bank). Those are just first liens.

Assuming an average payment of 1500 a month (roughly a 200k mortgage at 6% PITI) that is $11.25B a month that is not being paid.

That is more than the collective state governments are paying in unemployment benefits.

rose 3.2% from the year-earlier period,

Strip out the gas sales which are still close to a $1 per gallon more this year than the same week last year and what do we get?

Wow.... SRS briefly had a 5 handle.

FML.

Answer: A much less newsworthy headline.

What do I win?

LOL, talk about timing ... I just now got a call back from a competing lender whom I'd pinged on Monday.

A 30-year fixed FRM with 1 point as of this morning is ... 4.625%.

Four and five-eighths percent.

The price of debt is so far below its true cost that it's not even funny.

This will end well.

Mook wrote:

Four and five-eighths percent.
The price of debt is so far below its true cost that it's not even funny.
This will end well.

All's well that ends soon.

Mook wrote:

I just now got a call back from a competing lender whom I'd pinged on Monday

Mind sharing the name? I'm looking into financing as well. Thx.

ghostfaceinvestah wrote:

I have a tape in front of me with two mortgages, both in Florida, still active, neither has paid since August 2007. Both no-money-down mortgages. Talk about a deal.

What securitized trust are they part of?

This was awesome..!

Video: Michael Lewis | The Daily Show | Comedy Central

Mook wrote:

The price of debt is so far below its true cost that it's not even funny.

I can tell you, Bernanke and his crew are going nuts in the MBS market, spending like drunken sailors to get rid of their total 1.25T before the end of the month, in the face of light supply.

Imagine, our central bank sets both a dollar and date target, in a market where they were already over 70% of the market.

This is going to end in a disaster.

I take a different stance than most on this apparently. For this man and many like him, it is strictly a "business" decision to walk away; corporations do it all the time, or renegotiate their contract.

If the lender doesn't want to renegotiate, which most do not, then it is his option to walk and reap the consequences. There is recourse in the loan contract - the lender gets the collateral/asset back if the loan is not paid. It is the same with any other contract. He is not stealing the house, he is giving it back. It doesn't say much for his attitude that he is going to "stick it" to the bank; that is just ignorant. Nor should the borrower be "forgiven" for the debt.

However, we have elected a bunch of enablers that are only exasperating the problem by passing legislation that takes away the lender's right to go after the debt that is owed through various deficiency judgment laws, etc. For many like this man, they are just taking advantage of the opportunity.

Blackhalo wrote:

3.2% from the year-earlier period
I suspect that is not much of an accomplishment...

From the article:

On a week-over-week basis, sales fell 0.4%.

hgfj wrote:

For this man and many like him, it is strictly a "business" decision to walk away; corporations do it all the time, or renegotiate their contract.

Agree 100%. If the numbers make sense, exercise the put.

BREAKING

Senators vote 68-29 to approve jobs bill

energyecon,
You have

traderwalt, cinco

Thanks for replies and - muxt go to simulation briefing to share wisdom with some MBA's in training this weekend - bbl

ghostfaceinvestah wrote:

I can tell you, Bernanke and his crew are going nuts in the MBS market, spending like drunken sailors to get rid of their total 1.25T before the end of the month, in the face of light supply.
Imagine, our central bank sets both a dollar and date target, in a market where they were already over 70% of the market.
This is going to end in a disaster.

Since you're HCN's man on the street in these matters, I gotta ask:

If everyone else can see what you're seeing, where on Earth are people coming up with estimates that the end of the MBS purchase program is only going to bump up rates by 25 bps, 10 bps, maybe "not at all" (heard that gem on Bloomberg yesterday)?

What's the counterargument to rates soaring when the buyer of nine-tenths of the supply suddenly exits the market?

I don't get it.

Mook wrote:

The price of debt is so far below its true cost that it's not even funny.

I depends on the real inflation rate. If (price) inflation were at 4.625%, it'd be a real rate of zero. If it's at 0%, then the real rate is 4.625%. If we're in fact in a deflationary spiral, the real rate could be quite high....

