The Federal Reserve owns 10% of all residental mortgage debt, increasing 5% per year

 NEWS
Feb 232013
 
The Federal Reserve owns 10% of all residental mortgage debt, increasing 5% per year

The Federal Reserve (US central bank) influences interest rates and by extension mortgages rates. One of their key tools is the buy or selling of bonds, it adds or subtracts money from the money supply . Since 2008 and the Federal Reserve has purchased over $1 trillion dollars worth of US residential mortgages in the form of bonds. The effect of this unprecedented mortgage bond purchasing pushed mortgage rates down to the lowest levels since the 1940′s. This $1 trillion dollar figure represents 10% of the of the outstanding residential mortgages in the US.  To explain it in another way, [Read More...]

Can you name all the bailouts to banks, homeowners, and government sponsored enterprises? It’s many more than you think

 NEWS
Dec 222012
 
Can you name all the bailouts to banks, homeowners, and government sponsored enterprises? It's many more than you think

Last week I published a post that predicted that the Federal Reserve will start bailouts by performing principal reductions for underwater homeowners. I wanted to detail exactly how did we reach that stage. So, I wanted to briefly detail the last five years of housing bailouts. It was just an impossible task to sum up in a few paragraphs due the sheer number of programs. If fact I should have have created this list first, would have made writing easy. I will attempt to name the program, the beneficiary of the program, and a brief description of the program. California [Read More...]

Federal Reserve’s policy to save housing is forcing seniors into foreclosure

 LAGUNA HILLS, NEWS
Sep 252012
 
Federal Reserve's policy to save housing is forcing seniors into foreclosure

The federal reserve controls short-term interest rates through buying and selling Treasury notes. These rates determine how much interest people earn in savings accounts, the asset class favored by senior citizens. The federal reserve lowered interest rates to zero to force money out of savings accounts in hopes this money would seek out riskier asset classes and stimulate the economy. Since seniors are risk adverse, most have left their savings in place, and those that need those savings to survive — which is most seniors — are depleting their savings accounts to make ends meet. When many seniors planned their [Read More...]

Housing bubble’s defining delusion: real estate only goes up

 HUNTINGTON BEACH, NEWS
Aug 312012
 
Housing bubble's defining delusion: real estate only goes up

The opening of The Great Housing Bubble succinctly described the real estate bubble: What is a Bubble? A financial bubble is a temporary situation where asset prices become elevated beyond any realistic fundamental valuations because the general public believes current pricing is justified by probable future price increases. If this belief is widespread enough to cause significant numbers of people to purchase the asset at inflated prices, then prices will continue to rise. This will convince even more people that prices will continue to rise. This facilitates even more buying. Once initiated, this reaction is self-sustaining, and the phenomenon is entirely [Read More...]

Fed study concludes delinquent mortgage squatters lower values, foreclosures improve values

 NEWS, SANTA ANA
Aug 212012
 
Fed study concludes delinquent mortgage squatters lower values, foreclosures improve values

There are many myths about housing markets perpetuated by banks and the financial press. Two of these myths include (1) keeping people in a house keeps up the values, and (2) foreclosures reduce neighborhood values. Many believe that allowing delinquent mortgage squatters to stay in place improves the condition of a property. Perhaps in rough neighborhoods prone to property crime, occupancy is better than abandonment, but in most neighborhoods, when delinquent mortgage squatters stay on, they property gets run down. Why would anyone spend any money to improve or even maintain a property in which they have no financial interest? [Read More...]

federal reserve economists still don’t understand the housing bubble

 LAKE FOREST, NEWS
May 112012
 
federal reserve economists still don't understand the housing bubble

As the author of The Great Housing Bubble, I am an authority on the housing bubble. As someone who has written daily about the myriad of circumstances and consequences of the bubble, I have examined this phenomenon from every conceivable perspective. One of the great features of blogging is the constant exposure to other points of view on these issues. If there is something I miss, a reader usually points it out. The astute observations have greatly increased my understanding of these issues. For all these reasons, I would compare my understanding of the housing bubble with anyone, and from [Read More...]

Forcing second mortgage loss recognition brings reality back to bank reporting

 CORONA DEL MAR, NEWS
Apr 262012
 
Forcing second mortgage loss recognition brings reality back to bank reporting

For the last four years the health of the American banking system has been an illusion. In 2008 our insolvent banks were deemed too-big-to-fail, and regulators began allowing banks to market their assets to a fantasy valuation rather than fair-market value. Once insulated from loss recognition, lenders embarked on a policy of amend-extend-pretend with delinquent borrowers. Never before have so many been allowed to squat in luxury for so long. The policy of mark-to-fantasy bank accounting was necessary to make our banks look solvent. The hope was that banks would earn their way back to health as the federal reserve [Read More...]

What California can learn from Britain’s housing bubbles

 ANAHEIM HILLS, NEWS
Apr 112012
 
What California can learn from Britain's housing bubbles

California and Great Britain have much in common with regards to its real estate. California has witnessed three catastrophic bubbles over the last forty years as has Great Britain. Each bubble had different causes, but the timing was similar. California has strict land-use controls which creates artificial shortages of housing, and so does Great Britain. California’s economy has become dependent upon rampant HELOC abuse to fuel unsustainable booms and heart-wrenching busts. Great Britain endures the same real estate borrowing cycles of boom and bust. In this latest bust, lenders have not foreclosed on California’s mid- to high-end real estate keeping [Read More...]

