Like any business, banks adjust their business plans quarterly based on both internal and external forces. Internally, banks respond their need for additional capital to fund operations. Externally, they cope with a declining housing market, recent regulatory changes, and new conditions imposed by the bank settlement. When banks adjust their business plans, it may have sudden and dramatic effect on their policies. In the first quarter of 2012, the major banks which control most California REO dramatically reduced the number of properties they purchased at auction.
The precipitous declines in REO were not due to improving borrower delinquency. Far too many people are not paying their mortgages, and banks haven’t made significant progress in reducing shadow inventory. In short, they didn’t stop foreclosing because they ran out of people to foreclose on. So why did they?
Two key developments in the first quarter changed bank policy. First, federal regulators forced banks to recognize losses on second mortgages behind a delinquent first mortgage. This caused banks to greatly accelerate their steady write downs of these loans. Over the last several years, the major banks have been writing down a certain amount of first mortgages, second mortgages, and HELOCs each quarter based on their earnings. The regulatory change forced them to take much larger write downs on their second mortgages, so they didn’t have the same capacity to write down first mortgages as they have had in previous quarters. This forced banks to curtail taking losses on first mortgages which in turn forced them to stop taking back REO and processing the sales. After banks digest the losses on the HELOCs, they will likely resume their steady write downs on first mortgages and increase sales of REO or approval of short sales.
The second key development was the agreement between the major banks and states on the Robo-signer scandal. California extorted a significant sum from the banks (which they now want to spend on other bills). To comply with the agreement, the major banks must write down billions of dollars worth of loans. Short sale losses are credited toward their settlement obligations, so lenders are shifting gears to approve more short sales. This changed the incentives for lenders toward short sales and away from REO.
With lenders unable to afford their typical quarterly write downs on first mortgages, and with their changed incentives to favor short sale processing over REO sales, the number of REOs has plummeted in the first quarter. As a result, MLS inventories have shrunk, and the market has turned from a buyer’s market to a seller’s market — at least in the short term. Perhaps 2012 will be the year of the short sale. Of course, this requires the delinquent mortgage squatter to participate, and since most are planning to enjoy the free ride as long as they can, I really don’t expect short sales to increase much. Ultimately, banks will abandon their efforts to encourage short sales and foreclose on the committed squatters.
Foreclosure Radar foreclosure report — April 2012
Foreclosure Activity Declines Hurting Investors
April 2012 Foreclosure Starts declined across our coverage area wiping out the small gains in new foreclosure filings last month. In California, Notice of Default filings are down 69.8 percent from the peak in March 2009, and 15.8 percent from April 2011. Notice of Trustee Sale Filings, the start of Arizona’s foreclosure process, are down 59.4 percent from the peak in March 2009, and down 8.0 percent year-over-year.
Foreclosure Sales also declined, however, foreclosure investors purchased a record percentage of the limited inventory that was actually sold. Nevada investors purchased more than 50 percent of foreclosure sales for the first time at 50.7 percent. Arizona followed with 44.6 percent and California at 41.3 percent. The low number of sales, combined with record percent purchased on the courthouse steps left very little to become Bank Owned (REO). This further depletes the inventory of Bank Owned homes as REO sales continue to outpace the addition of new inventory.
For the last several years, lenders held the ratio of REO to third-party sales at 2:1. In February, lenders began slowing their acquisition of REO, but the number of third-party sales only declined fractionally. As a result, the number of third-party sales is set to overtake the number of REO sales. It’s unclear exactly how lenders intend to process their bad loans, but taking on additional REO doesn’t seem to be part of the plan. Perhaps they will approve more short sales, but there is little evidence of that so far. What is certain is that many more squatters will be given additional time in their free houses.
Banks took back 50% fewer REO in April than they did in January.
Despite investors purchasing a higher percentage of foreclosure sales, margins have rapidly declined in recent months. In both Arizona and Nevada winning bids on the courthouse steps on average equal the current estimated value of those properties. In California the discount between market value and winning bid have on average declined to 12.3 percent. This leaves investors who intend to resell their purchases with record low profits after eviction, repairs, and closing costs.