Juvenal Delinquent wrote:

Should hyperinflation hit us like it did Mexico, where will all the American Financial Freedom Fighters end up immigrating to?

Canada probably.

Take your story, then substitute Mexican peso for USD, and USD for commodities prices, and you can see what is going on today.

Oil up another 75 cents a barrel as I write. Copper was up over 1.5% yesterday, another 76bps today.

Forget the DXY, these are the true measure of dollar weakness, and yes, this dollar weakness will kill the middle class.

Just like Bernanke planned.

nades wrote:

No one wants to see what happens when rates go 10yr plus 3%....

Speak for yourself. I want to buy a house, cash. At an affordable price. High rates sound quite tasty to me.

Juvenal Delinquent wrote:

so possibilties were limited to:

1. Becoming a renter in LA.

I just want glod to go up to ...oh, maybe to $1225 and stay there so I can get my money out and go into something more profitable. Like Treasuries.....

ghostfaceinvestah wrote:

Forget the DXY, these are the true measure of dollar weakness

Yeah, FINALLY, the potential end, and my Dollar short ETF and commodity index fund should pay off.

Well, yeah,in many cases they really should not have made a loan.

Several asked for a little help early on--nono that cannot be. So the worst happens and the bank, having refused help, when ir was actually doable, now faces only bitterness and rresentment. a contract is a contract & human emtion is to be disregarded.

"Forget the DXY, these are the true measure of dollar weakness, and yes, this dollar weakness will kill the middle class.
Just like Bernanke planned."

bernanke planned to kill the middle class?

Puhlease the guy may be stupid but there is nothing in his writings or teachings to indicate any grand plan to kill the middle class.

Talked to a friend with a long established retail store in the City of Angles, and he tells me how he's getting people buying 5 or 6 silver eagles at a time once a week, week in-week out not worrying about the the 10% sales tax that could be avoided if they only made one larger purchase, as it's strictly all they can afford, and they want something-anything to avoid the fate of the people in Mexico that I wrote about earlier...

7 1/2%

The middle class is an artificial empty space in society, not a group of people. It was meant to be a workspace for some poor people to move up. Now you just have millions of Americans parked in that space for 2-3 generations. Now the space is collapsing. Did anyone really believe it was going to end differently? The existence of a permanent middle class is the ultimate pony.

Actions speak louder than words...

BB probably considers himself middle class.

poic wrote:

I told (actually more specifically got down on my knees and begged with tears coursing down my cheeks) my wife to dump ALL the SRS but noooooo we had to hold onto half and sell half.

I smell bear capitulation!

"there is nothing in his writings or teachings to indicate any grand plan to kill the middle class. "

Looking for a road-map that doesn't exist has nothing to do with the actual plan to get to the destination. How many times has BB been wrong? Too many to list here...I'll start with "we will not monetize the debt"....

Feel free to add the many other utterances from the Fed that have proven to be nothing more than pandering.

Ciao
MS

"Actions speak louder than words"

I never said his actions aren't killing the middle class; I agree they are. I said I don't believe he had a grand formulated plan to do the above. There's a difference.

poic wrote:

I know someone who put 25% down on an 800k house. Had absolutely no problem getting a loan. Went 15 year fixed and that dropped his rate by 0.75%. There's still mortgages available as long as they're below FHA limits and you put a chunk down.
Personally I was screaming "Noooo" inside when he told me about it.

Too bad you didn't use that example from yesterday about buying a "put" on the housing market by buying a $700k home with 3% down, and planning to default if house prices dropped.

poic wrote:

Puhlease the guy may be stupid but there is nothing in his writings or teachings to indicate any grand plan to kill the middle class.

It's just a means to an end, not a goal in and of itself....

nova wrote:

Time to get on the
Conspiracy Love Train!