Bernanke erroneously claims Federal Reserve didn’t cause the housing bubble

 ALISO VIEJO, NEWS
Mar 292012
 
Bernanke erroneously claims Federal Reserve didn't cause the housing bubble

The Federal Reserve did not directly cause the housing bubble. The lowering of interest rates in 2002 did help boost prices and may have served as a precipitating factor contributing to the housing bubble, but monetary policy of the Federal Reserve itself was not the cause. That doesn’t mean the Federal Reserve doesn’t have significant responsibility for the housing bubble. The primary cause of the housing bubble was the influx of private capital into the mortgage market through mortgage-backed securities. So why did this happen? First, when the Federal Reserve lowered interest rates to 1% under Alan Greenspan, investors sought [Read More...]

Top ten ways to devastate a housing market

 LA HABRA, NEWS
Mar 222012
 
Top ten ways to devastate a housing market

Among the valuable lessons we can learn from the housing bubble is the myriad of ways to cripple a housing market and prevent a recovery. Ever since prices started falling, loan owners put huge pressure on policymakers to “fix” the housing market — which in the mind’s of loan owners means making prices go back up. In reality, policymakers from the government and federal reserve exacerbated the problems of the market and ensured any recovery would be slow and painful. Today, with some help from Charles Hugh Smith, I intend to review how we can mess up the housing market [Read More...]

Fed’s Bullard warns against reflating the housing bubble

 NEWS, RANCHO SANTA MARGARITA
Mar 032012
 
Fed's Bullard warns against reflating the housing bubble

Fed’s Bullard: Not Feasible,Desirable To Reflate Housing Bubble Friday, February 24, 2012 – 11:36 — By Vicki Schmelzer NEW YORK (MNI) – The U.S. housing market continues to faces significant “headwinds, St. Louis Federal Reserve Bank President James Bullard said Friday. Bullard offered his observations on a piece “Housing, Monetary Policy and the Recovery,” co-authored by Michael Feroli, chief U.S. economist at JPMorgan Chase, Ethan Harris, co-head of global economic research at Bank of America Merrill Lynch, Amir Sufi, professor of finance at The University of Chicago Booth School of Business, and Kenneth West, professor of economics at the University [Read More...]

Benanke plans to print more money to buy mortgages

 COSTA MESA, NEWS
Jan 242012
 
Benanke plans to print more money to buy mortgages

The federal reserve is dominated by Keynesian economists who all have one thing in common: when their policies fail, they believe doing more will somehow succeed. If the definition of insanity is repeating the same behavior expecting a different result, then all Keynesian economists and all federal reserve officials are certifiably insane. Bernanke Doubles Down on Fed Bet Defied by Recession: Mortgages January 20, 2012, 3:40 PM EST — Bloomberg — By Jody Shenn Jan. 11 (Bloomberg) — Ben S. Bernanke is signaling his willingness to double down on a three-year bet that’s failed to revive housing, showing the extent [Read More...]

The federal reserve missed the housing bubble and its effects

 LAKE FOREST, NEWS
Jan 202012
 
The federal reserve missed the housing bubble and its effects

It is shocking — and a little frightening — to see how clueless and inept the people in charge of our money supply really are. Recent releases of federal reserve open market committee transcripts clearly show the federal reserve completely missed the housing bubble, and they grossly underestimated its impact on the economy. If policy makers do not identify the problem, they can’t craft policies to properly react to the problem. The people in charge at the federal reserve under Alan Greenspan — many of whom are still there — are embarrassingly inept. “Dear Mr. Greenspan, I think you’re pretty [Read More...]

Federal reserve official promotes principal reduction and Ponzi borrowing

 BUENA PARK, NEWS
Jan 122012
 
Federal reserve official promotes principal reduction and Ponzi borrowing

The federal reserve exists to create moral hazard. Their policies are designed to lessen the impact of the financial cycle, make booms less of an upswing and make busts less of a drag. However, the recessions at the end of a long boom are necessary. Unsustainable Ponzi-based business plans and lending programs must be purged. If these business and lending practices are allowed to continue, the improper allocation of resources becomes an even larger drag on the economy. Ponzi borrowing from mortgage equity withdrawal is one such lending practice that must be purged from the system. All Ponzi schemes are [Read More...]

Embarrassed Bernanke admits failure to see housing bubble

 NEWS
Feb 072011
 
Embarrassed Bernanke admits failure to see housing bubble

We want our government officials to lie. We must, or we wouldn’t continually put liars in positions of power. Ben Bernanke made a number of public statements around the peak of the housing bubble and during the financial meltdown that suggested his grasp of the obvious was challenged. Personally, I prefer to assume men like Bernanke are knowingly deceiving the general public to avoid feeding into a financial panic. If Bernanke is as clueless as his public statements make him out to be, he is more like Greenspan than I am comfortable with, and our financial system is being run [Read More...]

Panel finds Greenspan and Bernanke responsible and negligent

 NEWS
Feb 022011
 
Panel finds Greenspan and Bernanke responsible and negligent

Nobody is perfect. Everybody plays the fool sometimes. We hope we put people in positions of power who know what they are doing. Sometimes, these people fail, and when they do millions suffer for their arrogance and their ignorance. The sad conclusion of the government commission on the financial crisis concluded the entire ordeal was avoidable. If a few key people in power had made different decisions, we could have averted a housing bubble and the near meltdown of our financial system. Financial Crisis Was Avoidable, Inquiry Finds By SEWELL CHAN Published: January 25, 2011 WASHINGTON — The 2008 financial [Read More...]

 Older Entries