Flipping is on the decline. Aggressive bidders are buying properties for two reasons: first, many believe the bottom is in, and they don’t want to miss the bottom tick. There are many fools chasing the market higher. They may be very disappointed when the inventory liquidation resumes. Second, many new buyers operating on a buy-and-hold business model are acquiring properties, and they don’t need a flip margin to operate. This new demand coupled with reduced supply is causing auction prices to rise significantly.
“Foreclosure declines would be wonderful news if they were being driven by a true market recovery in which hundreds of thousands were no longer unable to make payments, and millions were no longer upside down. That is not the reality today. Instead we are seeing unprecedented government intervention into the foreclosure process leaving underwater homeowners in limbo, while stealing opportunity from investors and first time buyers.” stated Sean O’Toole, Founder & CEO of Foreclosure Radar. “California’s pending legislation, which is similar to laws we previously saw enacted in Nevada, will almost certainly bring foreclosure activity to a near halt there if passed. The reality is that these laws don’t solve anything as they fail to address the real problem – negative equity – while instead they punish real estate professionals, homebuyers, and investors far more than the banks they were aimed at.”
Sean is being kind suggesting “homeowners are in limbo.” It’s more accurately stated as, “delinquent loan owners continue squatting.” This is unquestionably stealing opportunity from investors and first-time buyers. Sean’s statement that the banks aren’t addressing the problem with negative equity isn’t accurate. Banks are addressing the problem. They hope they can force prices higher by withholding inventory. Banks are intent on solving the problem with negative equity by raising prices rather than writing down debt. I can understand their desire, but it won’t work.
This summer lenders will discover that buyers cannot raise their bids due to prudent lending standards. Buyers are limited to loan amounts financeable by verifiable incomes. Plus the recession and foreclosure depleted buyer pool will continue to dampen demand. Basically, prices will not rise as lenders hope, and transaction volumes will begin to taper off due to lack of supply, and the high end will continue to languish due to a lack of a move-up market. We will see another failed attempt to force prices to move higher.
Ponzis infested the high end too
Ponzi borrowing was considered sophisticated financial management during the housing bubble. It’s understandable that the poor took the free money and spent it. That’s their pattern. That’s why many are poor. However, people of greater means also went Ponzi. Like the poor, they simply wanted to live beyond their means and spend more than they earned, and like their subprime brethren, it blew up in their faces as well.
- The owners of today’s featured property paid $1,250,000 on 4/13/1998. Their original loan information is not in my records.
- On 8/21/2000 they obtained a 75,000 stand-alone second.
- On 9/19/2001 they refinanced with a $1,162,500 first mortgage.
- On 2/19/2004 they obtained a $200,000 HELOC.
- On 3/1/2005 they refinanced with a $1,500,000 first mortgage.
- On 4/12/2005 they got a $110,000 HELOC.
- On 9/13/2006 they opened a $426,700 HELOC.
- On 4/10/2007 they refinanced with a $1,590,000 first mortgage.
From the smallest condo to the most upscale mansions. HELOC abuse was everywhere during the housing bubble.
Santa Ana Overview
Median home price is $264,000. Based on a rental parity value of $381,000, this market is under valued.
Monthly payment affordability has been worsening over the last 1 month(s). Momentum suggests unchanging affordability.
Resale prices on a $/SF basis increased to $202/SF to $204/SF.
Resale prices have been falling for 12 month(s). Price momentum suggests falling prices over the next three months.
Median rental rates declined $133 last month from $1,733 to $1,600.
Rents have been slowly rising for 1 month(s). Price momentum suggests unchanging rents over the next three months.