I kinda felt the same way reading this link last night:

Market Skeptics: *****2010 Food Crisis for Dummies***** 

Here were my comments (since it was so late at night):

I thought I'd put out there that this does not, in any way, match the feeling I've gotten from my interactions with farmers. While the season was yucky throughout the midwest, as well as dry in the prairies, the final totals weren't too far off. I can respect his conclusions given the reports he was reading, but I'm more concerned about the upcoming year, given the weird weather we had all winter. Extra snow in many areas (perhaps delaying planting), little snow in the prairies (Drought Watch - but don't get too concerned about all the red as there's always minimal precipitation in the prairies over winter), and the El Nino throughout the spring. Either way, it is shaping up to potentially be a roller-coaster of a weather market this year.

But I haven't seen anything indicating a catastrophic food crisis for 2010, as of yet. Not unless the markets go bonkers.

I don't think there is a conspiracy. Just a group of greedy, immoral, borderline sociopaths who have bought themselves a government. BB, and his kind are not evil. They are theorists who bet their professional lives on a set of ideas that they are going to ride into the ground before they ever admit they were wrong.

noob goldberg wrote:

I kinda felt the same way reading this link last night:
Market Skeptics: *****2010 Food Crisis for Dummies*****

Here's how we deal with the "yellow threat":

in an effort to preserve their economic growth, were unleashing domestic consumption long constrained by inflation fears, and demand for raw materials, especially food staples, exploded as Chinese consumers worked their way towards American-style overconsumption, prodded on by a flood of cheap credit and easy loans from the government.

Kill 'em with our own lifestyle

lawyerliz wrote:

Longest what?

BB is MacArthur marching to the Yalu because he believes in a set of assumptions. They will deny any data disproving the validity of their beliefs until they get their asses handed to them or get fired.

I guess these aren't affected by commodities prices.

the ppi numbers were mostly down due to energy. that will change in march.

Food prices were up again for the 5th straight month.

Food inflation in India is becoming a problem.

And China says they will have inflation under control because they are expecting a bumper food crop this year. If that doesn't happen, food prices should be interesting.

World bank telling China to let the Yuan appreciate now too.

Cinco-X wrote:

As I mentioned (last thread?), the cost of borrowing money is affected not only by supply but also by demand. If there is little or no demand for loans (and this is what we've been seeing for consumer debt), what is going to drive up the price of borrowing?

It's not "driving up the price". It's at what point the price reflects the true cost.

We know that sub-5% isn't the true cost of 30-year mortgage debt. If it were, Bernanke and crew wouldn't have had to spend a trillion-plus dollars buying MBSs.

So that leaves two questions - what is the true cost, and will TPTB allow anything resembling price discovery?

I can buy an argument based on a "no" answer to the latter, but not one based on a "maybe this is the true cost" answer to the former.

Mook wrote:

The price of debt is so far below its true cost that it's not even funny.

They can't stop, or the ponzi scheme fails.
Eventually, the game will be over, but for now the illusion and delusion is helping j6p buy his next Jet Ski.

"None of his actions, public statements and the results of his actions indicate anything other than defensive firefighting actions."

Kool-aid mentality... let's face it, the system owns the market at higher prices based on two things...leveraged bets and free money to enable those types of bets. And you're saying that they are just reacting?

The sum of the pieces is what is destroying the middle class.....if I can see it (and others do as well)....certainly they do too. Saying that there is no statement of it is just a bit too cute...they know EXACTLY what the end game is.

Ciao
MS

Good morning

Probably 1/2 the houses in Az are 30% to 60% underwater. Even properties that were purchased prebubble or with 20% down are underwater. Many will not have equity if the debtor pays in full over the life of the loan.

Most of these loans will not quaify for a mod. Un/underemployment is high here. Wages are down about 30% across the board.

Why would they stay? Why would they continue to pay on the loan?

lawyerliz wrote:

can't go on.

What will stop it?

steelhead wrote:

All that is needed is a 9% marginal tax rate on all personal assets over $3 million dollars.

steelhead wrote:

All that is needed is a 90% marginal tax rate on all income over $3 million dollars.

When your average grocery trip costs $5000, that means everyone pays the top marginal rate?

Cinco-X wrote:

no more people who are willing and able to gorge themselves on more debt.

