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...]

Next week there might be an early definition and parameters of a “Qualified Mortgage”

 NEWS
Jan 052013
 
Next week there might be an early definition and parameters of a "Qualified Mortgage"

In the 1930′s when the federal government tried to stimulate the housing industry by creating Fannie Mae to standardize the 15-year and 30-year fixed mortgages thereby making more people eligible for home loans. In addition, Fannie Mae would sell these mortgages on the secondary market making more funds available for borrowing by the bank. This created a unified system of lending and solidified lending practices that nearly untouched for 70 years. Fast forward to the early 2,000′s and now we had dozens of exotic mortgage products, with new ones coming out every six months, so borrowers could afford higher and [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...]

Resale supply is coming, lenders increase foreclosures 10% in July in California

 CORONA DEL MAR, NEWS
Aug 152012
 
Resale supply is coming, lenders increase foreclosures 10% in July in California

The lack of supply on the MLS is becoming a serious problem. Buyers are getting burnt out and frustrated because they are unable to make a deal. Bidding is so aggressive — and so foolish — that 50% of deals fall out of escrow due to either a low appraisal or the borrower’s inability to obtain financing. The demand is still tepid by historical standards, but the supply is so constricted that lenders have considerable leeway to increase their foreclosure liquidations and still enjoy rising house prices. Perhaps as a response to current market conditions, lenders increased the number of [Read More...]

Banks cut standing REO inventories by reducing new acquisitions by 50%

 ALISO VIEJO, NEWS
Jun 142012
 
Banks cut standing REO inventories by reducing new acquisitions by 50%

Foreclosure Radar just released its report on May foreclosures. The change in bank’s behavior since the beginning of the year is becoming apparent. Lenders are determined to steadily reduce their standing REO inventory. At current liquidation rates, they will have cleared out the backlog of standing inventory by the middle of next year. Of course, this comes at a price. Lenders are not making headway on shadow inventory, and those who have been delinquent on their mortgages for a long time are going to get to squat even longer. Lenders are hoping these people will opt to short sell their [Read More...]

Is the banking cartel in violation of the Sherman Antitrust Act?

 LAKE FOREST, NEWS
May 292012
 
Is the banking cartel in violation of the Sherman Antitrust Act?

Unfettered capitalism has its drawbacks. The two most notable among them are key issues in the housing bubble and bust: Ponzi schemes, and monopoly price fixing. Ponzi schemes are destructive because they create artificial demand for goods and services based on unsustainable growth in investment or debt. A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation. The Ponzi scheme usually entices new investors by offering higher returns than other investments, in [Read More...]

As lenders withhold product, the homebuilders will flourish

 BREA, NEWS
Apr 272012
 
As lenders withhold product, the homebuilders will flourish

Anyone who watches the market carefully knows that lenders are withholding supply to cause prices to bottom. This is in the best interest of the members of the banking cartel. It’s surprising to me they managed to pull it off. Cartels are inherently unstable, most often because each member has a strong incentive to cheat by increase supply to take advantage of the improved pricing. In my opinion, that is what will likely cause the engineered spring rally of 2012 to fail. Calculated Risk famously described the problem facing homebuilders in the wake of the housing collapse in his analysis [Read More...]

What happened to the REOs that were due this spring?

 GARDEN GROVE, NEWS
Apr 252012
 
What happened to the REOs that were due this spring?

Last fall B of A and other major banks increased their filings of Notices of Default. Since then I have been predicting a spring surge of REO that would snuff out the spring rally. Right on schedule in January, Notices of Trustee Sale and the number of REO acquired increased, and it looked like the REO would hit the market in time for the spring selling season. Then lenders changed their collective minds. In February, lenders abruptly curtailed their acquisition of REOs at the auctions, and in March they took back fewer than in February. CA – Foreclosure Outcomes This [Read More...]

How will lenders liquidate their upcoming foreclosures?

 LAGUNA NIGUEL, NEWS
Apr 172012
 
How will lenders liquidate their upcoming foreclosures?

This year lenders drastically reduced the number of REO they are getting at auction. The numbers are down 62% over this time last year. Further, they have reduced their MLS inventories by nearly 20% from last year’s levels. Apparently, lenders are going to continue to reduce MLS inventory until prices bottom to reverse the two-year slide. This unexpected change is a desperate move to stop the market’s downward spiral. It means we will likely see depleted MLS inventories through the spring selling season and into the fall. At that point, the new crop of REOs from today’s default notices will [Read More...]

The lending cartel believes they can hold back the REO flood

 NEWS, TUSTIN
Apr 022012
 
The lending cartel believes they can hold back the REO flood

In what can best be termed as delusional optimism, the lending cartel is cautiously optimistic they can control the flow of properties as the liquidate their shadow inventory. Based on what is happening today, lenders have reason to be optimistic. Collectively, they are withholding REO inventory and decreasing the supply of distressed inventory to force the market to bottom this spring. They don’t have much to lose. If they keep putting properties on the market, prices will certainly continue to fall. They hope that by removing the inventory, they can get the markets to bottom and with the constant barrage [Read More...]

Fannie Mae and Freddie Mac are aggressively liquidating their REO

 NEWS
Jun 272011
 
Fannie Mae and Freddie Mac are aggressively liquidating their REO

Last September I noted the GSEs were expediting their foreclosures and REO sales and this behavior was going to threaten the banking cartel. The GSEs are still at it, and they are undercutting bank REO pricing to sell their inventory. Take the property as is, or take nothing at all. Foreclosures for sale, all homes sold as is By Kenneth R. Harney, Friday, June 24, 8:21 AM Looking for a deal where the home seller pledges in advance to contribute potentially thousands of dollars to your closing costs? If so, check out the summer sale terms available from two of [Read More...]

Higher loss severities will force lenders to resolve bad loans and liquidate REO

 NEWS
Dec 232010
 
Higher loss severities will force lenders to resolve bad loans and liquidate REO

If banks could store time in a bottle, they could keep in on the shelf with their worthless paper until the market gives it life again. Unfortunately, rather than storing time in a bottle, the remaining equity capital in our banking system is leaking away through servicing costs like sand in an hourglass. These servicing costs are hidden by amend-extend-pretend until disposition forces recognition of the losses. Astute housing market observers note the amend-extend-pretend policy of banks is untenable in the long term. As some point, keeping fantasy books must intersect with reality. The fantasy had house prices going up [Read More...]

Banks holding onto foreclosed homes to force buyers to overpay

 NEWS
Dec 162010
 
Banks holding onto foreclosed homes to force buyers to overpay

When you read trade publications you get a point of view on issues that is often unbiased by the political correctness of the mainstream media. I found the article today in www.bigbuilderonline.com written to interested parties in the homebuilding industry. The article in bold in its statements that the banking cartel is colluding to hold up prices. There is a matter-of-factness about the articles tone that says this activity is just and desirable. I think the bank’s behavior sucks. Banks holding onto foreclosed homes to keep market stable Source: San Bernardino County Sun Publication date: December 2, 2010 By Toni [Read More...]