Market rating = 10
Proprietary OC Housing News home purchase analysis 
1412 STANFORD Ct Santa Ana, CA 92705
$1,549,000 …….. Asking Price
$1,250,000 ………. Purchase Price
4/13/1998 ………. Purchase Date
$299,000 ………. Gross Gain (Loss)
($100,000) ………… Commissions and Costs at 8%
============================================
$199,000 ………. Net Gain (Loss)
============================================
23.9% ………. Gross Percent Change
15.9% ………. Net Percent Change
1.5% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$1,549,000 …….. Asking Price
$309,800 ………… 20% Down Conventional
4.25% …………. Mortgage Interest Rate
30 ……………… Number of Years
$1,239,200 …….. Mortgage
$309,439 ………. Income Requirement
$6,096 ………… Monthly Mortgage Payment
$1,342 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$387 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$168 ………… Homeowners Association Fees
============================================
$7,994 ………. Monthly Cash Outlays
($1,368) ………. Tax Savings
($1,707) ………. Equity Hidden in Payment
$473 ………….. Lost Income to Down Payment
$214 ………….. Maintenance and Replacement Reserves
============================================
$5,606 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$16,990 ………… Furnishing and Move In at 1% + $1,500
$16,990 ………… Closing Costs at 1% + $1,500
$12,392 ………… Interest Points
$309,800 ………… Down Payment
============================================
$356,172 ………. Total Cash Costs
$85,900 ………. Emergency Cash Reserves
============================================
$442,072 ………. Total Savings Needed
——————————————————————————————————————————————-
We're sorry, but we couldn't find MLS # U12001905 in our database. This property may be a new listing or possibly taken off the market. Please check back again.
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$1,899,900 10072 HIGHCLIFF Dr |
0.06 miles 6 bd / 4.75 ba 6,055 Sq. Ft. |
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$1,224,900 9942 FOXRUN Rd |
0.14 miles 6 bd / 4.25 ba 4,500 Sq. Ft. |
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$2,675,000 1292 KINGS CROWN |
0.18 miles 5 bd / 6.5 ba 6,700 Sq. Ft. |
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$2,050,000 9922 HIGHCLIFF Dr |
0.27 miles 5 bd / 4.25 ba 4,852 Sq. Ft. |
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$2,099,900 10071 SUNRISE Ln |
0.31 miles 7 bd / 6 ba 7,286 Sq. Ft. |
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$2,995,000 10042 RANGEVIEW Dr |
0.33 miles 5 bd / 5.25 ba 7,000 Sq. Ft. |
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$2,490,000 9902 RANGEVIEW Dr |
0.42 miles 5 bd / 4 ba 4,835 Sq. Ft. |
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$1,275,000 9801 OVERHILL Dr |
0.76 miles 6 bd / 4.25 ba 4,083 Sq. Ft. |
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$1,550,000 19672 PINE CANYON Rd |
0.89 miles 5 bd / 4.5 ba 5,730 Sq. Ft. |
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$1,599,900 494 North EQUESTRIAN Dr |
1.11 miles 4 bd / 4.5 ba 5,006 Sq. Ft. |
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Tonight’s cashflow presentation is canceled.
I apologize for the late notice and any inconvenience, but tonight’s cashflow presentation is canceled. Right now it is very difficult to find investment properties in Las Vegas as the inventory had really dried up — at least temporarily.
36 Responses to “California bank repossessions continue to plummet, squatters rejoice”
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Well, I started my refi process. I’m trying to get a 15 year loan. My DTI is 10% on this loan and I have barely (really hoping) 50% equity. However, Wells requires that last 4 years of tax returns.
You must be self-employed?
W-2, 08, 09, 10, and 11. I’m also an existing Wells Fargo borrower.
The lack of inventory is starting create problems for sales, just as expected. Also as expected, CAr puts optimistic spin and bullshit in their report.
California Sales Drop Due to Lack of Inventory
The California Association of Realtors (C.A.R.) reported Tuesday that, although pending home sales in the state fell from March to April, other statistics indicate a good start for the housing market.
C.A.R.‘s Pending Home Sales Index (PHSI) fell from a revised 138.9 in March to 128.0 in April. This index was nearly 14 points higher than the revised 114.4 index from April 2011, marking the 12th consecutive month that pending sales were higher year-over-year. Pending home sales figures are often used as an indicator of the market’s future direction.