I doubt that is the case- I think it is more that extension of credit now requires more than a pulse. I have no doubt that if lenders went back to their free wheeling ways that the masses wouldn't hesitate to go deeper into debt. I see no evidence of the new so called frugality. The savings rate of 3.3% is in actual fact probably lower than it was when the rate was close to zero. Back then peoples stocks and home prices were rising plus I think given how well the people at the top have done in the last year my guess is that most of the savings are happening at the top .

lawyerliz wrote:

I'm notv up to color of title at the moment.
Perkoset.

Liz, you are really cute when you are stoned.

Black Star Ranch wrote:

.....Not that it has any relevance, but, I wonder what the Jews and Gypsies discussed during their last train trips in Europe during the early 1940s?

One step back from where you asked: I knew a fellow that escaped Krystalnacht, and then his family picked up and left. I asked why everyone else didn't also leave, and he answered: Because they believed it couldn't get any worse.

Edit: Excuse my german spelling, or lack thereof.

One family's nightmare struggle to keep their home - MarketWatch

more fodder on topic

From the just passed "jobs" bill: (the last sentence says it all)

The bill which passed Wednesday contains about $18 billion in tax breaks and a $20 billion infusion of cash into highway and transit programs. Among other things, it exempts businesses that hire the unemployed from paying the 6.2 percent Social Security payroll tax through December and gives employers an additional $1,000 credit if new workers stay on the job a full year. Taxpayers will have to reimburse Social Security for the lost revenue.

Ciao
MS

lawyerliz wrote:

Perkoset.

"Mars is amazing!"

josap wrote:

Probably 1/2 the houses in Az are 30% to 60% underwater. Even properties that were purchased prebubble or with 20% down are underwater. Many will not have equity if the debtor pays in full over the life of the loan.
Why would they stay? Why would they continue to pay on the loan?

In metro Phoenix? Honestly, it beats me.

I was the first person I know of to go on record as predicting that (absent rampant Fed-engineered inflation) houses in the Phoenix exurbs will never again reach their peak prices.

Not real prices - nominal prices.

Energy and water costs will make those places unlivable long before they appreciate the 150% to 250% from current levels that would be required.

enough for you?

Mook wrote:

We know that sub-5% isn't the true cost of 30-year mortgage debt.

Might that depend on your opinion of future deflation/inflation?

Mook wrote:

In metro Phoenix? Honestly, it beats me.

The last people who tried to live there eventually reverted to cannibalism.
It has never worked out well.

some off the books people might get on the books for a while.

Black Star Ranch wrote:

.....Not that it has any relevance, but, I wonder what the Jews and Gypsies discussed during their last train trips in Europe during the early 1940s?

Very relevant IMO. I imagine the thoughts were the same as the boiling frog or American taxpayer. A little erosion of rights, slow boiling, etc. "How could such little things get so out of hand?" "At least things can't get any worse."

Cinco-X wrote:

Perhaps everyone should rethink boosting boosting taxes "only" on those making more that $250k? That might be the bulk of us soon....

I don't see that happening with the drop in wages currently. In inflation years wages didn't keep up, so I don't expect it to occur if we have the same in the future.

Rob Dawg wrote:

"Mars is amazing!"

That was LOL funny.

more on the subject, some very good advice actually.

Before You Walk Away From Your Mortgage, Read This - WSJ.com 

lawyerliz wrote:

I'm not up to color of title at the moment.

I'm going to have T-shirts made.

S.

Martin Wolf: China, Germany Commiting World to Deflation « naked capitalism

The last people who tried to live there eventually reverted to cannibalism.
It has never worked out well.

Mexican food?

"In 2006, when growth peaked, about 30 percent of the Phoenix area’s economic output was tied to real estate and construction."

From ghostface... link

nova wrote:

They are theorists who bet their professional lives on a set of ideas that they are going to ride into the ground before they ever admit they were wrong.

That sounds very Republican of them...

ghostfaceinvestah wrote:

some very good advice actually.

Seems to be saying that filing BK is the way to go.

Blackhalo wrote:

That sounds very Republican of them...

You misspelled Keynesian.

BH,

That sounds very Republican of them...

More like human to me.

