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...]

Loanowner bailouts were designed to benefit banks, an insider’s view

 NEWPORT COAST, NEWS
Nov 052012
 
Loanowner bailouts were designed to benefit banks, an insider's view

The bubble collapse was rife with denial caused by false rumors of homeowner bailouts. Many homeowners held out hope that if they could just keep current on their mortgage long enough, the government would come to their rescue in the form of a mandated bailout program. Many such programs were attempted, but if their stated goal was to keep loanowners in the properties they occupied, these programs were a dismal failure — thankfully. If they had succeeded, the moral hazard would have served to inflate an even more massive housing bubble in the future. Moral hazard is central issue in [Read More...]

To prevent an FHA bailout, lower the conforming limit on GSE loans

 NEWS, SANTA ANA
Jul 312012
 
To prevent an FHA bailout, lower the conforming limit on GSE loans

In a recent post, I noted that FHA mortgage delinquencies skyrocketed more than 25%. Since most FHA borrowers only put 3.5% down, when factoring in a 6% commission, 2% closing costs, and a declining market, nearly all FHA borrowers over the last five years are effectively underwater. When these borrowers sell or quit paying, the losses will be huge because the capital recovery will be far less than the original loan balance. With a 9.4% serious delinquency rate, the FHA is facing 713,104 future foreclosures. This rate has been rising steadily, and many more delinquencies are coming because many borrowers will [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...]

Everyone hates the mortgage settlement, except the banks

 NEWS, YORBA LINDA
Mar 142012
 
Everyone hates the mortgage settlement, except the banks

Despite a vigorous public relations campaign by both government officials and bank representatives, the sheeple are angry over the terms of the bank settlement. Loan owners are upset because they are not getting the break the believe they deserve, and prudent borrowers are upset because they know others are getting handouts. The only people who are happy with the settlement are bankers, and perhaps government officials who look like they did something. Rage grows over mortgage deal By Les Christie @CNNMoney March 13, 2012: 11:00 AM ET NEW YORK (CNNMoney) — As more details emerge about the massive $26 billion [Read More...]

Government intervention delays housing market recovery

 LA HABRA, NEWS
Feb 172012
 
Government intervention delays housing market recovery

I have repeatedly made the argument that government intervention is counterproductive. However, politicians and federal reserve policy makers either don’t accept this simple fact, or they don’t care. Politicians need to look like they are trying because doing nothing — which is the proper course of action — makes them look helpless and inept — which they are. The same is true for the federal reserve, but they also have a mandate to keep their member banks solvent. Most of the meddling in the markets has been done for that reason. Perhaps a few loan owners were saved along the [Read More...]

Banks greatly benefit from foreclosure settlement

 ANAHEIM, NEWS
Feb 132012
 
Banks greatly benefit from foreclosure settlement

Last Friday, I posted an opinion piece about bailing out California debtors. The post was more about moral hazard than about the details of the bank settlement. Now that I have had time to review the bank settlement, I see the issues raised in Friday’s post were completely wrong. From what I now understand about the agreement, it only pertains to the big commercial banks, and it really doesn’t bail out anyone other than the banks. The moral hazard I was concerned about does not appear to be a big issue on the settlement. The real beneficiaries are not loan [Read More...]

US taxpayers about bail out California HELOC abusers

 ANAHEIM HILLS, NEWS
Feb 102012
 
US taxpayers about bail out California HELOC abusers

I found a new hero online: Steven Greenhut, vice president of journalism at the Franklin Center for Government and Public Integrity. As a fellow displaced Midwesterner, he was shocked and appalled at what he witnessed moving to California. He too is buying up rental homes in beaten down markets for the cashflow. He recently wrote an editorial on Bloomberg that is today’s featured article. Mortgage Deal Props Up California House of Cards: Steven Greenhut By Steven Greenhut Feb 9, 2012 8:06 AM PT Why should a taxpayer in Houston or Wichita bail out irresponsible California homeowners, banks and the state’s [Read More...]

Proposed Subsidies to Housing Market Prices Benefit Only Bankers

 NEWS
Apr 272010
 
Proposed Subsidies to Housing Market Prices Benefit Only Bankers

The indulgent lives of the Great Housing Bubble were last seen during the Roaring Twenties, another era notable for its sequence of financial bubbles. First came the Florida land boom (from Wikipedia): The Florida land boom of the 1920s was Florida’s first real estate bubble, which burst in 1925, leaving behind entire new cities and the remains of failed development projects such as Isola di Lolando in north Biscayne Bay. The preceding land boom shaped Florida’s future for decades and created entire new cities out of the Everglades land that remain today. The story includes many parallels to the modern real [Read More...]

Failed Bailouts and the Neverending Mortgage Crisis

 NEWS
Apr 122010
 
Failed Bailouts and the Neverending Mortgage Crisis

At the core of every con is a dream. A con artist tempts a victim with dreams of riches or power to come in order to get them to do something today. It wasn’t long ago it was only realtors and mortgage brokers who sold the dream. Now, our own government is joining the choir. Over two years ago, I expressed by deep cynicism over the endless parade of Bailouts and False Hopes. As the bailouts continued, grew in number, and failed miserably, others have come to share my view. The Permanent Mortgage Crisis One more housing bailout to prolong the [Read More...]