C.A.R. speculated that the drop in pending home sales from March to April may be attributed to inventory.
“Inventory constraints could be a contributing factor to lower pending sales,” said LeFrancis Arnold, president of C.A.R. “The tight inventory we’ve been experiencing in the distressed market over the past several months is now spreading to equity properties, essentially affecting the supply conditions of both the distressed and non-distressed markets.”
The share of equity sales (non-distressed property sales) compared with total sales increased to 58 percent in April, its highest level since July 2008. This figure is up from March’s 54.5 percent and last year’s 52.3 percent.
Shares of distressed sales (composed of foreclosures and short sales) in California decreased in April to 42 percent, down from 45.5 percent in March and 47.7 percent the previous year. The share of short sales also declined from the previous month: 19.4 percent of distressed sales were short sales, a drop from 21 percent in March and slightly higher than 19.1 percent in April 2011.
The share of REO sales dropped as well, moving 22.3 percent, down from 24.1 percent in March and 28.3 percent the previous year. April’s figure for REO sales was the lowest it’s been in four years.
In other data, April’s sales came in at an annualized pace of 555,300, making it the sixth consecutive month in with an annual pace above 500,000. The statewide median home price was $308,050, up 5.7 percent from March and 1.6 percent from April 2011. It’s also the first time the median went above $300,000 since December 2010.
With prices in distressed markets staying stable, C.A.R. chief economist Leslie Appleton-Young said that, inventory scarcities aside, the market got off to a strong start in spring.
“One thing is clear, we’ve got the best start for the housing sector that we’ve seen in 5 years,” she said.
If I may add IR….
NAr and CAr and trying to stop bulk REO sales in California
It’s only introduced legislation but NAR and CAR have big lobby arms, however so do the banks. Realtors hate the bulk sales since they would get no commission on bulk sales. Only commissions on individual sales.
Bill would stop bulk REO sales in California
NAR backing sponsor Gary Miller’s reelection bid
By Inman News, Friday, May 18, 2012.
California Rep. Gary Miller — who’s getting major backing from the National Association of Realtors as he runs for reelection to Congress in a new district — has introduced a bill that would put the brakes on bulk sales of Fannie Mae real-estate owned (REO) homes in the state.
H.R. 5823, the “Saving Taxpayers from Unnecessary GSE Bulk Sale Programs Act of 2012,” would prevent Fannie Mae and Freddie Mac’s regulator, the Federal Housing Finance Authority (FHFA), from implementing a pilot program to sell Fannie Mae-owned properties in California to institutional investors for conversion to rentals
“best start to housing in 5 yrs” ??
LOL
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/05-2/housing%20april.jpg
When you pick the five worst years for housing in recorded history, it isn’t difficult to show some improvement.
They are really going to have to spin hard to explain the decline in sales that is forecoming. I expect to see them rant about how appraisers are killing deals and how lenders aren’t approving enough buyers. in short, they want to reflate the bubble by eliminating prudent appraisal and lending standards.
Larry, you’ll enjoy this one..
http://www.zerohedge.com/news/pimco-vs-shilling-housing-bull-vs-bear-debate
That is a very good debate. It echos the post from last week on buying a house. Everything in the real estate market boils down to managing the distressed inventory. Can the banks successfully liquidate and keep prices up, or will their liquidations get out of control and force prices lower. That is what puts knowledgeable people (not realtors or sheeple) on opposite sides of this issue. I don’t think we will see the 20% declines Shilling predicts, but I also don’t think we have seen the bottom tick of the nominal price market either.
I think with Mark going public on his recent purchase and now trotting-out bullish into the financial media spotlight is indicative of PIMCO signaling about ready to book profits (offload RMBS accumulated over the last 18+months) They’ve had a very nice run.
Take a look at current PTTRX positions
scroll down to top fund holdings
notably, FNCL 4.5 1/12 and FNCL 4 1/12 positions.
http://www.bloomberg.com/quote/PTTRX:US
Is the RMBS rally about to run out of gas?