One of the reasons why I believe it's so important to understand why certain decisions are being made is that I believe "keeping the system going at any and all costs" can be more damaging then "doing it to make money for my wallstreet buddies"

the worst behaviour tends to come from the mindset

"I want result x, what do I need to do to get that result?"

Even if I were the type: The profits would go to the employment lawyers if just one lawsuit were filed.

Really: The subsidy is much like the FTHB subsidy. It will cost a shedload more per honest head hired than anybody has yet published.

posted above. 3 years and sale not set yet in faCT, SUMMARY JUDGMENT NOt set yet. so this one will go 3 1/2 years. Only about 10% or less have actually been finished out of all my foreclosure clients.

nova wrote:

"In 2006, when growth peaked, about 30 percent of the Phoenix area’s economic output was tied to real estate and construction."

...60% was tied to roadside taco stands, and the other 10% was tied to bilking old people.

poic-

and at some point you know someone said "do you realize what that does to middle-income people"...........if not at the highest level you can bet it was discussed. It's alot like the people who make bombs who then complain that they could actually be used to kill someone.

Ciao
MS

josap wrote:

I don't see that happening with the drop in wages currently. In inflation years wages didn't keep up, so I don't expect it to occur if we have the same in the future.

That comment was predicated on the previous comment:
When your average grocery trip costs $5000, that means everyone pays the top marginal rate?
Comment by sm_landlord from thread 'LA Times: More 'strategic defaults''

Get well soon.

Glod bless America! From a real estate website...

Getting The Down Payment
For Your Buyer

by Steve Cook

As most of us know, one of the toughest things to overcome for our buyers is the down payment. Especially when that down payment needs to be verified.

I have on two occasions now successfully overcome this problem both legally and ethically. This is how I do it:

As I get calls from prospective buyers, I find out how much money they have to put down. When I have someone who seems to be credit worthy but does not have down payment money, I tell them about my "earn your down payment program."

I ask my prospective buyers if they are handy. If they say "yes," I ask if they would want to do work to their own home on the weekends and I will pay them for their work. I tell them that I will put the money into an account for their down payment. Actually I write a check out to them stating that it is for repairs. I go with them to my bank as they cash the check and buy a cashiers check to give back to me. We make a copy of the check I wrote to them to verify their earnings and a copy of the check they gave back to me for down payment to establish a paper trail.

He goes on...I love this country.

hgfj wrote:

I take a different stance than most on this apparently. For this man and many like him, it is strictly a "business" decision to walk away; corporations do it all the time, or renegotiate their contract.

It'll simply be a business decision when states walk away from their pension obligations, too. But I'm sure he won't take that business decision the same way.

Juvenal Delinquent wrote:

Should hyperinflation hit us like it did Mexico, where will all the American Financial Freedom Fighters end up immigrating to?

By then every American will hold his or her savings in gold and silver, so there will be no need to immigrate.

adornosghost wrote:

while a dem will feel sorry for you, but still walk away.

I dunno, my recollection of Dem actions, is that they are more likely to resign in defeat, when an idea turns out to be a bad one or get busted in a scandal.

adornosghost wrote:

Not much difference between dems and repugs. If you are hurt and lying in the street, a repug will kick you in the face while drinking a martini and laughing, mentioning that you should pull yourself up by your bootstraps, while a dem will feel sorry for you, but still walk away.

There's the old story of the two liberals who, while on a walk, came across a poor fellow lying in a ditch after being beaten mercilessly and left in a ditch after being robbed. The one liberal says to the other, "We need to find the person who did this; he needs help"!

Charles Kiting wrote:

It'll simply be a business decision when states walk away from their pension obligations, too. But I'm sure he won't take that business decision the same way.

Lender beware... Yep, rates are too low.

no, but this stupid laptop does. I.m used to looking at the screen not my hands and since I'm only using one fingere, I don't see my typing mistakes. It's little and new and cute and I hate it.

Great quote:

"Yves here. This battle of wills is rooted on every front in domestic politics, plus a collective inability to recognize that our current version of globalization is no longer workable. But we appear likely to test the current system to destruction rather than come up with less drastic ways out. "

Completely agree.

lawyerliz wrote:

It's little and new and cute and I hate it.

