The desire to push defaulting homes into shadow inventory and keep them off the market is manifesting itself into new programs. Let’s briefly review, remember when banks didn’t want borrowers to default and when the borrower defaulted, banks had very strict guidelines to get out default and back into the good graces of the bank? Banks didn’t even want to publicize the fact they were having defaults or foreclosures to give appearance of financially soundness of their institution. Now banks in conjunction with Fannie Mae and Freddie Mac are giving defaulted loanowners virtually an automatic enrollment into a new loan [Read More...]

The suppression of the housing inventory has resulted in some interesting home construction. The lenders have suppressed many homes from entering the market place. They have become shadow inventory and currently there are about 5 million of them. Most media organizations have even lost interest in reporting these numbers. The lack of existing home inventory has generated a lot of demand even with a small pool of buyers. Home builders have wasted no time to fill this void and started building more new homes. Within this activity there is a much smaller subset of builders that are building homes without [Read More...]

What was the tagline for Jaws 2? “Just when you thought it was safe to get back into the water”. Eminent Domain is the seizing of private property at market rates for public use for example roads, schools, and other infrastructure. Robert Shiller is to my surprise, a proponent of using eminent domain. How is purchasing a mortgage which is a security agreement between the lender and the borrower qualifies as a public use? Eminem domain just a backdoor way to force a principal balance write down on a mortgage by using local government’s police power. The principal reductions completely [Read More...]