Time to go short is nearing
Shilling is basing his “20% decline” prediction on the Shiller chart that IR posted a week or so ago. Unfortunately, Shiller didn’t adjust for changes since January 2011 when that chart was last updated. Prices have already fallen at least 5% since then according to the Case/Shiller index, maybe more because March & April data haven’t been released yet. Add to that about 4% “official” inflation over the past 16 months and you’ve already got half the projected decline Shiller is predicting based on that chart. This strikes me as a pretty bad oversight for a nationally respected economist. Although it doesn’t surprise me that el ORACLE would buy it
Oops… I said Shiller when I meant to say Shilling a couple of times in that paragraph.
uh… nowhere in Shilling’s ‘call’ did he mention adjusted for inflation.
PS: speaking of oversight, get some sleep…..you need it
Love the first pic, might just superimpose my own face on it and send it to relatives! You’ve got to be smart and take advantage of what is being offered. Foolish underwater loan owners who won’t default….you will get your reward, more decline in prices and less time to squat when you DO decide to cut and run. By then, the tax implications will be in full effect and the worst president in the history of america will NOT allow you to escape your servitude and debt slavery. How’s that HOPE working for all the suckers out there? Uncle Tomba, worst president ever.
Have they served you notice yet? With the new slowdown in activity, you should be getting more squatting time. You may have timed your default well after all.
Swiller is an Obama hating racist on top of being a complete POS? Who would have figured?
I may not be a huge Obama fan, but I sure know he didn’t create this mess. However there is a solid argument that he helped steer us away from complete catastrophe.
Ray Dalio, fabled hedge-fund manager, says the U.S. has done a “beautiful” job delevering, (but sees a 30% chance Europe will stumble badly).
http://online.barrons.com/article_email/SB50001424053111904370004577390023566415282-lMyQjA1MTAyMDIwMDEyNDAyWj.html?mod=barrons_share_email#articleTabs_article%3D1
Obama is whore to Wall Street Bankers and the statuesque. He actually appointed that little grease ball, Timothy Geithner to head the Treasury and he reappointed The Bernank at the Fed.
Not everyone who dislikes Obama is a right-wing nut or a racist. I personally can’t stand the asshat because I think he missed the greatest opportunity to reform the system that blew-up just as he took office … a lot of people agree with me, and the sentiment is growing.
Obama will lose in a landslide come November.
Call me crazy, but I consider Uncle Tom a racial epithet. I have no issues with anyone making their case against Obama (not a fan myself), but if you want to be taken seriously you aren’t doing yourself favor calling someone an Uncle Tom.
A whore to Wall Street Bankers? Sure. I hope you aren’t implying the Republicans are any better? They started us on this path decades ago, cumulating with the disaster Bush presided over. The fact that anyone can call Obama the worst president ever (especially over Bush) just screams of myopic, bipartisan hatred.
The Republicans are puppets of Wall Street and the military industrial complex, just like the Democrats.
“I personally can’t stand the asshat because I think he missed the greatest opportunity to reform the system that blew-up just as he took office”
That sums up my feelings exactly. He blew his chance at real reform. He could have been the next FDR, but he sold out to banking interests in hopes of getting reelected.
I don’t believe Romney wins by a landslide. If he picks a doesn’t go all Christine O’Donnell evangelical with his running mate selection like McCain did, then I think he’s got an excellent shot.
Obama barely won Florida in 2008, but he utterly destroyed McCain/Palin in key swing states like Ohio, Pennsylvania, Wisconsin and Michigan. I read today polls showing Romney ahead of Obama in Florida.
What I remember was that in 2008 the economy was also very shitty. It seemed to me that millions of Americans didn’t vote so much FOR Obama as they voted AGAINST McCain/Palin.
America is changing fast. If Republicans were serious, they’d drop the moral majority b.s. and focus on what really matters to all Americans: sound money and the economy.