Sounds like a kitten. Just put it in a bag and throw it in the river. Problem solved.

We know it doesn't. The Fed is keeping it artificially low. The only question is by how much.

The issue might be what will treasuries do when Ben quits buying. I'm on board with CR's thoughts regarding the spread between the 10year and 30 year mortgages. The Christmas Eve line of credit for 3 years from the Treasury Department to cover any agency losses booted the problem to treasuries (for now). Bill Gross has said that he sold ben his mbs and recycled them into treasuries (Krugman said china did the same). According to that Morgan Stanley chart, in 2009 new issuance of government debt (treasuries and agencies) net of FR purchases only had to find a home for $200 billion with private investors. In 2010 private placement needs to be over $2 trillion (after factoring out ben's purchases the first three months). Unless the stock market rolls over and money is herded into bonds I don't see how treasuries (and agencies) can not rise absent QE. And you are right - 'the only question is by how much'.

However, I'm in the deflation camp (for now) and expecting a so I don't think rates will rise as much as many here think.

rosethorn wrote:

Great quote:
"Yves here. This battle of wills is rooted on every front in domestic politics, plus a collective inability to recognize that our current version of globalization is no longer workable. But we appear likely to test the current system to destruction rather than come up with less drastic ways out. "
Completely agree.

Great synopsis too:

China and Germany are, of course, very different from each other. Yet, for all their differences, these countries share some characteristics: they are the largest exporters of manufactures, with China now ahead of Germany; they have massive surpluses of saving over investment; and they have huge trade surpluses.

Both also believe that their customers should keep buying, but stop irresponsible borrowing. Since their surpluses entail others’ deficits, this position is incoherent. Surplus countries have to finance those in deficit. If the stock of debt becomes too big, the debtors will default. If so, the vaunted “savings” of surplus countries will prove to have been illusory: vendor finance becomes, after the fact, open export subsidies.

Fire all but your most key employees, replace them with the unemployed, and cash in on the 6.2% competitive advantage with a 1000K/bonus!

Plan B: Go out of business, sell the fixed assets to your new company, new company hires your employees FTW.

Yes. To all of the above. Anyone out there who thought your job was secure; you are about to be replaced by a new guy for the 6.2 spread and a 1k bonus.

And that's a change you can believe in!

(It will be somewhat inefficient for the little guys to game it this way, but the BigCorps of the world will be all over this.)

The pool of unemployed and the pool of employed will swap some individual members of the sets, but the overall volume of the pools will remain constant. The plan does nothing to create demand for MORE TOTAL EMPLOYEES, which is the only number that is actually relevant.

Another Epic Fail.

I am starting to enjoy the gamesmanship on display. Go ahead, .gov, whatchu got next?

Yep, It's not like he has tenure...

Joseph Shull. Title: Online Instructor, Marketing at AIU Online and Everest College

Don't know my opium based pain killer, tell it tell it tell it. Don't have time to google, paint and keep up on CR.

Sen. Hatch stated last night there is 1700 federal programs in the health care plan, could be a program or two for re underwater.

Irvine Housing Blog - Irvine Real Estate and Irvine Homes - One Defaulting Owner’s Free Ride: Three Years and Counting

* The owner of today's featured property paid $465,000 on 10/23/2003. She used a $372,000 first mortgage, a $93,000 second mortgage, and a $0 down payment.
* On 12/30/2004 she refinanced into an Option ARM for $486,500.
* Two months later on 2/3/2005 she opened a HELOC for $67,000.
* Total property debt is $553,500 plus 3 years of missed payments, negative amortization, and fees.
* Total mortgage equity withdrawal is $88,500.

Consider what this woman accomplished:

1. She put no money into the transaction. None.
2. She extracted $88,500 in just over one year. That is nearly the median income in Irvine, and that money came to her without tax withholding.
3. She has lived in the property since 2003, and in the full term of ownership, she has not made payments totaling what she pulled from the property.

ghostfaceinvestah wrote:

She has lived in the property since 2003, and in the full term of ownership, she has not made payments totaling what she pulled from the property.

She is a bando. A good one at that. I bet she steals cable, too.

Feckless Ness wrote:

That's a chilling statement.

He had a gentle manner about him too, which made it even more scary when he told me.

black dog wrote:

However, I'm in the deflation camp (for now) and expecting a so I don't think rates will rise as much as many here think.

What makes a double dip and deflationary period incompatible with a +135bps Treasury/Mortgage spread?

JP wrote:

Even if I were the type: The profits would go to the employment lawyers if just one lawsuit were filed.

The problem is that the incentives to abuse the program are there, and if a competitor is able to do it profitably and take market share from you... some one less scrupulous might be enticed. Inch by inch, pretty soon everyone is doing it.

freudian slip Elvis?

Re: BB and the middle class.

It's about neo-liberalism. Neo-liberalism is why NAFTA was passed, but it goes all the way down to why tens of thousands of cell phones are packaged with shrink-wrap and then have to be separated into bins in your kitchen. I really don't think BB sits around and talks with other Fed members about the middle class. It's not his job. But it's not a conspiracy, either.

some investor guy wrote:

In almost all states these have strong protections. They can't just walk away. They can't declare bankruptcy under current law.

What happens when the check bounces? Federal receivership?

Charles Kiting wrote:

But the ultimate lender was his pension fund.

That is totally awesome! The whole financial crisis in one microcosm.

Charles Kiting wrote:

Catch-22. He didn't need his house to be a nest egg since he had a pension. But by playing the "I want even more" game, he lost money on the house. To avoid losing money on the house, he'll walk away. So instead the lender will take the hit. But the ultimate lender was his pension fund.

That's most elegant.

Edit: Too elegant? The pension funds loss will be socialized and we're back on the carosel of extension and pretension and obfuscation.

Blackhalo wrote:

But to get access to health care, education and housing, at today's prices, debt is almost a requirement.

From earlier posts- i think the middle class has done a lot to destroy itself. What street was just the enablers not the cause of that destruction. Lets face it - the dominant theme in America is I can have everything now without any effort or sacrifice. There is no question that TPTB have been beaming this message at the middle class but at the end of the day people have free will and the choice to accept or not accept the message. What was the pressing need to increase the average size of homes or most of the junk that people have mortgaged their future for?

More specifically housing doesn't require debt only home ownership.- yet another example of people buiying into a senseless concept. As to health care requiring debt- yet another example of the mind set of something for nothing. People want access to the all the medical treatment they want without having to pay for it. Otherwise why all the furor over government run health care. Education is yet another example of the middle class contributing to their own demise. Why is it that politicians get rewarded for student loans more affordable and available rather than addressing the question of making college tuition less expensive?

Thanks Seb,

Moak if you are still on would you send me an email on your source for 4.65 fixed. Daughter is trying to finish up dream home, still in school, her hub doesn't have time to find the best rate so I will help. They already have 100k in it with no lien by the grace of glod and good parents to help.

crazyv wrote:

More specifically housing doesn't require debt only home ownership.

Are you crazy? I'm not buying a house at these prices using my OWN money! It might go DOWN in value! Plus, cheap credit allows me to leverage my put.

some investor guy wrote:

In almost all states these have strong protections. They can't just walk away. They can't declare bankruptcy under current law. Cities and counties can, but not states.

Guess we'll see how well those protections work.

Rob Dawg wrote:

What makes a double dip and deflationary period incompatible with a +135bps Treasury/Mortgage spread?

What is the current spread?

some investor guy wrote:

In almost all states these have strong protections. They can't just walk away. They can't declare bankruptcy under current law. Cities and counties can, but not states.

In Obama-speak, those laws and obligations were merely a mess we inherited from previous administrations.

Cinco-X wrote:

There's a fine line between clever and stupid-

My favorite movie line ever.

I still say this is one possible solution. Pearl's Plan To Save The Economy:

Part 1: We admit that the title to most securitized mortgages is very cloudy, at best. Any lender claiming to hold the promissory note on a securitized home loan must produce a completely unsevered, properly assigned, legally notarized original document that proves beyond the shadow of a doubt that they own the rights to the property, and that they were in full compliance of all laws and regulations in the securing, and physical possession and maintenance of said document. (This will nullify almost every promissory mortgage note signed in the past ten years.)