Obama has been consistently leading in the polls which is very bad news for Romney.
http://www.realclearpolitics.com/epolls/2012/president/us/general_election_romney_vs_obama-1171.html
Look at the historical graph and Romney has never led other than a couple of short blips last Fall. Now with an improving economy and housing market, Romney’s argument that he would be the better President for the economy just isn’t resonating.
Clueless,
No name calling please.
Swiller and his opinions are welcome in this forum. I rather enjoy reading his comments. You can feel the rage he has for his circumstances. Granted, he isn’t always selective where he vents his rage, but that’s part of the package.
What about my rage? The rage I have seeing the dummy’s who got in over heads now cheating the system while the rest of us pay for it. The rage I have by getting bent over the barrel by the tax man to help out irresponsible, greedy borrowers?
The rage I have about being a responsible saver who has to deal with way to much risk for measly returns in every investment class I can think of?
Don’t worry IR – my rage is directed to the banks, Wall Street and the government too, they are all equally at fault.
But irresponsible homeowners who gloat about squatting deserve just as much venom. They are asshats…who should just shut up rather brag about how we are paying for their free rent.
Frankly, I would do what Swiller is doing if I was stupid enough to put myself in that situation. It is indeed the right financial decision. However I would hope to have the class and dignity not to broadcast to the world how they are transferring the financial burden of their dumb mistakes onto the rest of us.
You can vent your rage, that’s what makes the astute observations interesting. Just don’t directly call anyone names. You did that with your first statement.
Arguing amongst the folks is exactly what the bureaucrats want, as it is distractive and divisive.
Reality:
1) at the core, both parties are essentially the same; exist predominately to serve the FRBNY.
2) at the surface, public policy rhetoric differentiates the 2 parties; nothing more.
3) only those who have a lobbyist are represented in the US.
First divide, then conquer; ie., see history. Sad really.
IrvineRenter – Has the drop in foreclosures hurt your business in Las Vegas?. I imagine the lack of inventory driving prices up would make the pickings slim.
Yes, that is exactly what is happening. I am putting the last of my idle money to work and hunkering down to see what happens when they start releasing inventory.
Just one more post today….
Click the article to look at the graph.
O.C. home prices triple U.S. costs
An Orange County house once again costs triple what an typical American homebuyers pays.
I’ve long tracked a curious ratio: What local homes are selling at, using National Association of Realtor data, compared to the overall U.S. median price. My “Orange Premium” tracks what we pay extra to live here.
Using this Realtors home-price data, we see Orange County’s latest median of $484,860 compares to $158,100 nationwide. So, one could buy one median-priced Orange County single-family house or 3.07 houses at the national median in the last quarter. The Orange Premium had dipped below triple — well, 2.99 — in the previous quarter for the first time in five quarters.
It’s more that just another statistic. One could argue that the high premium reflects high local housing costs and makes other parts of the country look cheaper — no small factor when family budgets are stretched.
The premium is by no means a fixed measure. Since 2008, Orange County homes have averaged a 2.89 “premium” — while from 1982 to 2007, that premium averaged 2.33 — by this same math.
This U.S.-to-O.C. home-price benchmark hot a peak of 2.70 in 1989, just before that cycle’s real estate ugliness. It then hit a bottom at 1.84 in 1996. In the next homebuying mania, this premium reached 3.41 in 2004 before tumbling back down to 2.58 in 2008′s fourth quarter.
The premium grew in recent years as local price appreciation dwarfed gains from elsewhere: Home prices, by Realtor math, rose at an 7.0% annual rate from 1982 to 2007 vs. 4.8% nationwide.
The premium has remained stubbornly high since the big real estate bust. That’s because both local and national markets have suffered in the downturn. Orange County home prices have fallen 5.3% in a year and 18.9% in four years. The national median price dropped 0.4% in a year is off 19.4% in four years.
Here we go again…
AIG ventures back into subprime mortgages
NEW YORK – American International Group, the insurer that needed a $182.3 billion bailout from the U.S. government in 2008 after failed mortgage investments, is betting this time it’s different.