Part 2: Every homeowner with such a securitized mortgage on their primary residence, who is or promises to become current on their property taxes within 24 months, gets their original mortgage loan forgiven. ( HELOCs still have to be paid off.) Each one of these homeowners is then assessed a one-time windfall profit-type tax (payable over a period of time.) The one-time windfall profit-type tax will be a progressive tax—the more that is forgiven, the higher the tax rate.

Part 3: Any taxpayer in good standing that is 21 years or older who does not currently have a mortgage for a primary residence (including those who own their homes free and clear, those who have unsecuritized mortgages, those who have already lost their homes to foreclosure, and those who rent—for whatever reason) get a once per lifetime voucher for a government-backed fully assumable 30 year fixed 3.5% conventional loan up to the median price of a home in the zip code of their choosing. These vouchers may be used at any time in the next 10 years, to allow time for those who wish to qualify for a more expensive home the time to achieve their full earning potential. The vouchers for these loans will be good for a primary residence or for an investment property.

The inherent value in the assumable loans is that they will be fully assumable by future buyers of that home; thus, the financing that is attached to the particular home will increase the value of the home in the short term, as well as the long-term. The 10 year time-frame is an attempt to give the real estate market time to settle back to realistic values.

And we all live happily ever after.....

Charles Kiting wrote:

There's a fine line between clever and stupid-

My favorite movie line ever.

Certainly top 5 for me. I also like the one from yesterday:
Analyst: They call him the desert spider.
Charlton Heston: Hmmmm...I wonder why?
Analyst: Probably because it sounds scary....

Final reminiscence before bed (thanks for sharing) is from primary school: the sawdust looking stuff that janitors would throw on the barf your classmate just ralphed-- it smelled like Pepto Bismol but did allow class to continue. By the time you were back from recess, the whole mess was gone.

But who's sweeping the unsweepable here?

Pearl wrote:

And we all live happily ever after.....

I have one question; I have a decent income....enough that the USG and the State of MA feel entitled to take a substantial portion of it. I have essentially no debt. I didn't participate in this housing fiasco and have otherwise been living within my means. Does your plan involve me paying for a chunk of it?

Blackhalo wrote:

All that CREMBS... TBTF?

In the south, that's Krispy Crembs

Blackhalo wrote:

All that CREMBS... TBTF?

CREMBS Brulee - a rich custard base topped with a contrasting layer of empty strip malls. Best served cold.

Cinco-X wrote:

Rob Dawg wrote:
What makes a double dip and deflationary period incompatible with a +135bps Treasury/Mortgage spread?
What is the current spread?

25-50 bps.

oh they'll get bailed out (BBI)....look who holds the two biggest chunks:

The investment fund of noted activist Carl Icahn is Blockbuster's biggest outside shareholder, owning 10.8%, or 13.2 million shares. Goldman Sachs owns 12.1 million shares, or 9.9% of Blockbuster's common stock, according to regulatory filings.

Ciao
MS

Rob Dawg wrote:

Rob Dawg wrote:
What makes a double dip and deflationary period incompatible with a +135bps Treasury/Mortgage spread?

[current:] 25-50 bps.

I feel like there will be limited demand for home loans for awhile, unless hyperinflation kicks in. 135bps; that 1.35%? Maybe, but if treasury rates rise, you might actually see the spread get even smaller. It may very well be that banks revert to their old ways of making money; by loaning it out and collecting interest. That would obviate the need to secutitize, and a potential decrease in the supply of MBS could keep those rates low for a period as well.

crazyv wrote:

Blackhalo- you are the one who said that for housing debt was a requirement.

Well, I said AT THESE PRICES it is ALMOST a requirement to use debt for these items. The implication that I was trying to make being, that the debt perpetuates the high prices. Of course you don't HAVE to go into debt, but AT THESE PRICES it seems foolish to use your own money.