CEO Robert Benmosche has increased non-government-guaranteed residential and commercial-mortgage backed securities holdings by $11.1 billion since 2010 to $28.4 billion at the end of March, according to regulatory filings. The New York insurer has acquired debt sold by the Federal Reserve that the central bank acquired from AIG when the company was rescued, including $600 million of commercial-mortgage backed securities last month.
AIG, which is also bolstering its unit that insures home loans with low down payments, is wagering that a 35 percent plunge in property values, cheaper prices for the securities and fewer competitors justify returning to investments that four years ago required the government to step in when it was unable to meet margin calls to banks.
“This is massively illiquid, underloved asset risk that’s actually really attractive,” said Josh Stirling, an analyst with Sanford C. Bernstein. “The one thing this doesn’t do for AIG is help simplify the story.”
Jim Ankner, an AIG spokesman, declined to comment.
Benmosche is targeting debt that may yield in excess of 10 percent as the Fed pledges to hold interest rates near zero through 2014 to bolster the economy and help lower the 8.1 percent jobless rate.
Fed policymakers and Europe’s debt crisis have pushed down benchmark bond yields to below 1 percent, weighing on returns at insurers and forcing them to buy lower-rated or longer-duration securities to maintain profits. AIG has put more cash to work after repaying most of its bailout funds, regaining access to capital markets through debt and equity sales and having its outlook lifted by ratings company A.M. Best.
It reported pretax investment income of $7.1 billion in the quarter ended March 31, a 28 percent increase from a year earlier. That was the most AIG earned from its holdings since 2007 before the financial crisis.
Pressure to generate profit from bonds held to back claims has increased as the company’s property-casualty insurer Chartis posted underwriting losses in 2010, 2011 and for the first quarter of this year, meaning the business spent more on claims and expenses than it earned in premiums.
With JPMC getting burned with essentially betting in the equity markets and now AIG venturing back into sub-prime, I’m swiftly reminded of Proverbs 26:11
“As a dog returns to it’s own vomit, so a fool repeats his folly”.
Absolutely. There are no substantive barriers preventing us from repeating the mistakes which brought the economy down in 2008. We are reflating a housing bubble, and allowing too-big-to-fail institutions to speculate wildly with taxpayer backing.
I believe TBTF banks have no fear since their losses are your losses. If they get into trouble they go the the taxpayers on the fed. If they get their bailout then they hit the airwaves saying the whole economy will go under if they don’t get their bailout. They push fear, it’s one hell of a business model, sort like the S&L of the 1980′s.
I think you are right, it will happen again to some degree. I wish we can return to pre-1980′s banking regulations and get Fannie and Freddie off the US books and finally off the US support system. But argument has been politicized, so now it’s a right and left issue.
The S&L bailout of the 80s was the watershed event that set us up for the credit rampage and subsequent bailouts of subsequent years.
People then pointed out that a huge moral hazard was being created, but those who pushed for the bailout said it would not be allowed to happen again.
Yeah, sure.
The Long Term Capital bailout, which was much larger, was the signal that we would never fail to rescue “too big to fail” institutions whenever their risks got them into trouble. And when Glass-Steagal was repealed right afterwards, the ensuing credit rampage and collapse was inevitable.
[...] If it was really that hot of a market the banks would be selling these on the court house steps during the auction. However, when the bank do reposes the house they usually don’t place the house on the market. So, it’s that these homes are a hot item it’s that the banks don’t want to flood them on the market pushing down prices. [...]
Typical “blame the home owner” article. I would bet thaqt 80% of all people who stop paying their mortgage tried to work out a deal first. Reductiuon in principal? Forget it. They will give that deal to a stanger but not to you. By the way- if your squatting you don’t own the house, so the entire premise of this article is junk….
Uh….what does squatting have to do with it?
if you have a mortgage, you don’t own the house either; you’re a renter! (rent the capital needed to buy). But…. you do own the obligation to pay for insurance, mort insurance, structural upkeep, other repairs and to pay prop taxes. LOL
BTW, if you happen to be mortgage-free, the only thing you own is the structure built on the land you lease from the local taxing authority.